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Payment of Bonus Act

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Payment of Bonus Act

  1. 1. except FactoryAny other establishmentPublic sector(Share capital held by Govt>40%)Note : For some establishment POBA will apply even if thenumber of employees are below 20 under two conditions,oMinimum of 10 employeesoNotified in gazette.Once applies, applied forever.
  2. 2. All the employees Con 01: 30 days (or) more. Con 02: Salary less than (or) equal to 10,000.Note : Working days includes Casual leaves, sick leaves………….etc.
  3. 3. Calculation of available surplus u/s 5.oGross profit u/s 4 xxxoLess :Prior profits u/s6 xxxoAdd :Tax savings(previous accounting year)* xxxAvailable surplus xxx Banking 60% Allocable surplus Other than 67% banking Note : Subject to conditions of limits
  4. 4. SET ON : Allocable surplus exceeds maximum bonus. Then the excess shall, subject to limit of 20% of salary will be carried forward for set on in next 4 accounting years. SET OFF: Allocable surplus is nil or less than or equal to the minimum bonus. In this case the minimum or the deficiency is carried forward to next 4 accounting years.Note: The set on or the set off is adjusted in calculation of bonus payable.
  5. 5. oCalculation of bonus payableoGross profit xxxoLess prior charges xxxoAdd Tax savings xxxoAvailable surplus xxxoALLOCABLE SURPLUS(60/ 67%)oLess set OFF xxxoAdd set on xxxoBONUS PAYABLE xxx
  6. 6. SALARY= BASIC SALARY+DA+FFA+RA+city.The minimum for majors is RS 100.The minimum for minors between 14 to 15 is RS 60.The maximum bonus payable is RS 8400 (3500*20%*12months).The minimum bonus payable is RS 1200 (100*12) (OR) for minors 720(60*12).Note: the bonus i.e minimum/maximum is calculated on RS3500 p.m (or) thesalary less than RS3500 i.e salary of employee (or) RS 3500 which ever is lower
  7. 7. REASONS: Having regard to employers financial position and otherrelevant circumstances &It will not be in the public interest to pay the bonus Act.CONDITIONS:1.Must given opportunity for being heard2.can’t be given retrospectively3.Through notification in the official gazette4.It may be granted for the limited period5.further,appropriate govt may impose certain conditions as itmay think so.
  8. 8. OFFENCE PENALTY Contraventions of any provisions 6 months imprisonment and /or Rs 10,000 or both Default in complying with ActNote : If the offence is committed with the knowledge of director criminal liability isawardable on director and civil liability on company.
  9. 9. Where a dispute regarding payment of bonus pending beforeany authority under section 22 with in 1 month on date on whichthe award or settlement comes into operationIn any other caseWith in period of 8 months from closure of accounting year.This period of 8 months may be extended up to a maximum oftwo years by appropriate government, on an application beingmade by the employer.Collector - arrears of land revenue.Inspector-Powers.Note : Interest of 9% is awarded to employee form the date it becomes due.
  10. 10. Calculated on number of units produced.It needs an agreement between employer andemployee.Subjected to conditions imposed u/s31A.oAn such agreement which results into therelinquishment of employees right to claim theminimum bonus is NULL & VOID.oIf bonus payable under such agreement is in excessof 20% of the salary, such employees are not entitledto excess of 20%.Note: This section over rides entire Act.(units instead of profits).
  11. 11. 5 accounting years from starting of commercial productivity in which the employers earns profit. From 8th year the provisions of section 15 will apply. Deemed profit: After employer made provisions for depreciation as per Income tax Act. Set off’s unabsorbed depreciation and unabsorbed losses. Period of trail run is excluded.Note: The establishment is not deemed to be new one for changes in location, ownership,management.

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