You are on page 1of 11

PAYMENT OF BONUS ACT 1965

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
www.afterschoool.tk
mobile : 91+9414430763

5 DECEMBER 09 www.afterschoool.tk 1
What is available surplus?

It is the profit that can be distributed to the


workers. It has to be calculated as per the
provisions of payment of Bonus Act. It is profit
which can be distributed. Out of Available
surplus, we will find allocable surplus. While
calculating available surplus, we have to allow
expenditure, depreciation etc. As per Income
tax rules.
5 DECEMBER 09 www.afterschoool.tk 2
WHAT IS ALLOCABLE
SURPLUS
1. in relation to an employer, being a company (other than a
banking company) which has not made the arrangements
prescribed under the Income-tax Act for the declaration and
payment within India of the dividends payable out of its profits
in accordance with the provisions of Section 194 of that Act,
sixty-seven per cent of the available surplus in an accounting
year;
2. in any other case sixty per cent of such available surplus.
[Section 2(4)]

5 DECEMBER 09 www.afterschoool.tk 3
WHO CAN GET BONUS?

As per section 2(13) and sec. 8, every worker /


employee drawing upto 3500 per month is
entitled to get bonus. As per court judgements,
even part time worker, temporary worker and
retrenched worker will also get bonus.

5 DECEMBER 09 www.afterschoool.tk 4
Exempted organisations

As per section 32, LIC, red cross, merchant


company, local authorities, government
departments, etc are exemmpted. Labour laws
dont apply to army / security personnel. Some
financial institutions like UTI, IFCI etc. Are
also exempted from the provisions of this act.

5 DECEMBER 09 www.afterschoool.tk 5
How to calculate allocable
surplus?

1. calculate gross profit as per section 4.


2. allow deductions as per sec. 6.
3. carry out set on or set off as per section 10,
and 15.

5 DECEMBER 09 www.afterschoool.tk 6
What is set off?

Suppose you dont have sufficient profit, you


still have to pay bonus, this amount is set off to
be adjusted against future profits (carried
forward)

5 DECEMBER 09 www.afterschoool.tk 7
What is set on?

After making all the adjustments, we can make


payment of bonus (minimum bonus is 8.33%
and maximum bonus 20% p.a. Of salary /
wages), if we have surplus profit left, we can
keep it for future, this is called set on – it can
be used in next 4 years.

5 DECEMBER 09 www.afterschoool.tk 8
example...
Gross profit 200, permissible exp. 40,
depreciation 20, income tax : 20%, payments
to workers 10.
solution : (200 – 40 – 20) = 140
less tax : = 140-28= 112
60% is allocable surplus : 67
bonus to be given : 20% of 10 = 2.
amount left : 67-2 = 65, the firm can set on for
4 years: Rs. 8. answer
5 DECEMBER 09 www.afterschoool.tk 9
Other provisions...
Sec. 17 : employer can deduct custom bonus
(like Diwali bonus) from the bonus payable
under the act
Sec. 18 : deductions for penalty on workers are
permitted from bonus
Sec. 19: time limit to pay bonus : 8 months.
Sec 21 : employee can claim bonus – in 1 year
from due date.
5 DECEMBER 09 www.afterschoool.tk 10
THANKS....

GIVE YOUR SUGGESTIONS AND JOIN


AFTERSCHOOOL NETWORK / START
AFTERSCHOOOL NETWORK IN YOUR
CITY
AFTERSCHOOOL@IN.COM
PGPSE – WORLD'S MOST
COMPREHENSIVE PROGRAMME IN
SOCIAL ENTREPRENEURSHIP
5 DECEMBER 09 www.afterschoool.tk 11

You might also like