Applicability of Act

Every factory where in 10 or more persons are employed with the aid of power or an establishment in which 20 or more persons are employed without the aid of power on any day during an accounting year

Establishment

Establishment includes Departments, undertakings and branches, etc.

Computation of available surplus

a. Income taxes and direct taxes as payable.

b. Depreciation as per section 32 of Income Tax Act.

c. Development rebate, investment or development allowance. {Section 5}

Components of Bonus

Salary or wages includes dearness allowance but no other allowances e.g. overtime, house rent, incentive or commission. {Section 2(21)}

Separate establishment

If profit and loss accounts are prepared and maintained in respect of any such department or undertaking or branch, then such department or undertaking or branch is treated as a separate establishment. {Section 3}

Disqualification & Deduction of Bonus

On dismissal of an employee for;

• Fraud; or

• riotous or violent behavior while in the premises of the establishment; or

• theft, misappropriation or sabotage of any property of the establishment or

• Misconduct of causing financial loss to the Employer to the extend that bonus can be deducted for that year {Section 9 & 18}

Computation of gross profit

For banking company, as per First Schedule.

Others, as per Second Schedule {Section 4}

Eligibility of Bonus

An employee will be entitled only when he has worked for 30 working days in that year. {Section 8}

Payment of Minimum Bonus

8.33% of the salary or Rs.100 (on completion of 5 years after 1^st Accounting year even if there is no profit) {Section 10}

Eligible Employees

Employees drawing wages upto Rs.10000.00 per month or less.

Time Limit for Payment of Bonus

Within 8 months from the close of accounting year {Section 19}

Set-off and Set-on

As per Schedule IV

{Section 15}

Maintenance of Registers and Records etc. 

• A register showing the computation of the allocable surplus referred to in clause (4) of section 2, in form A.

• A register showing the set-on and set-off of the allocable surplus, under section 15, in form B.

• A register showing the details of the amount of bonus due to each of the employees, the deductions under section 17 and 18 and the amount actually disbursed, in form C. {Section 26 Rule 4}

Act not applicable to certain employees of Life Insurance Corporation, General Insurance, Dockyards, Red Cross, Universities & Educational Institutions, Chambers of Commerce, Social Welfare Institutions, Building Contractors, etc. {Section 32}

PENALTY

For contravention of any provision of the Act or the Rule, imprisonment upto 6 months or with fine upto Rs.1000 {Section 28}