Bonus Calculator

Under the Payment of Bonus Act, 1965, employees earning wages (Basic + DA) up to ₹21,000 per month are eligible for statutory bonus, provided they have worked at least 30 days in the accounting year. The Act applies to establishments employing 20 or more people, and to certain notified establishments with 10 or more employees.

If an employee's Basic + DA exceeds ₹21,000/month, they fall outside the scope of the Act, and any bonus paid to them is at the employer's discretion rather than a statutory obligation.

Even though the eligibility wage limit is ₹21,000, the bonus itself is not calculated on the employee's actual wages. Instead, the Act applies a separate, lower "calculation wage" - ₹7,000 per month, or the state government's notified minimum wage for that employment or scheduled employment, whichever is higher.

This means an eligible employee earning, say, ₹18,000/month in Basic + DA still has their bonus computed on a capped wage of ₹7,000 (or the applicable state minimum wage, if higher) - not on ₹18,000. This calculation ceiling was last revised, raised from ₹3,500 to ₹7,000, via the Payment of Bonus (Amendment) Act, 2015.

The minimum bonus - 8.33% of the calculation wage - must be paid regardless of whether the company made a profit in that accounting year. It is a statutory floor, not tied to business performance. The maximum bonus is 20% of the calculation wage, but this higher amount is payable only if the employer's "allocable surplus" for the year - a defined calculation under the Act - is sufficient to support it.

Regardless of the rate applied, statutory bonus must be paid within 8 months of the close of the accounting year. Employers should maintain bonus registers and related records to demonstrate compliance in the event of an inspection.