Hi
How is Bonus calculated? 8.33% on Basic or Gross and what is the max . Is it upto Gross? For higher salary how it is applicable
As per the amendment on the Payment of Bonus Bill passed in 2015, if the gross earning of the employee is below Rs. 21,000, employers are liable to pay bonuses. The bonus will be calculated as follows:
If salary is equal to or less than Rs. 7,000, then the bonus will be calculated on the actual amount by using the formula: Bonus= Salary x 8.33 / 100
If salary is more than Rs. 7,000, then the bonus will be calculated on Rs. 7,000 by using the formula: Bonus= 7,000 x 8.33 /100
Note: Salary means: Basic Salary + Dearness Allowance
Examples:
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If A’s Salary (Basic + DA) is Rs. 6,000, then bonus payable will be: 6,000 x 8.33 / 100= Rs. 500 per month(Rs. 6,000 per year)
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If B’s Salary (Basic + DA) is Rs. 7,500, then bonus payable will be: 7,000 x 8.33 / 100= Rs. 583 per month(Rs. 6,996 per year)
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Thank you for the update.
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Thank you so much. So 7000 is same for if it is more than 7K.
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Hi
If you are computing in Karnataka then it is on 7000 or minimum wages applicable for that category. Currently the minimum wages as per Karnataka labour department notification is 15744/-.
Thanks and Regards
Natarajan S
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Yes, if basic more than 7k, must be calculated on 7k.
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As per The Payment of Bonus ( Amendment ) Act, 2015, if salary of an employee exceeds Rs. 7000 or the Minimum wage for the scheduled employment per month, Bonus is to be calculated on Rs. 7000 or the Minimum wage, whichever is higher.
Only those employees drawing a salary not exceeding Rs. 21,000 per month are entitled to Payment of Bonus as per the Act. Salary components for computing bonus includes only Basic + D.A presently, till such time the new Wage Code is enforced.
Minimum bonus is @ 8.33% and maximum is @ 20% depending on the allocable surplus as per the Accounting books.
Hope this clarifies.
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