Bonus Calculator India 2026
Free Statutory Bonus Calculator with 4 modes: Employee Bonus Calculator using the 3-step formula under the Payment of Bonus Act, 1965 (8.33%–20% with ₹21,000 eligibility ceiling and ₹7,000 calculation base, proportionate days worked, minimum ₹100 guarantee), Employer Cost Estimator for workforce-level annual liability and monthly provisioning, Compliance Guide covering eligibility, disqualification (fraud, violence, theft), penalties (6 months imprisonment + ₹1,000 fine), and all required forms (Form A/B/C/D), and Allocable Surplus Calculator computing gross profit, prior charges (depreciation, direct tax), available surplus, 67%/60% allocable split, set-on/set-off mechanism for 4-year carry-forward.
What is Statutory Bonus?
Statutory Bonus is a mandatory payment made by employers to eligible employees, governed under the Payment of Bonus Act, 1965. The Act ensures that employees receive a share in the profits of the establishment, regardless of whether bonus is mentioned in the employment contract.
The Act applies to every factory and every other establishment employing 20 or more persons on any day during an accounting year. Once an establishment is covered, it remains covered even if employee count drops below 20.
Eligibility Criteria
| Criterion | Requirement |
|---|---|
| Salary Ceiling | Basic + DA ≤ ₹21,000 per month |
| Minimum Service | At least 30 working days in the accounting year |
| Establishment Size | 20+ employees on any day during the year |
| Employee Type | Manual, clerical, supervisory — all types (excluding managerial staff above ₹21,000) |
| Sector | Both public and private sector (with specific exemptions) |
Bonus Calculation Formula
| Step | Formula | Example (₹18,000 Basic+DA) |
|---|---|---|
| Step 1: Determine Base | MIN(Actual Basic+DA, ₹7,000 or Min Wage) | MIN(₹18,000, ₹7,000) = ₹7,000 |
| Step 2: Annual Base | Monthly Base × 12 | ₹7,000 × 12 = ₹84,000 |
| Step 3: Apply Rate | Annual Base × Bonus % × (Days ÷ Total Days) | ₹84,000 × 8.33% × (365/365) = ₹6,997 |
Allocable Surplus — How Bonus Rate is Determined
The actual bonus percentage (between 8.33% and 20%) depends on the establishment’s allocable surplus:
| Step | Computation |
|---|---|
| Gross Profit | As per First Schedule (banking) or Second Schedule (other) |
| Less: Prior Charges | Depreciation + Direct Tax + Development Rebate |
| = Available Surplus | Gross Profit − Prior Charges |
| Allocable Surplus | 67% of Available Surplus (companies) OR 60% (others) |
Set-On and Set-Off Mechanism
| Scenario | Action | Carry Forward |
|---|---|---|
| Surplus > 20% max bonus | Set On — excess carried forward | Up to 4 years |
| Surplus < 8.33% min bonus | Set Off — deficit carried forward | Up to 4 years |
| Surplus between 8.33%–20% | Pay actual percentage | No carry forward |
This mechanism ensures bonus payments are smoothed across years of varying profitability. Use our Surplus Calculator (Mode 4) to compute your establishment’s set-on/set-off.
Disqualification from Bonus
- Fraud — Employee engages in fraud against the establishment
- Violence — Riotous or violent behaviour on establishment premises
- Theft/Sabotage — Theft, misappropriation, or sabotage of establishment property
- Financial Loss — If misconduct causes financial loss, employer may deduct from bonus
Excluded Establishments & Employees
- Apprentices under the Apprentices Act, 1961
- Employees of Life Insurance Corporation of India
- Indian Red Cross Society
- Universities and educational institutions
- Chambers of Commerce; social welfare institutions
- Managerial/supervisory staff earning above ₹21,000/month
Compliance & Record-Keeping
| Form | Purpose | Maintained By |
|---|---|---|
| Form A | Computation of allocable surplus | Employer |
| Form B | Set-on and set-off statement | Employer |
| Form C | Details of bonus paid to each employee | Employer |
| Form D | Annual return — filed with Labour Department | Employer |
Records must be preserved for at least 5 years. Non-compliance can attract imprisonment up to 6 months, fine up to ₹1,000, or both. See our TDS Calculator for TDS compliance alongside bonus.
Tax Treatment of Statutory Bonus
- Statutory bonus is fully taxable as “Income from Salary”
- Employer deducts TDS as part of monthly salary
- Employee includes bonus in total income for ITR filing
- If bonus relates to arrears, relief under Section 89 may apply
- For the employer, bonus paid is a deductible business expense under Section 36(1)(ii)
- Use our Income Tax Calculator to see the impact on your total tax
New Establishment Exemption (Section 16)
Newly established factories/establishments may be exempt from bonus for the first 5 accounting years, but only if no profit is derived. If profit is made in any year within the first 5, bonus becomes payable for that year. After 5 years, the minimum 8.33% is mandatory regardless of profitability.
Employer Strategy — Monthly Provisioning
Smart employers provision for bonus monthly rather than paying a lump sum at year-end. This prevents cash-flow strain. For example, if your total annual bonus liability is ₹5,00,000, provision ₹41,667 each month. Use our Employer Cost Estimator (Mode 2) to calculate your exact monthly provision.
Related Calculators & Tools
- Salary Calculator — Bonus is a key CTC component. See complete salary breakdown.
- Income Tax Calculator — Bonus is taxable income. Compute your total tax liability.
- TDS Calculator — Employer TDS on bonus payments.
- Professional Tax Calculator — Another payroll compliance obligation.
- HRA Exemption Calculator — Another salary component with tax implications.
- GST Calculator — Gross profit (for surplus) is affected by GST treatment.
- Business Loan Calculator — Bonus liability impacts working capital needs.