Bonus Compliance Services

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What is Bonus Compliance

Bonus compliance refers to the legal obligation of an employer to pay bonuses to eligible employees under the Payment of Bonus Act, 1965.

This law ensures that employees who help generate profits for the organization receive a share of that profit in the form of a bonus – regardless of whether the business is doing exceptionally well or just meeting its basic financial targets.

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Bonus Calculation

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CriteriaDetails
Bonus rangeMinimum 8.33% to Maximum 20%
Salary ceiling for calculation₹7,000/month or minimum wage (whichever is higher)
Calculation baseBasic + Dearness Allowance (DA)

Example: If your minimum wage in the state is ₹9,000/month, bonus is calculated on ₹9,000, even if the employee earns ₹18,000/month.

Bonus Payment Due Date

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The bonus for a financial year must be paid within 8 months from the end of that year (generally by November 30th of the following year).

Note: Late payment or non-payment may attract penalties or legal actions.

Mandatory Registers & Forms for Compliance

To comply with the Bonus Act, you must maintain

Mandatory Forms

  • Form A – Computation of Allocable Surplus
  • Form B – Set-On & Set-Off of Bonus
  • Form C – Bonus Payment Register
  • Form D – Annual Return Submission

You also need to

  • Reflect bonus in salary registers or payslips
  • Submit annual returns (online or offline, depending on your state)

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Frequently Asked Questions

Is it mandatory to pay a bonus if my company is not profitable?

Yes, you must pay the minimum 8.33% bonus regardless of profitability.

Can I pay a higher bonus than 20%?

Not under the Bonus Act. If you do, the excess will be treated as an ex-gratia payment, not a statutory bonus.

What if I have less than 20 employees?

You’re not covered under the Act, but it’s good practice to offer a bonus to retain staff.

Are contract employees eligible for bonus?

Only if they are on your payroll and meet eligibility criteria.

Can I combine performance bonus and statutory bonus?

No. They must be treated and reported separately.