Which employees are eligible for statutory bonus?

Employees earning up to the wage ceiling defined under the Act and who have worked at least 30 days in the accounting year are eligible. Bonus is calculated on a capped wage figure even if actual earnings are higher. Both permanent and temporary staff within the limit can qualify.

What are the minimum and maximum bonus rates?

The Act mandates a minimum bonus of 8.33 percent of annual wages regardless of profit or loss. The maximum payable rises to 20 percent when the allocable surplus permits. The exact figure between these depends on the surplus and set-on/set-off calculations.

When must statutory bonus be paid?

Bonus must be paid within eight months from the close of the accounting year. If an authority grants an extension, the maximum permitted period is two years. Filing the annual return in Form D is also part of the compliance cycle.

Free Payment of Bonus Act Checklist Checklist

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Payment of Bonus Act Checklist

Establishment Name:

Accounting Year:

Allocable Surplus:

Compliance Officer:

Applicability and Eligibility

Confirm the Payment of Bonus Act, 1965 applies to the establishment.Identify employees eligible for bonus under the Act.Determine the calculation ceiling for bonus computation.Verify that no disqualification under Section 9 applies.

Bonus Computation

Calculate allocable surplus under Sections 2(4) and 5.Ensure minimum bonus of 8.33% is paid regardless of profit.Cap the maximum bonus at 20% of wages.Apply set-on and set-off provisions under Section 15.Prepare the bonus computation sheet in prescribed forms.

Payment and Disbursement

Pay bonus within 8 months of the close of the accounting year.Deduct income tax (TDS) on bonus payments.Pay proportionate bonus to employees who worked only part of the year.Do not deduct or reduce bonus for authorised leave or layoff days.

Records, Returns and Penalties

Maintain the bonus register in Form D as per Rule 4.File annual bonus return in Form D with the Inspector.Provide employees with a bonus payment slip.Be aware of penalties for non-compliance under Section 28.

The complete guide

Everything you need to know

01What Is the Payment of Bonus Act Checklist?

This checklist captures the duties employers carry under the Payment of Bonus Act, which requires eligible establishments to share annual profits with lower-wage employees. It covers eligibility thresholds, the minimum and maximum bonus percentages, the allocable surplus and set-on/set-off calculations, and the deadline for disbursing bonus within eight months of the accounting year close. It keeps your annual bonus cycle compliant and documented.

02Why Use a Payment of Bonus Act Checklist

Bonus calculations pull from accounting figures, wage ceilings, and prior-year set-on balances, so mistakes are common when finance and HR work from different assumptions. This checklist aligns both teams on who qualifies, what wage limit applies, and how the minimum eight percent and maximum twenty percent brackets work. It reduces the risk of underpayment claims, inspector notices, and disputes while giving you a clean record for each financial year.

03How to Use This Payment of Bonus Act Checklist

Run it at the end of each accounting year. Confirm the establishment falls within scope, list employees below the eligibility wage ceiling, and calculate bonus on the capped wage. Reconcile the allocable surplus, apply set-on and set-off from previous years, and decide the applicable percentage. Prepare Form C and Form D, disburse within eight months, and file the annual return. Check off each step as it clears.

Payment of Bonus Act Checklist

Payment of Bonus Act Checklist

Applicability and Eligibility

Bonus Computation

Payment and Disbursement

Records, Returns and Penalties

Everything you need to know

01What Is the Payment of Bonus Act Checklist?

02Why Use a Payment of Bonus Act Checklist

03How to Use This Payment of Bonus Act Checklist

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