Payment under Bonus Act: Key Rules and Upcoming Deadline of November 30

As November 30 approaches, employers must prioritize compliance with the Payment of Bonus Act, 1965, especially since it marks the last day to pay bonuses for the previous accounting year. Non-compliance can lead to penalties and harm employer-employee relationships.  

1. Key Deadlines
I) Bonus Payment Deadline:
Bonuses for the accounting year ending March 31, 2024, must be paid by November 30, 2024.  

Il) Bonus Return Filing Deadline:
  Employers must file the annual return (Form D) under the Act by December 30, 2024, within 30 days of the bonus payment deadline.  

2. Eligibility Criteria
To qualify for a bonus, an employee must meet the following conditions:  
I) Salary/Wage Threshold: 
   Employees earning ₹21,000 or less per month (basic + dearness allowance).  

II) Minimum Work Duration: 
   The employee must have worked for at least 30 working days during the accounting year.  

Exclusions:
Employees in managerial or supervisory roles earning above ₹21,000 are not eligible.  

3. Bonus Calculation Rules 
The Payment of Bonus Act outlines the following rules:  

I) Calculation Base: 
- If Salary/Wages are ₹7,000 or Below Minimum Wage:  
• Bonus is calculated on ₹7,000 or the minimum wage, whichever is higher.  
- If Salary/Wages are Above ₹7,000: 
• Bonus is calculated on ₹7,000 or the minimum wage, whichever is higher, regardless of actual salary.  

II) Bonus Rates:
- Minimum Bonus: 8.33% of eligible wages.  
- Maximum Bonus: 20% of eligible wages.  

III) Calculation Examples: 
- If an employee earns ₹6,000 and the minimum wage is ₹7,000:  
• Bonus will be calculated on ₹7,000.  
• Minimum Bonus: ₹7,000 × 8.33% = ₹583.10/month.  
• Maximum Bonus: ₹7,000 × 20% = ₹1,400/month.  

- If an employee earns ₹8,500 and the minimum wage is ₹9,000: 
• Bonus will be calculated on ₹9,000.  
• Minimum Bonus: ₹9,000 × 8.33% = ₹749.70/month.  
• Maximum Bonus: ₹9,000 × 20% = ₹1,800/month.  

4. Penalties for Non-Compliance 
Failure to comply with the Payment of Bonus Act can lead to:  
- Imprisonment: Up to 6 months, or  
- Fine: Up to ₹1,000, or both.  

Delays in payment or return filing may result in additional penalties, increasing the financial and legal burden on the employer.  

5. Bonus Return Filing (Form D)
After bonus distribution, employers must submit Form D to the appropriate labor authorities. This form includes details like total employees, eligible employees, and total bonus paid.  

- Form D Filing Tips:
1. Maintain accurate records of bonus calculations and payments.  
2. File by December 30, 2024, to avoid penalties.  
3. Keep acknowledgment receipts for future audits.  

6. Importance of Compliance
Timely payment and return filing under the Payment of Bonus Act ensures:  
1. Avoidance of penalties and legal actions.
2. Improved employee satisfaction and morale.
3. Strengthened employer-employee trust and goodwill.

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