What is Bonus formula?

Posted on 18th Jul 2018 | 1151 views

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Bonus formula

Bonus formula depends on Salary+DA, an employee have Paid Basic and Payable Basic every month. Paid Basic can be altered subject to attendance of an employee every month. As per the payment of Bonus Act, 1965 minimum bonus is 8.33% of basic pay earned during the accounting year and the maximum is 20%. As per this act per month, bonus-able wage or salary is Rs. 3500/-. The Payment of Bonus Act applies to every organization and employer recruiting not less than 20 employees on any day during the financial year. The companies covered under the Act should continue to pay bonus even though if the no. of employees fall below 20 afterward. There are provisions and benefits for newly formed establishments as well. As per these benefits, the first five fiscal years following the financial year in which the company sells renders/goods services, the bonus is to be paid only in respect of the financial year, in which profits are made but the benefits of set on and set off would not apply.

Bonus calculation in India

Bonus calculation

Bonus calculation does not include other allowances such as house rent, over-time, commission or incentive. An employee who has been dismissed from service on the grounds of riotous or violent behavior, fraud, at the premises of the company or for the robbery, misuse or sabotage of any of the property of the company as mentioned in the Act, shall not only exclude him from receiving the bonus for the financial year in which he was dismissed but also for the previous year’s which were not paid to him. Bonus calculation formula is based on bonus calculation parameters. It is also mentioned in the act that within 8 months from the close of the financial year the bonus should be paid to the employees. Bonus calculation in India depends upon the percentage on which employer wants to give a bonus to its employees

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