

THE PAYMENT OF BONUS ACT, 1965
1. | The Act has been extended to Goa, Daman and Diu by Act No.6 of 1977, s. 2 and Sch. |
2. | Subs. by Act No.23 of 1976, s. 2, for the long title (w.e.f. 25-9-1975). |
3. | The words "except the State of Jammu and Kashmir" omitted by Act No.51 of 1970, s. 2 and Sch. (w.e.f. 1-9-1971). |
4. | Ins. by Act No.23 of 1976, s. 3 (w.e.f. 25-9-1975). |
[Provided that in relation to the State of Jammu and Kashmir, the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year shall be construed as reference to the accounting year commencing on any day in the year 1968 and every subsequent accounting year:]
[provided further that when the provisions of this Act have been made applicable to any establishment or class of establishments by the issue of a notification under the proviso to sub-section (3), the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year or, as the case may be, the reference to the accounting year commencing on any day in the year 1968 and every subsequent accounting year, shall, in relation to such establishment or class of establishments, be construed as a reference to the accounting year specified in such notification and every subsequent accounting year.]
(5) An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein falls below twenty [or, as the case may be, the number specified in the notification issued under the proviso to sub-section (3)].
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COMMENTS
A part-time employee is also an employee for the purpose of calculating the number of employees-2D or more-under section 1(3)(b) [Automobile Karamchari Sangh & Ors. v. Industrial Tribunal & Ors., (1976) 38 F.J.R 268 (All.)]
2. Definitions.-In this Act, unless the context otherwise requires,4:
(1) "accounting year" means-
(i)in relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced;
(ii)in relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not;
(iii)in any other case-
(a)the year commencing on the 1st day of April; or
(b)if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced:
1. | Added by Act No.51 of 1970, s. 2 and Sch. (w.e.f. 1-9-1971). |
2. | Ins. by Act No.23 of 1976 s. 3 (w.e.f. 25-9-1975) |
3. | The words, brackets, letter and figure "under clause (b) of sub-section (3)" omitted by Act No.23 of 1976, 5.3 (w.e.f. 25-9-1975). |
4. | Ins. by 5.3, ibid. (w.e.f. 25-9-1975). |
1. | Ins. by Act No.66 of 1980, s. 2 (w.e.f. 21-8-1980). |
2. | Certain words omitted by Act No.23 of 1976, s. 4 (w.e.f. 25-9-1975). |
1. | Ins. by Act No.23 of 1976, s. 4 (w.e.f. 25-9-1975). |
2. | Ins. by Act No.66 of 1980, s. 2 (w.e.f. 21-8-1980). |
3. | Subs. by Act 34 of 1995, sec. 2 for 'two thousand and five hundred rupees' (w.e.f. 1-4-1-3). |
(14) "employer includes-
(i)in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii)in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;
(15) "establishment in private sector" means any establishment other than an establishment in public sector;
(16) "establishment in public sector" means an establishment owned, controlled or managed by-
(a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);
(b) a corporation in which not less than forty per cent of its capital is held (whether singly or taken together) by-
(i) the Government; or
(ii) the Reserve Bank of India; or
(iii) a corporation owned by the Government or the Reserve Bank of India;
(17) "factory" shall have the same meaning as in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948);
(18) "gross profits" means the gross profits calculated under section 4;
(19) "Income-tax Act" means the Income-tax Act, 1961 (43 of 1961);
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(20) "prescribed" means prescribed by rules made under this Act;
(21) "salary or wage" means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-
(i)any other allowance which the employee is for the time being entitled to;
(ii)The value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii)any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the being in force;
(vi)any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.-Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee;
(22) words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.
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COMMENTS
(i) Employees of State Boards are entitled to bonus. [Orissa State Housing Board v. D.Nayak & Ors., (1989) 2 L.L.N. 241 (Ori.)].
(ii)A co-operative bank is a banking company. [Vellore Central Co-op. Bank Ud. v. Industrial Tribunal, (1989) 58 F.L.R. 924 (Mad.)].
(iii)Lay-off compensation is included in the terin of "salary" or "wages". [Mohan Kumar v. Deputy Labour Commissioner, (1991) 62F.L.R. 903 (Ker.)].
(iv)When wages are revised, the management has to pay bonus on arrears. [Mumbai Kamgar Union v. Indian Tool Mfrs. Ltd. & Ors., (1981) 1 L.L.N. 391 (Born.)].
(v) Dearness allowance and city compensatory allowance are included in the definition of "salary" or "wages" under section 2 (21) of the Act. [S. Krishnamurthy v. Presiding Officer, Labour Court. (1986) 55 F.L.R. 535].
1. | Subs. by Act No. 66 of 1980, s. 3, for s. 4 (w.e.f. 21-8-1980 |
1. | Added by Act No.8 of 1969, s. 2. |
2. | Subs. by Act No.66 of 1980, s. 4, for certain words (w.e.f. 21-8-1980). |
1. | Subs. Act No.66 of 1980, s. 4, for "Second Schedule" (w.e.f. 21-8-1980). |
2. | Subs. by Act No.8 of 1969, s. 3, for "For the purpose of clause (c) of section 6, any direct tax payable by the employer". |
1. | Subs. by Act No.66 of 1980, s, 5, for certain words (w.e.f. 21-8-1980). |
1. | Subs. by Act No. 66 of 1980, s. 6, for s. 10 (w.e.f. 21-8-1980). Original s.11 was rep. by Act. No. 23 of 1976, s. 8 (w.e.f. 25-9-1975). |
11. Payment of maximum bonus.-
(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent. of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.]
COMMENTS
(i)The bonus payable in a year is subject to 20% of an employee's salary or wages.
(ii)Bonus in excess of allocable surplus cannot be claimed by employees. [Oriental Machinery & Civil Construction Pvt. Ltd. v. The 2nd Industrial Tribunal (W.B.), 1978 Lab. I.C. 586 (Cal.)].
12. Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds [ two thousand and five hundred rupees] per mensem, the bonus payable to Such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [two thousand and five hundred rupees] per mensem.
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13. Proportionate, reduction in bonus in certain cases- Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33 per cent. of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.
COMMENTS
(i)The minimum bonus is to be proportionately reduced by reference to the number of days an employee worked.
(ii)No work for all the working days, no payment of full bonus.
(iii)The bonus is payable on the salary or wages earned by an employee in respect of an accounting year. The payment received by way of encashment of leave cannot be taken into account for payment of bonus.
1. | S.12 omitted by Act No.30 of 1985, s. 2 and ins. by Act 67 of '1985, s.3 (w.e.f. 7-11-1985). |
2. | Subs. by Act 34 of 1995, sec. 3 for 'one thousand and six hundred rupees' (w.e.f. 1-4-1993). |
3. | Subs. by Act No.66 of 1980, sec. 8 for s. 13 (w.e.f. 21-8-1980). |
14. Computation of number of working days.-For the purposes of section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which-
(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(d) the employee has been on maternity leave with salary or wage, during the accounting year.
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"Working days" include days of leave, lay-off. etc.
15. Set on and set off of allocable surplus-
(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount of sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule.
(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this Act.
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1. | Subs. by Act No.66 of 1980, s. 9, for s. 15 (w.e.f. 21-8-1980). |
(4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.]
COMMENTS
Liability of paying bonus has to be determined only with reference to sections 10 and 11, i.e., the employer is bound to pay the minimum bonus of 4% of wages or the maximum bonus of 20% of wages in accounting year, as the case may be. [Express Cables Pvt. Ltd. v-C.I.T., (1992) 1 L.L.J 441 (Cal.)].
16. Special provisions with respect to certain establishments-
(1) Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the " provisions of sub-Sections (1A), (1B) and (1C).
(1A) In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this Act in relation to that year, but without applying the provisions of section 15.
(1B) For the sixth and seventh accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, the provisions of section 15 shall apply subject to the following modifications, namely:-
(i) for the sixth accounting year-
set on or set off, as the case may be, shall be made in the manner illustrated in the [Fourth Schedule] taking into account the excess or deficiency, if any, as the case may be, of the allocable surplus set on or set off in respect of the fifth and sixth accounting years;
(ii) for the seventh accounting year-
set on or set off, as the case may be, shall be made in the manner illustrated in the [Fourth Schedule] taking into account the excess or deficiency , if any, as the case may be, of the allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years.
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1. | Subs. by Act No.23 of 1976, s. 12, for sub-section (1) and Explanation thereto (w.e.f. 25-9-1975). |
2. | Subs. by Act No.66 of 1980, s. 10, for "Third Schedule" (w.e.f. 21-8-1980). |
1. | Subs. by Act No.23 of 1976, s. 12, for "sub-section (1)" (w.e.f. 25-9-1975). |
17. Adjustment of customary or interim bonus against bonus payable under the Act. Where in any accounting year-
(a) an employer has paid any puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable,
then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.
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(i)Payment of any customary bonus, such as attendance bonus, festival bonus, or the like, does not absolve the management from their liability to pay statutory bonus. [Baidyanath Bhawan Mazdoor Union v. Baidyanath Ayurvedic Bhawan Pvt. Ltd. & Anr., 1984 Lab. I.C. 148].
(ii)Customary bonus is adjustable against the statutory bonus. [ibid.]
(iii)The employee is bound to refund the excess amount of bonus. [Landra Engineering & Foundary Works v. State of Punjab & Ors., (1970) 38 F.J.R. 538 (P &H) ].
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18. Deduction of certain amounts from bonus payable under the Act.-Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.
19. Time-limit for payment of bonus.-1[All amounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer-
(a) where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
1. | Subs. by Act No.23 of 1976, s. 13, for "(1) Subject to the provisions of this section all amounts" (w.e.f. 25-9-1975). |
(b) in any other case, within a period of eight months from the close of the accounting year :
Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years.
1* * * * *
2* * * * *
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The amount of bonus is payable in cash within 8 months, with an exception, from the close of the accounting year.
20. Application of Act to establishments in public sector in certain cases.-
(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Act shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector.
(2) Save as otherwise provided in sub-section (1), nothing in this Act shall apply to the employees employed by any establishment in public sector.
21. Recovery of bonus due from an employer.-Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorised by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue:
1. | Sub-sections (2) to (7) ins. by Act No.68 of .1972, s. 4, omitted by Act 23 of 1976, s. .13 (w.e.f. 25-9-1975). |
2. | Sub-section (8) ins. by Act No.39 of 1973, s. 4, omitted by Act No.55 of 1973, s. 2 (w.el.1-9-1973). |
3. | S. 20 re-numbered as sub-section (1) thereof by Act No.66 of 1980, s. 11 (w.e.f. 27-12-1980). |
4. | Ins. by s. 11, ibid. (w.e.f. 27-12-1980). Original sub-section (2) was omitted by Act No. 23 of 1976, s. 14 (w.e.f. 25-9-1975). |
1. | Subs. by Act No.66 of 1980, s. 12, for "sections 22, 23 and 25" (w.e.f. 21-8-1980). |
COMMENTS
The authority has to presume the statements and particulars contained in the Balance-sheet and the Profit and Loss Account to be accurate unless the opposite party applies for clarification. [Workmen of India Cements Ltd. v. India Cements Ltd. & Anr., (1987) 57 F.L.R. 349 (Mad.)].
[24. Audited accounts of banking companies not to be questioned.-
(1) Where any dispute of the nature specified in section 22 between an employer, being a banking company, and its employees has
been referred to the said authority under that section and during the course of proceedings the accounts of the banking company duly audited are produced before it, the said authority shall not permit any trade union or employees to question the correctness of such accounts, but the trade union or the employees may be permitted to obtain from the banking company such information as is necessary for verifying the amount of bonus due under this Act.
(2) Nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any information which the banking company is not compelled to furnish under the provisions of section 34A of the Banking Regulation Act, 1949 (10 of 1949).]
1. | Subs. by Act No.23 of 1976, s. 16, for "and in sections 24 and 25" (w.e.f. 2-9-1975). |
2. | Subs. by Act No.66 of 1980, s. 13, for "section 25" (w.e.f. 21-8-1980). |
3. | Ins. by s. 14, ibid. (w.e.f. 21-8-1980). |
26. Maintenance of registers, records, etc.-Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may be prescribed.
27. Inspectors.-
(1) The appropriate Government may, by notification in the Official Gazette, appoint such persons as it thinks fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.
(2) An Inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this Act has been complied with-
(a) require an employer to furnish such information as he may consider necessary;
(b) at any reasonable time and with such assistance, if any, as he thinks fit, enter any establishment or any premises connected therewith and require anyone found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment;
(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer, his agent or servant or any other person found in charge of the establishment or any premises connected therewith or any person whom the Inspector has reasonable cause to believe to be or to have been an employee in the establishment;
(d) make copies of, or take extracts from, any book, register or other document maintained in relation to the establishment;
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(e) exercise such other powers as may be prescribed.
(3) Every Inspector shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 of 1860).
(4) Any person required to produce any accounts, book, register or other documents or to give information by an Inspector under sub-section (1) shall be legally bound to do so.
1[(5) Nothing contained in this section shall enable an Inspector to require a banking company to furnish or disclose any statement or information or to produce, or give inspection of any of its books of account or other documents, which a banking company cannot be compelled to furnish, disclose, produce or give inspection of, under the provisions of section 34A of the Banking Regulation Act, 1949 (10 of 1949).]
1. | Ins. by Act No.66 of 1980, s. 15 (w.e.f. 21-8-1980). |
1. | Ins. by Act No.66 of 1980, s. 16 (w.e.f. 21-8-1980). |
2. | Ins. by Act No.23 of 1976, s. 19 (w.e.f. 25-9-1975). |
3. | Ins. by Act No.66 of 1980, s. 17 (w.e.f. 21-8-1980). |
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No payment can be paid beyond the prescribed limit of 20%.
32. Act not to apply to certain classes of employees.-Nothing in this Act shall apply to--
(i) employees employed by any insurer carrying on general insurance business and the] employees employed by the Life Insurance Corporation of India
(ii) seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958)
(iii) employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers
(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority
(v) employees employed by-
(a) the Indian Red Cross Society or any other institution of alike nature (including its branches)
(b) universities and other educational institutions
(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit
(Vi) employees employed through contractors on building operations
(viii) employees employed by the Reserve Bank of India
(ix) employees employed by-
1. | Subs. by Act No.66 of 1980, s. 17, for "Provided that" (w.e.f. 21-8-1980). |
2. | The words "employees employed by any insurer carrying on general insurance business and the" shall stand omitted by Act No. 62 of 1968, s. 41 (w.e.f. to be notified). |
3. | Cl. (vii) omitted by Act No.66 of 1980, s.18 (w.e.f. 21-8-1980). |
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(i) Local bodies do not come within the purview of this Act. [Union of India & Ors. v. R.C. fain & Ors., A.I.R. 1981 S.C. 951].
(ii) Institutions such as hospitals, social welfare institutions and chambers of commerce are intended to be exempted under section 32(v)(c). [Maharashtra Electricity Board v. M.c. Chitale, (1981) 1 L.L.J. 162 (Born.) D.B.].
(iii) It is not every type of institutions (including a statutory corporation) which can be exempted. [ibid.].
(iv) This Act is not applicable to agents of State Governments. [Maharashtra State Co-op. M.arketing Federation Ltd. v. 1st Labour Court (1988) 57 F.L.R. 301 (Born.)].
(v) A society established for the purpose of making profit is not excepted under this Act. [ibid.].
(VI) Institutions designed for earning profit should pay the minimum bonus to their employees. [T.N. Water Supply & Drainage Board Engineers' Association v. Government of T.N. etc., (1991) 2 L.L.J. 394 (Mad.)]
1. | Subs. by Act No.61 of 1981, s. 61 and Sch. II, for sub-clause (d) (w.e.f. 12-7-1982). |
2. | Ins. by Act No.39 of 1989. |
3. | Ins. by Act No.53 of 1987, s. 56 and Second Sch. (w.e.f. 9-7-1988) which was omitted by Act No.66 of 1980, s.18 (w.e.f. 21-8-1980). |
4. | Ins. by Act No.66 of 1980, s.18 (w.e.f. 21-8-1980). |
5. | Cl. (x) omitted by Act No.23 of 1976, s. 20 (w.e.f. 25-9-1975). |
33. [Act to apply to certain pending disputes regarding payment of bonus.] Rep. by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), s. 21 (w.e.f. 25-9-1975).
34. Effect of laws and agreements inconsistent with the Act.-Subject to the provisions of section 31A, the provisions of this Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service.
35. Saving.-Nothing contained in this Act shall be deemed to affect the provisions of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (46 of 1948), or of any scheme made thereunder.
36. Power of exemption.-If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act.
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(i) Before according exemption under section 36 to an establishment, its employees should be heard. [State of T.N. v. K. Sabansyagam & T.N.S.H.B., (1989) 1 L.L.N. 955 (Mad.)].
(ii) Exemption cannot be granted with retrospective effect. [ibid.].
(iii) For granting exemption to any establishment, the Government has to pass a speaking order. [National Dairy Development Board v. National Dairy Development Employees' Union. (1986) 2 L.L.N.148].
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(iv) Exemption applies to branches, etc. [Alloy Steel Project v. The Workmen (1971) 1 S.C.C. 536].
(v) The appropriate government must consider relevant factors before it chooses to accord exemption. [T.N. State Housing Board v. K. Sabanayagam, (1990) 61 F.L.R. 60 (Summary) (Mad.)].
37. [Power to remove difficulties.] Rep. by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), 5.23 (w.e.f. 25-9-1975).
1. | Subs. by Act No.23 of 1976, s. 22, for s. 34 (w.e.f. 25-9-1975). |
(1) The Central Government may make rules for the purpose of carrying into effect the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for-
(a) the authority for granting permission under the proviso to sub-clause (iii) of clause (1) of section 2;
(b) the preparation of registers, records and other documents and the form and manner in which such registers, records and documents may be maintained under section 26;
(c) the powers which may be exercised by an inspector under clause (e) of sub-section (2) of section 27;
(d) any other matter which is to be, or may be, prescribed.
(3) Every rule made under this section shall be laid as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days, which may be comprised in one session [or in two or more successive sessions], and if before the expiry of the session [immediately following the session or the successive sessions aforesaid], both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have, effect only in such modified for or be of no effect, as the case may be; so, however, that any such modification or annulment shall be Without prejudice to the validity of anything previously done under that rule.
39. Application of certain laws not barred.-Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947 (14 of 1947), or any corresponding law relating to investigation and settlement of industrial disputes in force in a State.
40. Repeal and saving.-
(1) The Payment of Bonus Ordinance, 1965 (3 of 1965), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th May, 1965.
TOP
1. | Subs. by Act No.23 of 1976, s. 24, for "or in two successive sessions" (w.e.f. 2.5-9-1975). |
2. | Subs. by s. 24, ibid., for "in which it is so laid or the session immediately following" (w.e.f. 25-9-1975). |
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
*1. | Net Profit shown in the Profit and Loss Account after making usual and necessary provisions. | Rs. | Rs. | |
2. | Add back provision for: (a) Bonus to employees. (b) Depreciation (c) Any other Rebate Reserve (d) Any other reserves. Total of Item No. 2 |
Rs. |
See foot-note (1) See foot-note (1) |
|
3. | Add back also: (a) Bonus paid to employees in respect of previous accounting years. (b) The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of - (i) the amount, if any, paid to, or provided for payment to, an approved gratuity fund; and (ii) the amount actually paid to employees on their retirement or on termination of their employment for any reason. |
See foot-note (1) |
||
(Contd.) | ||||
1. | The First Schedule which was omitted by Act No.23 of 1976, s 25.ins. by Act No.43 of 1977, s.18 (w.e.f. 3 9-1977). |
* | Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on income is shown, the actual provision for taxes on income shall be deducted from the profit. |
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
(c) Donation in excess of the amount admissible for income-tax. (d) Capital expenditure (other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in force relating to direct taxes) and capital losses (other than losses on sale of capital assets on which depreciation has been allowed for income-tax. (e) Any amount certified by the Reserve Bank of India in term of sub-section (2) of section 34A of the Banking Regulation Act, 1949 (10 of 1949). (f) Losses of, or expenditure relating to, any business situated outside India. Total of Item No. 3 . . . . . . . . |
Rs. Rs. |
Rs. | See foot-note (1) |
|
4. | Add also income, profits or gain (if any) credited directly to published or disclosed reserve, other than- (i) capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for income-tax); (ii) profits of, and receipts relating to, any business situated outside India: (iii) income of foreign banking companies from investment outside India. Net total of Item No. 4 . . . . . . |
Rs. |
||
5. | Total of Item Nos. 1,2,3, and 4 . . . . . . | Rs. | ||
(Contd.) | ||||
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
6. | Deduct: (a) Capital receipts and capital Profits (other than profits on the sale of assets on which depreciation has been allowed for income-tax). (b) Profits of, receipts relating to, any business situation outside India. (c) Income of foreign banking companies from investments outside India. (d) Expenditure or losses (if any) debited directly to published or disclosed reserves, other than- (i) capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not been allowed for income-tax); (ii) losses of any business situated outside India (e) In the case of foreign banking companies proportionate administrative (overhead) expenses of Head Office allocable to India business. (f) Refund of any excess direct tax paid for previous accounting years and excess provision, if any, of previous accounting years, relating to bonus, depreciation, or development rebate, if written back. (g) Cash subsidy, if any, given by the Government or by any law for the time being in force or by any other agency through budgetary grants, whether given directly to through any agency for specified purposes and the proceeds of which are reserved for such purpose. Total of Item No. 6 . . . . . . 7. Gross Profit for purposes of bonus (item No. 5 minus Item No. 6) |
Rs. Rs. |
Rs. Rs. |
See foot-note (2) See foot-note (2) See foot-note (2) See foot-note (2) See foot-note (2) See foot-note (2) |
(Contd.) | ||||
Explanation-In sub-item (b) of Item 3, "approved gratuity fund" has the same meaning assigned to it in clause (5) of section 2 of the Income-tax Act. Foot-notes- (1) If, and to the extent, charged to Profit and Loss Account. (2) If, ant to the extent, credited to Profit and Loss Account. (3) In the Proportion of India Gross Profit (Item No. 7) to Total World Gross Profit (as per Consolidated Profit and Loss Account adjusted as in Item No. 2 above only).] |
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
1. | Net Profit as per Profit and Loss Account. |
Rs. | Rs. | |
2. | Add back provision for : (a) Bonus to employees. (b) Depreciation. (c) Direct taxes, including the provision (if any) for previous accounting years. |
|||
(Contd.) | ||||
1. | The First Schedule renumbered as the Second Schedule by Act No. 66 of 1980, s. 19 (w.e.f. 21-8-1980). |
2. | Subs. by s.19, ibid., for "(See section 4)" (w.e.f. 21-8-1980). |
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
1[(d) Development rebate/Investment allowance/Development allowance reserve.] (e) Any other reserves. Total of Item No. 2 . . . . . . . |
Rs. Rs. |
Rs. | See foot-note (1) See foot-note (1) |
|
3. | Add back also: (a) Bonus paid to employees in respect of previous accounting years. 2[(aa) The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of- (i) the amount, if any, paid to, or provided for payment to, an approved gratuity fund; and (ii) the amount actually paid to employees on their retirement or on termination of their employment for any reason.] (b) Donation in excess of the amount admissible for income-tax. (c) Any annuity due, or commuted value of any annuity paid, under the provisions of section 280D of the Income-tax Act during the accounting year. (d) Capital expenditure (other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in force relating to direct taxes) and capital losses (other than losses on sale of capital assets on which depreciation has been allowed for income-tax or agricultural income-tax). (e) Losses of, or expenditure relating to, any business situates outside India. Total of Item No. 3 . . . . |
Rs. |
See foot-note (1) See foot-note (1) |
|
(Contd.) | ||||
1. | Subs. by Act No. 66 of 1980, s. 19, for entry (d) (w.e.f. 21-8-1980). |
2. | Ins. by Act No. 23 of 1976, s. 26 (w.e.f. 25-9-1975). |
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
4. | Add also income. profits or gains (if any) credited directly to reserves, other than- (i) capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for income-tax or agricultural income-tax); (ii) profits of, and receipts relating to, any business situated outside India; (iii) income of foreign concerns from investments outside India Net total of Item No. 4 . . . |
Rs. Rs. |
Rs. | |
5. | Total of Item Nos. 1,2,3 and 4 . . . | Rs. | ||
6. | Deduct: (a) Capital receipts and capital profits (other than profits on the sale of assets on which depreciation has been allowed for income-tax or agricultural income-tax). (b) Profits of, and receipts relating to, business situated outside India. (c) Income of foreign concerns from investment outside India. |
See foot-note (2) See foot-note (2) See foot-note (2) |
||
(Contd.) | ||||
Item No. | Particulars | Amount of sub-items | Amount of main items | Remarks |
(d) Expenditure or losses (if any) debited directly to reserves, other than- (i) capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not been allowed for income-tax or agricultural income-tax; (ii) Losses of any business situated outside India. (e) In the case of foreign concerns proportionate administrative (overhead) expenses of Head Office allocable to India business. (f) Refund of any tax paid for previous accounting years and excess provision, if any, of previous accounting year relating to bonus, depreciation, taxation or development rebate or development allowance, if written back. [(g) Cash Subside, if any, given by the Government or by the body corporate established by any law for the time being in force or by any other agency through budgetary grants, whether given directly or through any agency for specified purpose and the proceeds of which are reserved for such purposes.] Total of Item No. 6 . . . . . |
Rs. Rs. |
Rs. | See foot-note (3) See foot-note (2) |
|
7. | Gross Profits for purpose of bonus (Item No. 5 Minus Item No. 6) . . | Rs. | ||
[Explanation-In sub-item (aa) of Item 3, "approved gratuity fund" has the same meaning assigned to it in clause (5) of section 2 of the Income-tax Act.] | ||||
1. | Subs. by Act No. 23 of 1976, s. 26, sub-item (g) (w.e.f. 25-91975). |
2. | Ins. by s. 26, ibid. (w.e.f. 25-9-1975). |
Foot-notes-
(1) If, and to the extent, charged to Profit and Loss Account.
(2) If, and to the extent, credited to Profit and Loss Account.
(3) In the proportion of Indian Gross Profit (Item No.7) to Total World Gross Profit (as per Consolidated Profit and Loss Account, adjusted as in Item No.2 above only).
1. | The Second Schedule renumbered as the Third Schedule by Act No. 66 of 1980, s. 20 (w.e.f.I2-8-1980). |
2. | Subs. by s. 20, bid., for "Company" (w.e.f. 1-8-1980). |
Item No. | Category of Employer | Further sums to be deducted |
(1) | (2) | (3) |
1[2. | Banking company. . . . . . | (i) The dividends payable on its preference share capital for the accounting year calculated at 'the rate at which such dividends are payable; (ii) 7.5 per cent. of its paid up equity share capital as at the commencement of the accounting year; (iii) 5 per cent. of its reserves shown in its balance-sheet as at the commencement of the accounting year, including any profits carried forward from the previous accounting year; (iv) any sum which in respect of the accounting year, is transferred by it- (a) to a reserve fund under sub- section (1) of section 17 of the Banking Regulation Act, 1949 (10 of 1949); or (b) to any reserves in India in pursuance of any direction or advice given by the Reserve Bank of India, whichever is higher: Provided that where the banking company is a foreign company within the meaning of section 591 of the Companies Act, 1956 (1 of 1956), the amount to be deducted under this Item shall be the aggregate of- (i) the dividends payable to its preference shareholders for the accounting year at the rate at which such dividends are payable on such amount as bears the same proportion to its total preference share capital as its total working funds in India bear to its total world working funds; |
(Contd.) |
1. | Ins. by Act No.66 of 1980, s. 20 (w.e.f. 21-8-1980). |
Item No. | Category of Employer | Further sums to be deducted |
(1) | (2) | (3) |
(ii) 7.5 per cent of such amount as bears the same proportion to its total paid up equity share capital as its total working funds in India bear to its total world working funds; (iii) 5 per cent. of such amount as bears the same proportion to its total disclosed reserves as its total working funds in India bear to its total world working funds; (iv) any sum which, in respect of the accounting year, is deposited by it with the Reserve Bank of India under sub-clause (ii) of clause (b) of sub-section (2) of section 11 of the Banking Regulation Act, 1949 (10 of 1949), not exceeding the amount required under the aforesaid provision to be so deposited.] |
||
3. | Corporation | (i) 8:5 per cent. of its paid up capital as at the commencement of the accounting year; (ii) 6 per cent. of its reserves, if any, shown in its balance-sheet as at the commencement of the accounting year including any profits carried forward from the previous accounting year. |
4. | Co-operative society | (i) 8.5 per cent. of the capital invested by such society in its establishment as evidenced from its books of accounts at the commencement of the accounting year; (ii) such sum as has been carried forward in respect of the accounting year to a reserve fund under any law relating to co-operative societies for the time being in force. |
(Contd.) | ||
Item No. | Category of Employer | Further sums to be deducted |
(1) | (2) | |
5. | Any other employer not falling under any of the aforesaid categories | 8.5 per cent. of the capital invested by him in his establishment as evidenced from his books of accounts at the commencement of the accounting year: Provided that where such employer is a person to whom Chapter XXII A of the Income-tax Act applies, the annuity deposit payable by him under the provisions of that Chapter during the accounting year shall also be deducted: Provided further that where such employer is a firm, an amount equal to 25 per cent. of the gross profits derived by it from the establishment in respect of the accounting year after deducting depreciation in accordance with the provisions of clause (a) of section 6 by way of remuneration to all the partners taking part in the conduct of business of the establishment shall also be deducted, but where the partnership agreement, whether oral or written, provides for the payment of remuneration to any such partner, and- (i) the total remuneration payable to all such partners is less than the said 25 per cent., the amount payable, subject to a maximum of forty-eight thousand rupees to each such partner; or (ii) the total remuneration payable to all such partners is higher than the said 25 per cent., such percentage, or a sum calculated at the rate of forty-eight thousand rupees to each such partner, whichever is less, shall be deducted under this provision: |
(Contd.) | ||
Item No. | Category of Employer | Further sums to be deducted |
(1) | (2) | Provided also that where such employer is an individual or a Hindu undivided family- (i) an amount equal to 25 percent. of the gross profits derived by such employer from the establishment in respect of the accounting year after deducting depreciation in accordance with the provisions of clause (a) of section 6; or (ii) forty-eight thousand rupees, whichever is less, by way of remuneration to such employer, shall also be deducted. |
6. | Any employer falling under Item No.1 or Item No.3 or Item No.4 or Item No. 5 and being a licensee within the meaning of the Electricity (Supply) Act, 1948 (54 of 1948). | In addition to the sums deductible under any of the aforesaid Items, such sums as are required to be appropriated by the licensee in respect of the accounting year to a reserve under the Sixth Schedule to that Act shall also be deducted. |
Explanation-The expression "reserves" occurring in column (3) against Item Nos.[1(iii), 2(iii) and 3(ii)] shall not include any amount set apart for the purpose of- (i) payment of any direct tax which, according to the balance-sheet, would be payable (ii) meeting any depreciation admissible in accordance with the provisions of clause (a) of section 61 (iii) payment of dividends which have been declared, but shall include- (a) any amount, over and above the amount referred to in clause (i) of this Explanation, set apart as specific reserve for purpose of payment of any direct taxi and (b) any amount set apart for meeting any depreciation in excess of the amount admissible in accordance with the provisions of clause (a) of section 6. |
||
(Contd.) |
1. | Subs. by Act No.66 of 1980, s. 20, for "1(iii) and 3(ii)" (w.e.f. 21-8-1980). |
Year | Amount equal to sixty per cent. or sixty-seven per cent., as the case may be, of a available surplus allocable as bonus | Amount payable as bonus | Set on or set off the year carried forward | Total set on or set off Carried Forward | |
Rs. | Rs. | Rs. | Rs. | of (year) | |
1. | 1.04.167 | 1.04.167** | Nil | Nil | |
2. | 6,35,000 | 2,50,000* | set on 2,50,000* | set on 2,50,000* | (2) |
3. | 2,20,000 | 2,50,000* (inclusive of 30,000 from year-2) | Nil | Set on 2,20,000 | (2) |
4. | 3,75,000 | 2,50,000* | Set on 1,25,000 | Set on 2,20,000 1,25,000 |
(2) (4) |
5. | 1,40,000 | 2,50,000* (inclusive of 1,10,000 from year-2) | Nil | Set on 1,10,000 1,25,000 |
(2) (4) |
6. | 3,10,000 | 2,50,000* | Nil | Set on Nil + 1,25,000 60,000 |
(2) (4) (6) |
7. | 1,00,000 | 2,50,000* (Inclusive of 1,25,000 from year-4 and 25,000 from year-6) | Nil | Set on 35,000 | (6) |
8. | Nil (due to loss) |
1,04,167** (inclusive of 35,000 from year-6) | Set off 69,167 | Set off 69,167 | (8) |
9. | 10,000 | 1,04,167*** | Set off 94,167 | Set off 69,167 94, 1267 |
(8) (9) |
10. | 2,15,000 | 1,04,167** (after setting off 69, 167 from year-8 and 41,666 from year-9) | Nil | Set off 52,501 | (9) |
NOTES______
* Maximum
+ The balance of Rs. 1,10,000 set on from year-2 lapses.
** Minimum
1. | Subs. by Act. No. 66 of 1980, s. 21, for the Third Schedule (w.e.f. 21-8-1980) |
1. | Published in the Gazette of India, Part II, Section 3(i) dated 6th September, 1975 vide G.S.R. 2367, dt. 21st August 1975. |
2. | Inserted by Payment of Bonus (Amendment) Rules, 1983, w.e.f. 21-1-1984. |
Sums deducted from gross profits | |||||||
Gross profit for the Accounting year Rs. | Depreciation under section 6(a) | Development rebate or Development allowance section 6(b) | Direct taxes section 6(c) | Further sums as are specified under the Third Schedule to the Act | Total of sums deducted under columns 2,3,4 and 5 (*60% of Column 7) | Available surplus for the accounting year (Column 1 minus Column 6) | Amount of allocable surplus (@ 67%) |
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Accounting year | Amount allocable as bonus (in Rs.) |
Amount payable as bonus (in Rs.) |
Amount of set on or set-off (in Rs.) |
Total set-on or set-off carried forward |
1 | 2 | 3 | 4 | 5 |
|
FORM C
[See rule 4(c)]
BONUS PAID TO EMLOYEES FOR THE ACCOUNTING YEAR ENDING ON THE ..
Name of the establishment
No. of Working days in the year
Deductions | ||||||||||||||||||
Sl. No. | Name of the employee | Father's Name | Whether he has completed 15 years of age at the beginning of the accounting year | Designation | No. of days worked in the year | Total salary or wage in respect of the accounting year | Amount of bonus payable under section 10 or section 11 as the case may be | Puja bonus other customary during the accounting year | Interim bonus or bonus bonus paid advance | 1[Amount of Income-tax deducted | Deduction on account of financial loss, if any, caused by misconduct of the employee | 2[Total sum deducted under Columns 9,10.10A and 11] | Net amount payable (Column 8 minus Column 12) | Amount actually Paid | Date on which paid | Signature/Thumb impression of the employee | ||
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 10A | 11 | 12 | 13 | 14 | 15 | 16 | ||
|
||||||||||||||||||
1. | Inserted by the Payment of Bonus (Amendment) Rules 1979, w.e.f. 8-9-1979, vide G.S.R. No-1147 dt. 23rd August 1979. |
2. | Substituted by Ibid. |
FORM D
[See rule 5]
ANNUAL RETURN-BONUS PAID TO EMPLOYEES FOR THE ACCOUTING YEAR ENDING ON THE
1. Name of the establishment and its complete postal address:
2. Name of industry:
3. Name of the employer:
4. Total number of employees:
5. Number of employees benefited by bonus payments:
Total amount payable as bonus under section 10 or 11 of the Payment of Bonus Act, 1965 as the case may be | Settlement, if any, reached under section 18(1) of 12(3) of the Industrial Disputes Act, 1947 with date | Percentage of bonus declared to be paid | Total amount of bonus actually paid | Date on which payment made | Whether bonus has been paid to all the employees, if not, reasons for non-payment | Remarks |
(1) | (2) | (3) | (4) | (5) | (6) | (7) |
|
Signature of the employer or his agent.]
1. | Inserted by the Payment of bonus (Amendment) Rules, 1983, w.e.f. 21-1-1984, vide S.O. No. 251 dt. 7-1-1984. |
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