{"id":13834,"date":"2024-10-09T14:26:58","date_gmt":"2024-10-09T08:56:58","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=13834"},"modified":"2024-10-10T11:16:15","modified_gmt":"2024-10-10T05:46:15","slug":"statutory-bonus","status":"publish","type":"post","link":"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/","title":{"rendered":"Statutory Bonus &#8211; A Comprehensive Guide"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69ea3e3d6984b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69ea3e3d6984b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#What-is-a-Statutory-Bonus\" >What is a Statutory Bonus?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Eligibility-for-Statutory-Bonus\" >Eligibility for Statutory Bonus<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Disqualifications-to-Statutory-Bonus-Eligibility\" >Disqualifications to Statutory Bonus Eligibility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Deductions-from-the-Bonus-Payable\" >Deductions from the Bonus Payable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Statutory-Bonus-Calculation-with-Example\" >Statutory Bonus Calculation with Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#How-is-the-Statutory-Bonus-Paid\" >How is the Statutory Bonus Paid?\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Advance-payment-with-salary\" >Advance payment with salary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Advance-adhoc-payment\" >Advance adhoc payment\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Advance-payment-in-bulk\" >Advance payment in bulk<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#Arrear-payment-in-bulk\" >Arrear payment in bulk<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/payroll\/learn\/statutory-bonus\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-a-Statutory-Bonus\"><\/span><b>What is a Statutory Bonus?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Statutory bonus is the minimum bonus an organisation needs to pay to its eligible employees each year under the<a href=\"https:\/\/clc.gov.in\/clc\/acts-rules\/payment-bonus-act-0\" target=\"_blank\" rel=\"noopener\"> Payment of Bonus Act<\/a>. This amount is paid irrespective of the employer&#8217;s financial performance or profitability. It is usually paid in October or November every year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Statutory Bonus is paid over and above the basic salary that an employee receives. It is meant to offer them a share in the company&#8217;s prosperity and encourage productivity. The bonus amount ensures that even employees in loss-making units receive a reasonable reward for their hard work throughout the year.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Eligibility-for-Statutory-Bonus\"><\/span><b>Eligibility for Statutory Bonus<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">For an employee to qualify for a statutory bonus, their salary should not exceed Rs. 21,000 per month. In addition, they must have worked for at least 30 days in an accounting year under the concerned establishment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, some categories are excluded such as seasonal factories working for less than 120 days, managerial or supervisory staff and employees below such designation. Organizations employing 20 or more persons for the major part of the accounting year also become eligible to pay this bonus amount as per the Act&#8217;s provisions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, there are many more aspects related to it that you must know. We are going to highlight one such element covering the deductions that come from the bonus payable.<\/span><\/p>\n<p>To simplify the complexities of statutory compliance, check out RazorpayX Payroll &#8211; a one-stop solution for everything payroll.<\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/payroll\/payroll-compliance\/?r=blog_cta_statutory_bonus&amp;utm_source=direct&amp;utm_medium=website\" target=\"_blank\" rel=\"noopener\" data-schema-attribute=\"\">Check out RazorpayX Payroll<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Disqualifications-to-Statutory-Bonus-Eligibility\"><\/span><b>Disqualifications to Statutory Bonus Eligibility<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">We have discussed the eligibility criteria to get the statutory bonus above. However, there are some situations where the employee can be disqualified from receiving a statutory bonus.\u00a0<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Any employee who has been dismissed for serious offences like any misconduct or fraud will not be eligible for the bonus.\u00a0<\/span><\/li>\n<li aria-level=\"1\">Any employee who engaged in riotous or violent behaviour while on premises<\/li>\n<li aria-level=\"1\">Any employee who has engaged in theft, misappropriation or sabotage of business assets.<\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Deductions-from-the-Bonus-Payable\"><\/span><b>Deductions from the Bonus Payable<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While the maximum bonus payable is 20% of the salary, some permissible deductions can lower the actual payout.<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Authorised deductions following the Payment of Wages Act can be made like provident fund, income tax etc.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The number of days of unauthorised absence or loss of pay due to disciplinary action may also be deducted on a pro-rata basis.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Total deductions cannot exceed 10% of the salary to ensure employees get a minimum bonus of 8.33% of their salary. Any unauthorised deductions can be challenged by employees.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">To make it easy for you to get the overall idea of your bonus this year, below we have an example of a statutory bonus calculation.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Statutory-Bonus-Calculation-with-Example\"><\/span><b>Statutory Bonus Calculation with Example<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The formula to calculate statutory bonus is: <\/span><\/p>\n<p><strong>(Salary\/30) x Number of days worked in the year.<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Let&#8217;s take the example of an employee drawing a Rs. 15,000 salary per month and working for 10 months (300 days) in a year.<\/span><\/p>\n<p><b>Step 1) <\/b>Total annual salary <span style=\"font-weight: 400;\">is Rs. 15,000 x 12 = Rs. 1,80,000. This is the amount upon which statutory bonus will be calculated.\u00a0<\/span><\/p>\n<p><b>Step 2) <\/b><span style=\"font-weight: 400;\">Maximum Bonus = 20% of Rs. 1,80,000 = Rs. 36,000<\/span><\/p>\n<p><b>Step 3) <\/b><span style=\"font-weight: 400;\">Bonus per day = Rs. 1,80,000\/30 = Rs. 600<\/span><\/p>\n<p><b>Step 4) <\/b>Days worked in the year = 300. Therefore, a<span style=\"font-weight: 400;\">ctual Bonus = Rs. 600 x 300 days = Rs. 18,000<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Since it is less than the maximum, the actual bonus payable is Rs. 18,000. So, in summary, the formula ensures a fair and standard bonus calculation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This shows that the Payment of Bonus Act protects employees&#8217; interests by ensuring a minimum yearly bonus as per statutory guidelines. Both employers and workers should be well aware of their rights and obligations under this law.<\/span><\/p>\n<p>To streamline bonus and payroll calculations, most businesses choose to automate their payroll processes with solutions like RazorpayX Payroll.<\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/payroll\/?r=blog_cta_statutory_bonus&amp;utm_source=direct&amp;utm_medium=website\" target=\"_blank\" rel=\"noopener\" data-schema-attribute=\"\">Check out RazorpayX Payroll<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-is-the-Statutory-Bonus-Paid\"><\/span><b>How is the Statutory Bonus Paid?\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Statutory bonus can be paid in advance or in arrear. Here are the four ways in which statutory bonus can be paid to employees<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Advance-payment-with-salary\"><\/span><b>Advance payment with salary<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The bonus may be included as a separate head under the employee&#8217;s salary structure. The statutory bonus then gets automatically processed with payroll.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Advance-adhoc-payment\"><\/span><b>Advance adhoc payment\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Payment of statutory bonus can be made on an adhoc basis if it is not included with regular payroll.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Advance-payment-in-bulk\"><\/span><b>Advance payment in bulk<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Bonus can also be paid in bulk during the year, where the employer can pay statutory bonus calculated as a percentage of wages.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Arrear-payment-in-bulk\"><\/span><b>Arrear payment in bulk<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Bonuses can also be paid at the end of the financial year as an arrear payment. This is done in March, once the employee has received his regular payroll.\u00a0<\/span><\/p>\n<p><strong>Read more: <a href=\"https:\/\/razorpay.com\/learn\/what-is-bonus-payments-payment-of-bonus-act\">All About Payment of Bonus Act<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\t\t\t<div id=\"rank-math-rich-snippet-wrapper\" class=\"\">\n\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\n","protected":false},"excerpt":{"rendered":"<p>What is a Statutory Bonus? Statutory bonus is the minimum bonus an organisation needs to pay to its eligible employees each year under the Payment of Bonus Act. This amount is paid irrespective of the employer&#8217;s financial performance or profitability. It is usually paid in October or November every year. Statutory Bonus is paid over<\/p>\n","protected":false},"author":151156542,"featured_media":13837,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3404],"tags":[3405,4005],"class_list":{"0":"post-13834","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payroll","8":"tag-payroll","9":"tag-statutory-bonus"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/13834","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156542"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=13834"}],"version-history":[{"count":2,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/13834\/revisions"}],"predecessor-version":[{"id":13839,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/13834\/revisions\/13839"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/13837"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=13834"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=13834"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=13834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}