The Payment of Bonus Act

7/23/2019 The Payment of Bonus Act

1/47

THE PAYMENT OF BONUS ACT, 1965CONTENTS

Introduction

Section1. Short title, extent and application.2. Definitions.3. Establishments to include departments, undertakings and branches.4. Computation of gross profits.. Computation of a!ailable surplus.". Sums deductible from gross profits.#. Calculation of direct tax pa$able b$ the emplo$er.

%. Eligibilit$ for bonus.&. Dis'ualification for bonus.1(. )a$ment of minimum bonus.11. )a$ment of maximum bonus.12. Calculation of bonus *ith respect to certain emplo$ees.13. )roportionate reduction in bonus in certain cases.14. Computation of number of *orking da$s.1. Set on and set off of allocable surplus.1". Special pro!isions *ith respect to certain establishments.

1#. +dustment of customar$ or interim bonus against bonus pa$able under the +ct.1%. Deduction of certain amounts from bonus pa$able under the +ct.1&. -imelimit for pa$ment of bonus.2(. +pplication of +ct to establishments in public sector in certain cases.21. /eco!er$ of bonus due from an emplo$er.22. /eference of disputes under the +ct.23. )resumption about accurac$ of balancesheet and profit and loss account of corporations and

companies.24. +udited accounts of banking companies not to be 'uestioned.2. +udit of accounts of emplo$ers, not being corporations or companies.2". 0aintenance of registers, records, etc.2#. nspectors.2%. )enalt$.2&. ffences b$ companies.


2/47

$ p

THE PAYMENT OF BONUS ACT, 1965INTRODUCTION

-he term =bonus= has not been defined in an$ legislati!e enactment. Chamber>s -*entiethCentur$ dictioner$ defines =bonus= as =a premium be$ond the usual interest for loan? an extradi!idend to shareholders? a polic$holder>s share of profit, an extra pa$ment to *orkmen or others?a doceur or bribe=. -he purpose of pa$ment of bonus is to bridge the gulf bet*een *ages paidand ideal of a li!ing *age.

-he practice of pa$ing bonus in ndia appears to ha!e originated during 7irst @orld @ar *hencertain textile mills granted 1(A of *ages as *ar bonus to their *orkers in 1&1#, under /ule %1+of Defence of ndia /ules, industrial disputes also included in certain cases the demand for

pa$ment of bonus. n 1&(, the 7ull -6E )+;0E:- 7 .

LIST OF AMENDING ACTS

1. -he nsurance B+mendment +ct, 1&"% B"2 of 1&"% B*ith effect from the date to be notified.2. -he )a$ment of


3/47

THE PAYMENT OF BONUS ACT, 1965

B21 7 1&" 1

25thSeptember, 1&".5

2[An Act to !o"#$% &o! t'% ()*%nt o& +on- to %!-on- %*.o)%$ #n c%!t(#n%-t(+.#-'*%nt- on t'% +(-#- o& !ot- o! on t'% +(-#- o& !o$ct#on o! !o$ct#"#t) (n$ &o!*(tt%!- conn%ct%$ t'%!%/#t'0


4/47

1)ro!ided that in relation to the State of Fammu and Gashmir, the reference to the accounting$ear commencing on an$ da$ in the $ear 1&"4 and e!er$ subse'uent accounting $ear shall beconstrued as reference to the accounting $ear commencing on an$ da$ in the $ear 1&"% ande!er$ subse'uent accounting $ear?5

2pro!ided further that *hen the pro!isions of this +ct ha!e been made applicable to an$establishment or class of establishments b$ the issue of a notification under the pro!iso to subsection B3, the reference to the accounting $ear commencing on an$ da$ in the $ear 1&"4 ande!er$ subse'uent accounting $ear or, as the case ma$ be, the reference to the accounting $earcommencing on an$ da$ in the $ear 1&"% and e!er$ subse'uent accounting $ear, shall, in relationto such establishment or class of establishments, be construed as a reference to the accounting$ear specified in such notification and e!er$ subse'uent accounting $ear.5

(5)+n establishment to *hich this +ct applies 4H H H shall continue to be go!erned b$ this +ctnot*ithstanding that the number of persons emplo$ed therein falls belo* t*ent$ 4or, as the casema$ be, the number specified in the notification issued under the pro!iso to subsection B35.

COMMENTS

+ parttime emplo$ee is also an emplo$ee for the purpose of calculating the number ofemplo$ees2D or moreunder section 1B3Bb Automobile Karamchari Sangh & Ors. v. Industrial

ribunal & Ors.!B1" 3% 7.F./ 2"% B+ll.5

20 D%n#t#on-03n this +ct, unless the context other*ise re'uires,4?B1 =accounting $ear= meansBi in relation to a corporation, the $ear ending on the da$ on *hich the books and accounts

of the corporation are to be closed and balancedI

Bii in relation to a compan$, the period in respect of *hich an$ profit and loss account of thecompan$ laid before it in annual general meeting is made up, *hether that period is a$ear or notI

Biii in an$ other case(a) the $ear commencing on the 1st da$ of +prilI or(b) if the accounts of an establishment maintained b$ the emplo$er thereof are closed and


5/47

than the 31st da$ of 0arch, then, at the option of the emplo$er, the $ear ending on theda$ on *hich its accounts are so closed and balanced?

)ro!ided that an option once exercised b$ the emplo$er under paragraph (b)of this subclause shall not again be exercised except *ith the pre!ious permission in *riting of theprescribed authorit$ and upon such conditions as that authorit$ ma$ think fitI

B2 =agricultural income= shall ha!e the same meaning as in the ncometax +ctI

B3 =agricultural incometax la*= means an$ la* for the time being in force relating to the le!$of tax on agricultural incomeI

B4 =allocable surplus= means

Ba in relation to an emplo$er, being a compan$ 1Bother than a banking compan$5 *hich hasnot made the arrangements prescribed under the ncometax +ct for the declaration andpa$ment *ithin ndia of the di!idends pa$able out of its profits in accordance *ith thepro!isions of section 1&4 of that +ct, sixt$se!en per cent of the a!ailable surplus in anaccounting $earI

Bb in an$ other case, sixt$ per cent of such a!ailable surplusI 2

H H H H H

B =appropriate o!ernment= means

(i) in relation to an establishment in respect of *hich the appropriate o!ernmentunder the ndustrial Disputes +ct, 1&4# B14 of 1&4#, is the Central o!ernment,the Central o!ernmentI

(ii) in relation to an$ other establishment, the o!ernment of the State in *hich thatother establishment is situateI

B" =a!ailable surplus= means the a!ailable surplus computed under section I

B# =a*ard= means an interim or a final determination of an$ ndustrial dispute or of an$'uestion relating thereto b$ an$ 9abour Court, ndustrial -ribunal or :ational -ribunal constituted


6/47

B% =banking compan$= means a banking compan$ as defined in section of the


7/47

B14 =emplo$er includes(i) in relation to an establishment *hich is a factor$, the o*ner or occupier of the

factor$, including the agent of such o*ner or occupier, the legal representati!e ofa deceased o*ner or occupier and *here a person has been named as amanager of the factor$ under clause Bf of subsection B1 of section # of the7actories +ct, 1&4% B"3 of 1&4%, the person so namedI and

(ii) in relation to an$ other establishment, the person *ho, or the authorit$ *hich, hasthe ultimate control o!er the affairs of the establishment and *here the saidaffairs are entrusted to a manager, managing director or managing agent, suchmanager, managing director or managing agentI

B1 =establishment in pri!ate sector= means an$ establishment other than an establishment inpublic sectorI

B1" =establishment in public sector= means an establishment o*ned, controlled or managed b$(a) a o!ernment compan$ as defined in section "1# of the Companies +ct, 1&" B1 of

1&"I

(b) a corporation in *hich not less than fort$ per cent of its capital is held B*hether singl$ or

taken together b$(i) the o!ernmentI or(ii) the /eser!e


8/47

allo*ance Bthat is to sa$, all cash pa$ments, b$ *hate!er name called, paid to an emplo$ee onaccount of a rise in the cost of li!ing, but does not include

(i) an$ other allo*ance *hich the emplo$ee is for the time being entitled toI

(ii) the !alue of an$ house accommodation or of suppl$ of light, *ater, medicalattendance or other amenit$ or of an$ ser!ice or of an$ concessional suppl$ offood grains or other articlesI

(iii) an$ tra!elling concessionI

(iv) an$ bonus Bincluding incenti!e, production and attendance bonusI

(v) an$ contribution paid or pa$able b$ the emplo$er to an$ pension fund orpro!ident fund or for the benefit of the emplo$ee under an$ la* for the being inforceI

(vi) an$ retrenchment compensation or an$ gratuit$ or other retirement benefitpa$able to the emplo$ee or an$ e" gratiapa$ment made to himI

(vii) an$ commission pa$able to the emplo$ee.

#"planation.$@here an emplo$ee is gi!en in lieu of the *hole or part of the salar$ or *agepa$able to him, free food allo*ance or free food b$ his emplo$er, such food allo*ance or the!alue of such food shall, for the purpose of this clause, be deemed to form part of the salar$ or*age of such emplo$eeI

B22 *ords and expressions used but not defined in this +ct and defined in the ndustrialDisputes +ct, 1&4# B14 of 1&4#, shall ha!e the meanings respecti!el$ assigned to them in that

+ct.

COMMENTS

(i) Emplo$ees of State


9/47

7ood allo*ance and !alue of uniforms etc. cannot be said to be remuneration.ibid.5.

(vi) Dearness allo*ance is a part and parcel of *ages. Scindia avigation -o. 0td. &Anr. v. Scindia #mploees nion & Anr.!B1&%3 2 9.9.:. "35.

(vii) +llo*ance like famil$ allo*ance, house rent allo*ance, adhoc and tiffinallo*ances are not in the nature of dearness allo*ance. ibid.5.

(viii) !ertime allo*ance does not form part of =*ages. +Associated -ement -o. 0td.v. heir 4or*men!+../.1&& S.C. &25.

(i") /etaining allo*ance comes *ithin the pur!ie* of section 2 B21. -halthan ,idutSe*hari dog v. overnment 0abour O11icer! A.I.6. 1&%1 S.C. &(5. -he retaineris entitled to bonus ibid.5.

(") /emuneration in case of o!ertime *ork and commission pa$able to emplo$eesare excluded from the definition of =salar$= or =*ages=. All India ,oltas & ,olpart#mploee7s 8ederation v9 ,oltas 0td.! 1 9ab. . C. "45.

40 E-t(+.#-'*%nt- to #nc.$% $%(!t*%nt-, n$%!t(#n7- (n$ +!(nc'%-03@here an

establishment consists of different departments or undertakings or has branches, *hethersituated in the same place or in different places, all such departments or undertakings orbranches shall be treated as parts of the same establishment for the purpose of computation ofbonus under this +ct?

)ro!ided that *here for an$ accounting $ear a separate balancesheet and profit and lossaccount are prepared and maintained in respect of an$. such department or undertaking orbranch, then, such department or undertaking or branch shall be treated as a separateestablishment for the purpose of computation of bonus, under this +ct for that $ear, unless suchdepartment or undertaking or branch *as, immediatel$ before the commencement of thataccounting $ear treated as part of the establishment for the purpose of computation of bonus.

COMMENTS


10/47

50 Co*t(t#on o& ("(#.(+.% -!.-03-he a!ailable surplus in respect of an$ accounting$ear shall be the gross profits for that $ear after deducting therefrom the sums referred to insection "?

1)ro!ided that the a!ailable surplus in respect of the accounting $ear commencing on an$da$ in. the $ear 1&"% and in respect of e!er$ subse'uent accounting $ear shall be the aggregateof

(a) the gross profits for that accounting $ear after deducting therefrom the sums referred to insection "I and

(b) an amount e'ual to the difference bet*een

Bi the direct tax, calculated in accordance *ith the pro!isions of section #, inrespect of an amount e'ual to the gross profits of the emplo$er for theimmediatel$ preceding accounting $earI and

Bii the direct tax, calculated in accordance *ith the pro!isions of section #, inrespect of an amount e'ual to the gross profits of the emplo$er for suchpreceding accounting $ear after deducting therefrom the amount of bonus *hichthe emplo$er has paid or is liable to pa$ to his emplo$ees in accordance *ith thepro!isions of this +ct for that $ear.5

60 S*- $%$ct#+.% &!o* 7!o-- !ot-03-he follo*ing sums shall be deducted from thegross profits as prior charges, namel$?

(a) an$ amount. b$ *a$ of depreciation admissible in accordance *ith the pro!isions of subsection (:)of section 32 of the ncometax +ct, or in accordance *ith the pro!isions of theagricultural incometax la*, as the case ma$ be?

)ro!ided that *here an emplo$er has been pa$ing bonus to his emplo$ees under asettlement or an a*ard or agreement made before the 2&th 0a$, 1&", and subsisting onthat date after deducting from the gross profits notional normal depreciation, then, theamount of depreciation to be deducted under this clause shall, at the option of suchemplo$er Bsuch option to be exercised once and *ithin one $ear from that date continueto be such notional normal depreciationI


11/47

(c) subect to the pro!isions of section #, an$ direct tax *hich the emplo$er is liable to pa$ forthe accounting $ear in respect of his income, profits and gains during that $earI

(d) such further sums as are specified in respect of the emplo$er in the 1-hird Schedule5.

COMMENTS

(i) -his +ct is a selfcontained Code. ,ellore -entral -o$op. an* 0td. v. Industrialribunal & Ors.!B1&%& % 7.9./. &24 B0ad.5.

(ii) +ll direct taxes for the time being in force ha!e to be deducted from the grossprofits as prior charges in order to ascertain the =a!ailable surplus= for purpose of

bonus. 1 .9./.


12/47

(c) *here the emplo$er is indi!idual or a 6indu undi!ided famil$, the tax pa$able b$ suchemplo$er under the ncometax +ct shall be calculated on the basis that the incomederi!ed b$ him from the establishment is his onl$ incomeI

(d) *here the income of an$ emplo$er includes an$ profits and gains deri!ed from theexport of an$ goods or merchandise out of ndia and an$ rebate on such income isallo*ed under an$ la* for the time being in force relating to direct taxes, then, noaccount shall be taken of such rebateI

(e) no account shall betaken of an$ rebate lother than de!elopment rebate or in!estmentallo*ance or de!elopment allo*ance5 or credit or relief or deduction Bnot herein beforementioned in this section in the pa$ment of an$ direct tax allo*ed under an$ la* for the

time being in force relating to direct taxes or under the rele!ant annual 7inance +ct, forthe de!elopment of an$ industr$.

0 E.#7#+#.#t) &o! +on-03E!er$ emplo$ee shall be entitled to be paid b$ his emplo$er in anaccounting $ear, bonus, in accordance *ith the pro!isions of this +ct, pro!ided he has *orked inthe establishment for not less than thirt$ *orking da$s in that $ear.

COMMENTS

Bi @orkers, *ho ha!e option to attend to *ork at the factor$ premises, are entitledto bonus. /;s. Kale Khan /ohd. %ani1 v.


13/47

90 D#-:(.#c(t#on &o! +on-03:ot*ithstanding an$thing contained in this +ct, anemplo$ee shall be dis'ualified from recei!ing bonus under this +ct, if he is dismissed from ser!icefor

(a) fraudI or(b) riotous or !iolent beha!ior *hile on the premises of the establishmentI or(c) theft, misappropriation or sabotage of an$ propert$ of the establishment.

COMMENTS


14/47

110 P()*%nt o& *(#** +on-03(:) @here in respect of an$ accounting $ear referred toin section 1(, the allocable surplus exceeds the amount of minimum bonus pa$able to theemplo$ees under that section, the emplo$er shall, in lieu of such minimum bonus, be bound to

pa$ to e!er$ emplo$ee in respect of that accounting $ear bonus *hich shall be an amount inproportion to the salar$ or *age earned b$ the emplo$ee during the accounting $ear subect to amaximum of t*ent$ per cent. of such salar$ or *age.

(2)n computing the allocable surplus under this section, the amount set on or the amountset off under the pro!isions of section 1 shall be taken into account in accordance *ith thepro!isions of that section.5

COMMENTS

(i) -he bonus pa$able in a $ear is subect to 2(A of an emplo$ee>s salar$ or *ages.

(ii)


15/47

10 Co*t(t#on o& n*+%! o& /o!#n7 $()-037or the purposes of section 13, an emplo$eeshall be deemed to ha!e *orked in an establishment in an$ accounting $ear also on the da$s on*hich

(a) he has been laid off under an agreement or as permitted b$ standing orders under thendustrial Emplo$ment BStanding rders +ct, 1&4" B2( of 1&4", or under the ndustrialDisputes +ct, 1&4# B14 of 1&4#, or under an$ other la* applicable to the establishmentI

(b) he has been on lea!e *ith salar$ or *ageI

(c) he has been absent due to temporar$ disablement caused b$ accident arising out of andin the course of his emplo$mentI and

(d) the emplo$ee has been on maternit$ lea!e *ith salar$ or *age, during the accounting$ear.

COMMENTS

=@orking da$s= include da$s of lea!e, la$off. etc.

1[150 S%t on (n$ -%t o&& o& (..oc(+.% -!.-3(:)@here for an$ accounting $ear, the

allocable surplus exceeds the amount of maximum bonus pa$able to the emplo$ees in theestablishment under section 11, then, the excess shall, subect to a limit of t*ent$ per cent. of thetotal salar$ or *age of the emplo$ees emplo$ed in the establishment in that accounting $ear, becarried for*ard for being set on in the succeeding accounting $ear and so on up to and inclusi!eof the fourth accounting $ear to be utilised for the purpose of pa$ment of bonus in the mannerillustrated in the 7ourth Schedule.

(2)@here for an$ accounting $ear, there is no a!ailable surplus or the allocable surplus inrespect of that $ear falls short of the amount of minimum bonus pa$able to the emplo$ees in theestablishment under section 1(, and there is no amount of sufficient amount carried for*ard and

set on under subsection B1 *hich could be utilised for the purpose of pa$ment of the minimumbonus, then, such minimum amount or the deficienc$, as the case ma$ be, shall be carriedfor*ard for being set off in the succeeding accounting $ear and so on up to and inclusi!e of thefourth accounting $ear in the manner illustrated in the 7ourth Schedule.


16/47

(D)@here in an$ accounting $ear an$ amount has been carried for*ard and set on or set offunder this section, then, in calculating bonus for the succeeding accounting $ear, the amount ofset on or set off carried for*ard from the earliest accounting $ear shall first be taken into account.5

COMMENTS

9iabilit$ of pa$ing bonus has to be determined onl$ *ith reference to sections 1( and 11, i.e.,the emplo$er is bound to pa$ the minimum bonus of 4A of *ages or the maximum bonus of 2(Aof *ages in accounting $ear, as the case ma$ be. #"press -ables vt. 0td. v$-.I..!B1&&2 19.9.F 441 BCal.5.

160 S%c#(. !o"#-#on- /#t' !%-%ct to c%!t(#n %-t(+.#-'*%nt-1B1 @here an

establishment is ne*l$ set up, *hether before or after the commencement of this +ct, theemplo$ees of such establishment shall be entitled to be paid bonus under this +ct in accordance*ith the = pro!isions of subSections (:A)! (:) and (:-).

(:A) n the first fi!e accounting $ears follo*ing the accounting $ear in *hich the emplo$ersells the goods produced or manufactured b$ him or renders ser!ices, as the case ma$ be, fromsuch establishment, bonus shall be pa$able onl$ in respect of the accounting $ear in *hich theemplo$er deri!es profit from such establishment and such bonus shall be calculated inaccordance *ith the pro!isions of this +ct in relation to that $ear, but *ithout appl$ing the

pro!isions of section 1.

(:)7or the sixth and se!enth accounting $ears follo*ing the accounting $ear in *hich theemplo$er sells the goods produced or manufactured b$ him or renders ser!ices, as the case ma$be, from such establishment, the pro!isions of section 1 shall appl$ subect to the follo*ingmodifications, namel$?

(i) for the sixth accounting $earset on or set off, as the case ma$ be, shall be made in the manner illustrated inthe 27ourth Schedule5 taking into account the excess or deficienc$, if an$, as the

case ma$ be, of the allocable surplus set on or set off in respect of the fifth andsixth accounting $earsI

(ii) for the se!enth accounting $ear


17/47

(:-)7rom the eighth accounting $ear follo*ing the accounting $ear in *hich the emplo$ersells the goods produced or manufactured b$ him or renders ser!ices, as the case ma$ be, fromsuch establishment, the pro!isions of section 1 shall appl$ in relation to such establishment as

the$ appl$ in relation to an$ other establishment.

#"planation I.$7or the purpose of subsection B1, an establishment shall not be ne*l$ set upmerel$ b$ reason of a change in its location, management, name or o*nership.

#"planation II.7or the purpose of subsection (:A)!an emplo$er shall not be deemed to ha!ederi!ed profit in an$ accounting $ear unless

(a) he has made pro!ision for that $ear>s depreciation to *hich he is entitled under the

ncometax +ct or, as the case ma$ be, under the agricultural incometax, la*I and

(b) the arrears of such depreciation and losses incurred b$ him in respect of theestablishment for the pre!ious accounting $ears ha!e been full$ set off against his profits.

#"planation III.$7or the purposes of subsections (:A), (:) and (:-)sale of the goodsproduced or manufactured during the course of the trial running of an$ factor$ or of theprospecting stage of an$ mine or an oilfield shall not be taken into consideration and *here an$

'uestion arises *ith regard to such production or manufacture, the decision of the appropriateo!ernment, made after gi!ing the parties a reasonable opportunit$ of representing the case,shall be final and shall not be called in 'uestion b$ an$ court or other authorit$.5

B2 -he pro!isions of 1subsections B1, B1+, B2


18/47

departments or undertakings or branches, then, such emplo$er shall be liable to pa$ bonus inaccordance *ith the pro!isions of this +ct to the emplo$ees of all such departments orundertakings or branches B*hether set up before or after that date on the basis of the

consolidated profits computed as aforesaid.

180 A$


19/47

date on *hich the a*ard becomes enforceable or the settlement comes intooperation, in respect of such disputeI

(b) in an$ other case, *ithin a period of eight months from the close of the accounting$ear ?

)ro!ided that the appropriate o!ernment or such authorit$ as the appropriate o!ernmentma$ specif$ in this behalf ma$, upon an application made to it b$ the emplo$er and for sufficientreasons, b$ order, extend the said period of eight months to such further period or periods as itthinks fitI so, ho*e!er, that the total period so extended shall not in an$ case exceed t*o $ears.

1H H H H H2H H H H H

COMMENTS

-he amount of bonus is pa$able in cash *ithin % months, *ith an exception, from the close ofthe accounting $ear.

2;0 A.#c(t#on o& Act to %-t(+.#-'*%nt- #n +.#c -%cto! #n c%!t(#n c(-%-034B15 f in an$accounting $ear an establishment in public sector sells an$ goods produced or manufactured b$ itor renders an$ ser!ices, in competition *ith an establishment in pri!ate sector, and the income

from such sale or ser!ices or both is not less than t*ent$ per cent. of the gross income of theestablishment in public sector for that $ear, then, the pro!isions of this +ct shall appl$ in relationto such establishment in public sector as the$ appl$ in relation to a like establishment in pri!atesector.

4B2 Sa!e as other*ise pro!ided in subsection (:)!nothing in this +ct shall appl$ to theemplo$ees emplo$ed b$ an$ establishment in public sector.5

210 R%co"%!) o& +on- $% &!o* (n %*.o)%!03@here an$ mone$ is due to an emplo$ee b$*a$ of bonus from his emplo$er under a settlement or an a*ard or agreement, the emplo$ee

himself or an$ other person authorised b$ him in *riting in this behalf, or in the case of the deathof the emplo$ee, his assignee or heirs ma$, *ithout preudice to an$


20/47

other mode of reco!er$, make an application to the appropriate o!ernment for the reco!er$ ofthe mone$ due to him, and if the appropriate o!ernment or such authorit$ as the appropriateo!ernment ma$ specif$ in this behalf is satisfied that an$ mone$ is so due, it shall issue a

certificate for that amount to the Collector *ho shall proceed to reco!er the same in the samemanner as an arrear of land re!enue?

)ro!ided that e!er$ such application shall be made *ithin one $ear from the date on *hichthe mone$ became due to the emplo$ee from the emplo$er?

)ro!ided further that an$ such application ma$ be entertained after the expir$ of the saidperiod of one $ear, if the appropriate o!ernment is satisfied that the applicant had sufficientcause for not making the application *ithin the said period.

#"planation$n this section and in 1sections 22, 23, 24 and 25, =emplo$ee= includes aperson *ho is entitled to the pa$ment of bonus under this +ct but *ho is no longer inemplo$ment.

COMMENTS

+n application for the reco!er$ of amount of bonus is re'uired to be made to the appropriateo!ernment *ithin 1 $ear from the date on *hich such amount became due. 6o*e!er, dela$, if

an$, ma$ be condoned.

220 R%&%!%nc% o& $#-t%- n$%! t'% Act03@here an$ dispute arises bet*een an emplo$erand his emplo$ees *ith respect to the bonus pa$able under this +ct or *ith respect to theapplication of this +ct to an establishment in public sector, then, such dispute> shall be deemed tobe an industrial dispute *ithin the meaning of the ndustrial Disputes +ct, 1&4# B14 of 1&4#, or ofan$ corresponding la* relating to in!estigation and settlement of industrial disputes in force in aState and the pro!isions of that +ct or, as the case ma$ be, such la*, shall, sa!e as other*iseexpressl$ pro!ided, appl$ accordingl$.

COMMENTS

(i) ndustrial -ribunal has urisdiction to grant interest on bonus a*arded. #.I.'.am (India) 0td. v. Industrial ribunal!B1&&1 1 9.9.F. 2.( B0ad.5


21/47

of proceedings before an$ arbitrator or -ribunal under the ndustrial Disputes +ct, 1&4# B14 of1&4#, or under an$ corresponding la* relating to in!estigation and settlement of industrialdisputes in force in a State Bhereinafter in this section 1and in 2sections 24 and 25 referred to as

the =said authorit$= to *hich an$ dispute of the nature specified in section 22 has been referred,the balancesheet and the profit and loss account of an emplo$er, being a corporation or acompan$ Bother than a banking compan$, dul$ audited b$ the Comptroller and +uditoreneral ofndia or b$ auditors dul$ 'ualified to act as auditors of companies under subsection B1 of section22" of the Companies +ct, 1&" B1 of 1&", are produced before it, then, the said authorit$ ma$presume the statements and particulars contained in such balancesheet and profit and lossaccount to be accurate and it shall not be necessar$ for the corporation or the compan$ to pro!ethe accurac$ of such statements and particulars b$ the filing of an affida!it or b$ an$ other mode ?

)ro!ided that *here the said authorit$ is satisfied that the statement and particularscontained in the balancesheet or the profit and loss account of the corporation or the compan$are not accurate, it ma$ take such steps as it thinks necessar$ to find out the accurac$ of suchstatement and particulars.

B2 @hen an application is made to the said authorit$ b$ an$ trade union being a part$ to thedispute or *here there is no trade union, b$ the emplo$ees being a part$ to the dispute, re'uiringan$ clarification relating to an$ item in the balancesheet or the profit and loss account, it ma$,after satisf$ing itself that such clarification is necessar$, b$ order, direct the corporation or, as the

case ma$ be, the compan$, to furnish to the trade union or the emplo$ees such clarification *ithinsuch time as ma$ be specified in the direction and the corporation or, as the case ma$ be, thecompan$, shall compl$ *ith such direction.

COMMENTS

-he authorit$ has to presume the statements and particulars contained in the


22/47

been referred to the said authorit$ under that section and during the course of proceedings theaccounts of the banking compan$ dul$ audited are produced before it, the said authorit$ shall notpermit an$ trade union or emplo$ees to 'uestion the correctness of such accounts, but the trade

union or the emplo$ees ma$ be permitted to obtain from the banking compan$ such informationas is necessar$ for !erif$ing the amount of bonus due under this +ct.

B2 :othing contained in subsection (:)shall enable the trade union or the emplo$ees toobtain an$ information *hich the banking compan$ is not compelled to furnish under thepro!isions of section 34+ of the


23/47

260 M(#nt%n(nc% o& !%7#-t%!-, !%co!$-, %tc03E!er$ emplo$er shall prepare and maintainsuch registers, records and other documents in such form and in such manner as ma$ beprescribed.

280 In-%cto!-.-(:)-he appropriate o!ernment ma$, b$ notification in the fficial aette,appoint such persons as it thinks fit to be nspectors for the purposes of this +ct and ma$ definethe limits *ithin *hich the$ shall exercise urisdiction.

B2 +n nspector appointed under subsection B1 ma$, for the purpose of ascertaining *hetheran$ of the pro!isions of this +ct has been complied *ith

(a) re'uire an emplo$er to furnish such information as he ma$ consider necessar$I

(b) at an$ reasonable time and *ith such assistance, if an$, as he thinks fit, enter an$establishment or an$ premises connected there*ith and re'uire an$one found in chargethereof to produce before him for examination an$ accounts, books, registers and otherdocuments relating to the emplo$ment of persons or the pa$ment of salar$ or *age or bonusin the establishmentI

(c) examine *ith respect to an$ matter rele!ant to an$ of the purposes aforesaid, the emplo$er,his agent or ser!ant or an$ other person found in charge of the establishment or an$premises connected there*ith or an$ person *hom the nspector has reasonable cause tobelie!e to be or to ha!e been an emplo$ee in the establishmentI

(d) make copies of, or take extracts from, an$ book, register or other document maintained inrelation to the establishmentI

(e) exercise such other po*ers as ma$ be prescribed.

B3 E!er$ nspector shall be deemed to be a public ser!ant *ithin the meaning of the ndian )enalCode B4 of 1%"(.

B4 +n$ person re'uired to produce an$ accounts, book, register or other documents or to gi!einformation b$ an nspector under subsection B1 shall be legall$ bound to do so.


24/47

compelled to furnish, disclose, produce or gi!e inspection of, under the pro!isions of section 34+of the


25/47

the authorit$ of the appropriate o!ernment 1or an officer of that o!ernment Bnot belo* the rankof a /egional 9abour Commissioner in the case of an officer of the Central o!ernment, and notbelo* the rank of a 9abour Commissioner in the case of an officer of the State o!ernment

speciall$ authorised in this behalf b$ that o!ernment5.

B2 :o court inferior to that of a presidenc$ magistrate or a magistrate of the first class shalltr$ an$ offence punishable under this +ct.

COMMENTS

Bi -he period of limitation for filing complaints in criminal court is the same as hasbeen specified in section 4"& B1 Ba of the Code of Criminal )rocedure, 1.

Avanti 'evelopment -o. 0td. & Ors. v. State o1 /aharashtra & Ors.!B1&%% #7.9./. 4% B


26/47

1)ro!ided further that5 such emplo$ees shall not be entitled to be aid such bonus in excessof t*ent$ percent. of the salar$ or *age earned b$ them during the rele!ant accounting $ear.5

COMMENTS

:o pa$ment can be paid be$ond the prescribed limit of 2(A.

420 Act not to (.) to c%!t(#n c.(--%- o& %*.o)%%-03:othing in this +ct shall appl$ to(i) 2emplo$ees emplo$ed b$ an$ insurer carr$ing on general insurance business

and the5 emplo$ees emplo$ed b$ the 9ife nsurance Corporation of ndiaI

(ii) seamen as defined in clause B42 of section 3 of the 0erchant Shipping +ct, 1&%B44 of 1&%I

(iii) emplo$ees registered or listed under an$ scheme made under the Dock @orkersB/egulation of Emplo$ment +ct, 1&4% B& of 1&4%, and emplo$ed b$ registeredor listed emplo$ersI

(iv) emplo$ees emplo$ed b$ an establishment engaged in an$ industr$ carried on b$or under the authorit$ of an$ department of the Central o!ernment or a Stateo!ernment or a local authorit$I

(v) emplo$ees emplo$ed b$

(a) the ndian /ed Cross Societ$ or an$ other institution of alike nature Bincluding itsbranchesI

(b) uni!ersities and other educational institutionsI

(c) institutions Bincluding hospitals, chambers of commerce and social *elfareinstitutions established not for purposes of profitI

(,i) emplo$ees emplo$ed through contractors on building operationsI 4H H H H H


27/47

Bix emplo$ees emplo$ed b$

(a) the ndustrial 7inance Corporation of ndiaI

(b) an$ 7inancial Corporation established under section 3, or an$ Foint 7inancialCorporation established under section 3+, of the State 7inancial Corporations +ct,1&1 B"3 of 1&1I

(c) the Deposit nsurance CorporationI

1Bd the :ational


28/47

(,I) nstitutions designed for earning profit should pa$ the minimum bonus to theiremplo$ees. .. 4ater Suppl & 'rainage oard #ngineers7 Association v.overnment o1 .. etc.!B1&&1 2 9.9.F. 3&4 B0ad.5

440Act to appl to certain pending disputes regarding pament o1 bonus.F 6ep. b theament o1 onus (Amendment) Act!1" B23 of 1", s. 21 B*.e.f. 2&1.

1[40 E&&%ct o& .(/- (n$ (7!%%*%nt- #ncon-#-t%nt /#t' t'% Act03Subect to the pro!isionsof section 31+, the pro!isions of this +ct shall ha!e effect not*ithstanding an$thing inconsistentcontained in an$ other la* for the time being in force or in the terms of an$ a*ard, agreement,settlement or contract of ser!ice.5

450 S("#n703:othing contained in this +ct shall be deemed to affect the pro!isions of theCoal 0ines )ro!ident 7und and


29/47

40 Po/%! to *(% !.%-03B1 -he Central o!ernment ma$ make rules for the purpose ofcarr$ing into effect the pro!isions of this +ct.

B2 n particular, and *ithout preudice to the generalit$ of the foregoing po*er, such rulesma$ pro!ide for

(a) the authorit$ for granting permission under the pro!iso to subclause Biii of clause B1 ofsection 2I

(b) the preparation of registers, records and other documents and the form and manner in*hich such registers, records and documents ma$ be maintained under section 2"I

(c) the po*ers *hich ma$ be exercised b$ an inspector under clause Be of subsection B2 of

section 2#I

(d) an$ other matter *hich is to be, or ma$ be, prescribed.

B3 E!er$ rule made under this section shall be laid as soon as ma$ be after it is made,before each 6ouse of )arliament *hile it is in session for a total period of thirt$ da$s, *hich ma$be comprised in one session 1or in t*o or more successi!e sessions5, and if before the expir$ ofthe session 2immediatel$ follo*ing the session or the successi!e sessions aforesaid5, both6ouses agree in making an$ modification in the rule or both 6ouses agree that the rule shouldnot be made, the rule shall thereafter ha!e, effect onl$ in such modified for or be of no effect, asthe case ma$ beI so, ho*e!er, that an$ such modification or annulment shall be @ithoutpreudice to the !alidit$ of an$thing pre!iousl$ done under that rule.

490 A.#c(t#on o& c%!t(#n .(/- not +(!!%$03Sa!e as other*ise expressl$ pro!ided, thepro!isions of this +ct shall be in addition to and not in derogation of the ndustrial Disputes +ct,1&4# B14 of 1&4#, or an$ corresponding la* relating to in!estigation and settlement of industrialdisputes in force in a State.

;0 R%%(. (n$ -("#n703(:)-he )a$ment of


30/47

1[THE FIRST SCHEDULE

Seesection 4Ba5

C0)8-+-: 7 /SS )/7-S

Accounting ear endingGGG..

tem:o.

)articulars +mount ofsubitems

+mount ofmain items

/emarks

H1. et ro1itsho*n in the )rofit and 9oss +ccountafter making usual and necessar$ pro!isions.

/s. /s.

2. Add bac*pro!ision for?Ba


31/47

tem:o.


+mount ofmain items

/emarks

Bc Donation in excess of the amount

admissible for incometax.

Bd Capital expenditure Bother than capitalexpenditure on scientific research *hichis allo*ed as a deduction under an$ la*for the time being in force relating todirect taxes and capital losses Botherthan losses on sale of capital assets on*hich depreciation has been allo*ed for

incometax.

Be +n$ amount certified b$ the /eser!e


32/47

tem:o.


+mount ofmain items

/emarks

". 'eductH

(a) Capital receipts and capital )rofitsBother than profits on the sale ofassets on *hich depreciation hasbeen allo*ed for incometax.

(b) )rofits of, receipts relating to, an$business situation outside ndia.

(c) ncome of foreign bankingcompanies from in!estmentsoutside ndia.

(d) Expenditure or losses Bif an$debited directl$ to published ordisclosed reser!es,other than$

(i) capital expenditure and capitallosses Bother than losses onsale of capital assets on *hichdepreciation has not beenallo*ed for incometaxI

(ii) losses of an$ businesssituated outside ndia

(e) n the case of foreign bankingcompanies proportionateadministrati!e Bo!erheadexpenses of 6ead ffice allocableto ndia business.

(1) /efund of an$ excess direct taxpaid for pre!ious accounting $earsand excess pro!ision, if an$, of

pre!ious accounting $ears, relatingto bonus, depreciation, orde!elopment rebate, if *rittenback.

/s. /s.

See footnote B2

Seefootnote B2

Seefootnote B2

Seefootnote B2

Seefootnote B2


33/47

1[THE SECOND SCHEDULE

2See section 4Bb5

C0)8-+-: 7 /SS )/7-S

Accounting ear endingGGG.

tem:o.

)articulars +mount of subitems

+mount ofmain items

/emarks

1. :et )rofit as per )rofit and

9oss+ccount.

/s. /s.

2. Add bac*pro!ision for ?(a)


34/47

tem:o.


+mount ofmain items

/emarks

1(d) De!elopment rebaten!estmentallo*anceDe!elopmentallo*ance reser!e.5

(e) +n$ other reser!es.

-otal of tem :o. 2 0 0 0 0 0 0 0

/s.

/s.

/s. See footnoteB1

See footnoteB1

3. Add bac* also?(a)


35/47

tem:o.


+mount ofmain items

/emarks

4. Add also income. profits or gains Bifan$ credited directl$ to reser!es,other than$(i) capital receipts and capital

profits Bincluding profits on thesale of capital assets on *hichdepreciation has not beenallo*ed for incometax oragricultural incometaxI

(ii) profits of, and receipts relatingto, an$ business situatedoutside ndiaI

(iii) income of foreign concernsfrom in!estments outside ndia:et total of tem :o. 4 0 0 0

/s.

/s.

/s.

. -otal of tem :os. 1,2,3 and 4 0 0 0 /s.

". 'eductH(a) Capital receipts and capital profits

Bother than profits on the sale ofassets on *hich depreciation hasbeen allo*ed for incometax oragricultural incometax.

(b) )rofits of, and receipts relating to,business situated outside ndia.

(c) ncome of foreign concerns from

in!estment outside ndia.

See footnote

B2

See footnoteB2

See footnoteB2

(-ontd )


36/47

tem:o.


+mount ofmain items

/emarks

(d) Expenditure or losses Bif an$

debited directl$ to reser!es,other than$

(i) capital expenditure and capitallosses Bother than losses onsale of capital assets on *hichdepreciation has not beenallo*ed for incometax oragricultural incometaxI

(ii) 9osses of an$ business

situated outside ndia.(e) n the case of foreign concerns

proportionate administrati!eBo!erhead expenses of 6eadffice allocable to ndia business.

(1) /efund of an$ tax paid forpre!ious accounting $ears andexcess pro!ision, if an$, ofpre!ious accounting $ear relatingto bonus, depreciation, taxation orde!elopment rebate or de!elopment allo*ance, if *rittenback.

1(g)Cash Subside, if an$, gi!en b$ theo!ernment or b$ the bod$corporate established b$ an$ la*for the time being in force or b$an$ other agenc$ throughbudgetar$ grants, *hether gi!en

directl$ or through an$ agenc$ forspecified purpose and theproceeds of *hich are reser!edfor such purposes.5

/s. /s.

See footnoteB3

See footnoteB2


37/47

1[THE THIRD SCHEDULE

BSee section "Bd

tem :o. Categor$ of Emplo$er 7urther sums to be deducted

B1 B2 B3

1. 2Compan$, other than abanking compan$5

(i) -he di!idends pa$able on itspreference share capital forthe accounting $ear calculated at the actual rate at

*hich such di!idends arepa$ableI

(ii) %. per cent. of its paid upe'uit$ share capital as at thecommencement of theaccounting $earI

(iii) " per cent. of its reser!essho*n in its balancesheet asat the commencement of the

accounting $ear, includingan$ profits carried for*ardfrom the pre!ious accounting$ear?

)ro!ided that *here the emplo$er is aforeign compan$ *ithin the meaningof section &1 of the Companies +ct,1&" B1 of 1&", the total amount tobe deducted under this tem shall be%. percent. on the aggregate of the

!alue of the net fixed assets and thecurrent assets of the compan$ in ndiaafter deducting the amount of itscurrent liabilities Bother than an$


38/47


B1 B2 B312. the rate at*hich such di!idends arepa$ableI

(ii) #. per cent. of its paid upe'uit$ share capital as at the

commencement of theaccounting $earI

(iii) per cent. of its reser!essho*n in its balancesheet asat the commencement of theaccounting $ear, includingan$ profits carried for*ardfrom the pre!ious accounting$earI

(iv) an$ sum *hich in respect ofthe accounting $ear, istransferred b$ it

Ba to a reser!e fund under subsection B1 of section 1# ofthe


39/47


B1 B2 B3

(ii) #. per cent of such amount as bears the

same proportion to its total paid up e'uit$share capital as its total *orking funds inndia bear to its total *orld *orking fundsI

(iii) per cent. of such amount as bears thesame proportion to its total disclosedreser!es as its total *orking funds in ndiabear to its total *orld *orking fundsI

(iv) an$ sum *hich, in respect of the accounting$ear, is deposited b$ it *ith the /eser!e


40/47


B1 B2

. +n$ other emplo$er not falling

under an$ of the aforesaidcategories

%. per cent. of the capital in!ested b$

him in his establishment as e!idencedfrom his books of accounts at thecommencement of the accounting$ear?

)ro!ided that *here such emplo$er is a personto *hom Chapter MM + of the ncometax +ctapplies, the annuit$ deposit pa$able b$ himunder the pro!isions of that Chapter during the

accounting $ear shall also be deducted?

)ro!ided further that *here such emplo$er is afirm, an amount e'ual to 2 per cent. of thegross profits deri!ed b$ it from theestablishment in respect of the accounting $earafter deducting depreciation in accordance *iththe pro!isions of clause Ba of section " b$ *a$of remuneration to all the partners taking part inthe conduct of business of the establishmentshall also be deducted, but *here thepartnership agreement, *hether oral or *ritten,pro!ides for the pa$ment of remuneration toan$ such partner, and(i) the total remuneration pa$able to all

such partners is less than the said 2per cent., the amount pa$able, subectto a maximum of fort$eight thousandrupees to each such partnerI or

(ii) the total remuneration pa$able to allsuch partners is higher than the said2 per cent., such percentage, or asum calculated at the rate of fort$eight


41/47


B1 B2 )ro!ided also that *here such emplo$er is anindi!idual or a 6indu undi!ided famil$(i) an amount e'ual to 2 percent. of the

gross profits deri!ed b$ such emplo$erfrom the establishment in respect ofthe accounting $ear after deductingdepreciation in accordance *ith thepro!isions of clause Ba of section "I or

(ii) fort$eight thousand rupees, *hiche!er

is less, b$ *a$ of remuneration to suchemplo$er, shall also be deducted.

". +n$ emplo$er falling under tem :o.1 or tem :o.3 ortem :o.4 or tem :o. andbeing a licensee *ithin themeaning of the Electricit$BSuppl$ +ct, 1&4% B4 of1&4%.

n addition to the sums deductible under an$ ofthe aforesaid tems, such sums as are re'uiredto be appropriated b$ the licensee in respect ofthe accounting $ear to a reser!e under theSixth Schedule to that +ct shall also bededucted.

#"planation$-he expression =reser!es= occurring in column B3 against tem :os. 11Biii,2Biii and 3Bii5 shall not include an$ amount set apart for the purpose of(i) pa$ment of an$ direct tax *hich, according to the balancesheet, *ould be pa$able

(ii) meeting an$ depreciation admissible in accordance *ith the pro!isions of clause Baof section "1

(iii) pa$ment of di!idends *hich ha!e been declared,

but shall include

(a) an$ amount, o!er and abo!e the amount referred to in clause Bi of this #"planation, setapart as specific reser!e for purpose of pa$ment of an$ direct taxi and

(b) an$ amount set apart for meeting an$ depreciation in excess of the amount admissible


42/47

1[THE FOURTH SCHEDULEBSee sections 1 and 1"

n this Schedule, the total amount of bonus e'ual to %.33 per cent. of the annual salar$ or *agepa$able to all the emplo$ees is assumed to be /s. 1,(4,1"#. +ccordingl$, the maximum bonus to*hich all the emplo$ees are entitled to be paid Bt*ent$ per cent. of the annual salar$ or *age ofall the emplo$ees *ould be /s. 2,(,(((.

;ear +mount e'ual to sixt$per cent. or sixt$se!enper cent., as the casema$ be, of a a!ailable

surplus allocable asbonus

+mount pa$able asbonus

Set on or set offthe $ear carriedfor*ard

-otal set on orset off Carried7or*ard

/s. /s. /s. /s. of B$ear

1. 1.(4.1"# 1.(4.1"#HH :il :il

2. ",3,((( 2,(,(((H set on 2,(,(((H set on 2,(,(((H B2

3. 2,2(,((( 2,(,(((H Binclusi!eof 3(,((( from $ear2

:il Set on 2,2(,((( B2

4. 3,#,((( 2,(,(((H Set on 1,2,((( Set on 2,2(,(((

1,2,(((

B2

B4. 1,4(,((( 2,(,(((H Binclusi!eof 1,1(,((( from$ear2

:il Set on 1,1(,(((1,2,(((

B2B4

". 3,1(,((( 2,(,(((H :il Set on :il L1,2,((("(,(((

B2B4B"

#. 1,((,((( 2,(,(((H Bnclusi!eof 1,2,((( from$ear4 and 2,(((from $ear"

:il Set on 3,((( B"

%. :ilBdue to loss

1,(4,1"#HH Binclusi!eof 3,((( from $ear"

Set off "&,1"# Set off "&,1"# B%


43/47

PAYMENT OF BONUS RULES, 19851

In e"ercise o1 the po>ers con1erred b section 3C o1 the ament o1 onus Act! :?5 (2: o1:?5)! and in supersession o1 the ament o1 onus 6ules! :?5! the -entral overnmenthereb ma*es the 1ollo>ing rules! namel9$

10 S'o!t t#t.% (n$ co**%nc%*%nt.-(:)-hese rules ma$ be called the )a$ment of


44/47

FORM ASee rule 4Ba5

COMPUTATION OF THE ALLOCABLE SURPLUS UNDER SECTION 2

:ame of the establishment +ccounting $ear ending on the

Sums deducted from gross profits

ross profit forthe +ccounting$ear /s.

Depreciationunder section"Ba

De!elopmentrebate orDe!elopmentallo*ancesection "Bb

Direct taxessection "Bc

7urther sumsas are specifiedunder the -hirdSchedule to the

+ct

-otal of sumsdeducted undercolumns 2,3,4and BH"(A ofColumn #

+!ailablesurplus for theaccounting $earBColumn 1minus Column"

+mount ofallocablesurplus BN"#A

1 2 3 4 " # %


45/47

FORM BSee rule 4Bb5

SET3ON AND SET3OFF ALLOCABLE SURPLUS UNDER SECTION 15

+ccounting $ear +mount allocableas bonusBin /s.

+mount pa$ableas bonusBin /s.

+mount of set onor setoffBin /s.

-otal seton or setoffcarried for*ard

1 2 3 4


46/47

FORM CSee rule 4Bc5

s:ame

@hetherhe hascompleted 1$ears ofage atthe

beginning of theaccounting $ear

Designation

:o.ofda$s*orked inthe$ear

-otalsalar$or*ageinrespect of

theaccounting$ear

+mount ofbonuspa$ableundersectio

n 1(orsection 11as thecasema$be

)uabonusothercustomar$durin

g theaccounting$ear

nterimbonusorbonusbonuspaid

ad!ance

1+mount ofncometaxdeducted

Deductiononaccount offinancial

loss, ifan$,caused b$misconductof theemplo$ee

2-otal sumdeductedunderColu

mns&,1(.1(+and115

:etamountpa$ableBColumn %

minusColumn 12

+mountactuall$)aid

Dateon*hichpaid

Signature-humbimpressionof theempl

o$ee

1 2 3 4 " # % & 1( 1(+ 11 12 13 14 1 1"

1. nserted b$ the )a$ment of


47/47

1FORM DSee rule 5

ANNUAL RETURN3BONUS PAID TO EMPLOYEES FOR THE ACCOUTING YEAR ENDING ON THE 1. :ame of the establishment and its complete postal address?

2. :ame of industr$?3. :ame of the emplo$er?4. -otal number of emplo$ees?. :umber of emplo$ees benefited b$ bonus pa$ments?

-otal amountpa$able as bonusunder section 1(

or 11 of the)a$ment of

The Payment of Bonus Act

Documents

Transcript of The Payment of Bonus Act