Last Updated: March 2026 Reviewed by CA & CS Team · Patron Accounting LLP

Bonus Calculator — Payment of Bonus Act Statutory Bonus

TL;DR

This Bonus Calculator computes statutory bonus under the Payment of Bonus Act, 1965. Eligible employees (Basic + DA ≤ ₹21,000/month, 30+ working days) receive a minimum of 8.33% and maximum of 20% of salary capped at ₹7,000/month or minimum wage. Enter your salary and working days to see both minimum and maximum bonus, pro-rata for partial year, and the employer's total bonus liability for the team. Payment deadline: within 8 months of year-end.

Calculate Statutory Bonus

Basic Salary + Dearness Allowance only
Total days worked (incl. leave with pay)
Usually 240 (factories) or 260 (offices)
For total employer liability

How Statutory Bonus Is Calculated

The Payment of Bonus Act, 1965 prescribes a specific calculation method that involves salary capping, minimum and maximum rates, and pro-rata adjustments:

Step 1: Determine Calculation Salary
If Basic + DA ≤ ₹7,000 → use actual Basic + DA
If Basic + DA > ₹7,000 → use ₹7,000 (or minimum wage, whichever is higher)

Step 2: Calculate Annual Bonus
Minimum Bonus = Calculation Salary × 12 × 8.33% (or ₹100, whichever is higher)
Maximum Bonus = Calculation Salary × 12 × 20%

Step 3: Pro-Rata (if partial year)
Pro-Rata Bonus = Full Year Bonus × (Working Days ÷ Total Working Days)

Eligibility: Basic + DA ≤ ₹21,000/mo + worked 30+ days

Worked Example

Ramesh earns Basic + DA of ₹15,000/month and worked for 200 days in a 240-day establishment:

StepCalculationAmount
Eligibility₹15,000 ≤ ₹21,000✓ Eligible
Calculation Salary₹15,000 > ₹7,000 → capped at ₹7,000₹7,000/mo
Annual Calculation Base₹7,000 × 12₹84,000
Min Bonus (full year)₹84,000 × 8.33%₹6,997
Pro-Rata Min Bonus₹6,997 × (200 ÷ 240)₹5,831
Max Bonus (full year)₹84,000 × 20%₹16,800
Pro-Rata Max Bonus₹16,800 × (200 ÷ 240)₹14,000

CA Tip: The ₹7,000 salary cap for bonus calculation has not been revised since 2015, despite the eligibility ceiling being raised to ₹21,000. This means employees earning ₹7,001 to ₹21,000 all receive the same bonus amount — a significant gap that benefits employers but limits employee bonus. Track minimum wage notifications from the Chief Labour Commissioner as minimum wage can override the ₹7,000 cap for scheduled employments.

Eligibility Criteria

Employee Eligibility

Under Section 8 of the Act, an employee must satisfy two conditions: monthly Basic + DA must not exceed ₹21,000, and they must have worked for at least 30 days in the accounting year. Days on leave with pay, lay-off, and absence due to employment injury or maternity leave count as working days.

Establishment Eligibility

The Act applies to every factory with 10 or more employees and every other establishment with 20 or more employees on any day during the accounting year. Once applicable, the Act continues even if employee count drops below the threshold in subsequent years. Certain establishments are exempt: the Reserve Bank of India, LIC, non-profit organisations, hospitals, educational institutions, and government departments.

Disqualification

An employee is disqualified from receiving bonus in that accounting year if dismissed for fraud or misconduct, violent behaviour, theft or misappropriation of employer property, or sabotage of establishment property. The disqualification applies only for the year of the offence — the employee remains eligible in other years. Under the Code on Social Security, 2020, fixed-term employees are also entitled to pro-rata bonus after 1 year.

Set-On and Set-Off Explained

Sections 15 and 16 of the Act introduce a carry-forward mechanism for allocable surplus:

Set-On (Carry Forward Surplus)

If in any year the allocable surplus exceeds the maximum bonus (20%) payable, the excess is carried forward (set-on) to the next year. This surplus can be used to pay bonus in future years when the allocable surplus is insufficient. Set-on can be carried forward for up to 4 years.

Set-Off (Carry Forward Deficiency)

If in any year the allocable surplus is less than the minimum bonus (8.33%), the employer must still pay the minimum bonus. The deficiency (difference between minimum bonus paid and the allocable surplus) is set-off against future years' surplus. Set-off is also limited to 4 years.

Employers must maintain Form A (surplus computation) and Form B (set-on/set-off record) under the Payment of Bonus Rules, 1975. These registers are inspected during labour inspections and must be kept for 8 years.

Bonus Compliance for Employers

ObligationRequirement
Payment DeadlineWithin 8 months of accounting year close (by 30th November for March year-end)
Form AComputation of allocable surplus
Form BSet-on and set-off register
Form CBonus payable, deductions, and disbursement details per employee
Form D (Annual Return)Filed on the Ministry of Labour portal by 1st February each year
Penalty for Non-PaymentUp to 6 months imprisonment or ₹1,000 fine or both (Section 28)
Record Retention8 years from the date of last entry

Need Bonus Computation Help? Patron Accounting calculates allocable surplus, maintains Forms A/B/C/D, computes employee-wise bonus with pro-rata adjustments, and files annual returns. We handle full payroll compliance for businesses across India. Get bonus compliance help →

Frequently Asked Questions About Statutory Bonus

Statutory bonus is a mandatory payment under the Payment of Bonus Act, 1965. Minimum 8.33% and maximum 20% of salary (Basic + DA) capped at ₹7,000/month or minimum wage. Applies to establishments with 20+ employees. Eligible employees earn up to ₹21,000/month and must have worked 30+ days. Must be paid within 8 months of accounting year close.
Bonus is calculated on salary capped at ₹7,000/month or minimum wage (whichever is higher). If actual Basic + DA is below ₹7,000, use actual. Annual calculation base = capped salary × 12. Minimum bonus = base × 8.33% (or ₹100, whichever is higher). Maximum = base × 20%. For partial year: Full bonus × (actual working days ÷ total working days). The actual percentage depends on the company's allocable surplus.
Employees earning Basic + DA up to ₹21,000/month who worked at least 30 days in the year. Establishments must have 20+ employees (10+ for factories). Leave with pay, lay-off days, and maternity absence count as working days. Employees dismissed for fraud, misconduct, theft, or sabotage in that year are disqualified. Contract and temporary employees are also eligible if criteria are met.
Two ceilings: eligibility at ₹21,000/month (above this, not covered by the Act) and calculation at ₹7,000/month or minimum wage (whichever is higher). Even if salary is ₹18,000, bonus is calculated on ₹7,000. Maximum minimum bonus = ₹7,000 × 12 × 8.33% = ₹6,997/year. The ₹7,000 cap hasn't changed since 2015 despite the eligibility ceiling rising to ₹21,000.
On Basic Salary + Dearness Allowance only — not gross. HRA, special allowances, overtime, conveyance, and other components are excluded. The calculation base is further capped at ₹7,000/month or minimum wage. This distinction is critical — many employers incorrectly calculate on gross salary, either overpaying or using the wrong base for compliance purposes.
Minimum 8.33% is mandatory regardless of profit or loss. Maximum 20% depends on allocable surplus — 60% of available surplus for non-banking companies, 67% for banks. If surplus permits up to 20%, the employer must pay that amount. The actual percentage between 8.33% and 20% is determined by the surplus computation under Sections 4 and 5 of the Act each year.
For partial year employment: Full Year Bonus × (Actual Working Days ÷ Total Working Days). An employee working 180 out of 240 days gets 75% of full bonus. You must work at least 30 days to qualify. Days on paid leave, lay-off, and maternity count as working days. An employee who joins mid-year and works 180+ days gets a proportionately higher bonus than one working only 30 days.
Within 8 months of accounting year close — by 30th November for March year-end companies. If a dispute is pending, within 1 month of the award. Many employers include bonus in monthly CTC (dividing annual amount by 12) — this is an advance payment which is permissible. However, the final reconciliation must happen per the Act's computation formula after year-end.
Yes — fully taxable as salary income. Added to total salary for the year and taxed at applicable slab rates. TDS is deducted by the employer when paying. No separate exemption exists. The employer can claim bonus paid as a business expenditure under Section 36(1)(ii) of the Income Tax Act. Bonus received in arrears can be claimed for relief under Section 89(1).
Set-on: excess allocable surplus (above 20% bonus) carried forward up to 4 years for future bonus payments. Set-off: deficiency when allocable surplus is below minimum bonus — the shortfall is carried forward and adjusted against future surplus, also up to 4 years. Employers maintain Form A (surplus) and Form B (set-on/set-off). This ensures employees benefit from cyclical profitability over time.
Up to 6 months imprisonment or ₹1,000 fine or both under Section 28. The Chief Labour Commissioner can direct payment with interest. Employees can file complaints with the labour department. Employers must maintain Forms A, B, C and file Form D annual return by 1st February. Records must be retained for 8 years. Non-compliance during labour inspections leads to immediate show-cause notices.
Yes — contract and temporary employees are eligible if they meet the criteria: salary up to ₹21,000, worked 30+ days, and establishment has 20+ employees. Under the Code on Social Security 2020, fixed-term employees get pro-rata bonus. The principal employer is liable for contract workers' bonus if the contractor fails to pay. This is often overlooked in compliance audits.
Yes — a CA computes allocable surplus, maintains Forms A/B/C/D, calculates employee-wise bonus with pro-rata, files annual returns with the labour department, and ensures timely payment. Patron Accounting provides complete payroll compliance including bonus, EPF, ESI, PT, and TDS for businesses across Pune, Mumbai, Delhi, and Gurugram.
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