THE PAYMENT OF BONUS ACT, 1965 
__________ 

ARRANGEMENT OF SECTIONS 
__________ 

SECTIONS 

1.  Short title, extent and application. 
2.  Definitions. 
3.  Establishments to include departments, undertakings and branches. 
4.  Computation of gross profits. 
5.  Computation of available surplus. 
6.  Sums deductible from gross profits. 
7.  Calculation of direct tax payable by the employer. 
8.  Eligibility for bonus. 
9.  Disqualification for bonus. 
10.  Payment of minimum bonus. 
11.  Payment of maximum bonus. 
12.  Calculation of bonus with respect to certain employees. 
13.  Proportionate reduction in bonus in certain cases. 
14.  Computation of number of working days. 
15.  Set on and set off of allocable surplus. 
16.  Special provisions with respect to certain establishments. 
17.  Adjustment of customary or interim bonus against bonus payable under the Act. 
18.  Deduction of certain amounts from bonus payable under the Act. 
19.  Time-limit for payment of bonus. 
20.  Application of Act to establishments in public sector in certain cases. 
21.  Recovery of bonus due from an employer. 
22.  Reference of disputes under the Act. 
23.  Presumption about accuracy of balance-sheet and profit and loss account of corporations and 

companies. 

24.  Audited accounts of banking companies not to be questioned. 
25.  Audit of accounts of employers, not being corporations or companies. 
26.  Maintenance of registers, records, etc. 
27.  Inspectors. 
28.  Penalty. 
29.  Offences by companies. 
30.  Cognizance of offences. 
31.  Protection of action taken under the Act. 
31A. Special provision with respect to payment of bonus linked with production or productivity. 
32.  Act not to apply to certain classes of employees. 
33.  [Repealed.] 
34.  Effect of laws and agreements inconsistent with the Act. 
35.  Saving. 
36.  Power of exemption. 
37.  [Repealed.] 
38.  Power to make rules. 
39.  Application of certain law not barred. 

1 

 
 
 
SECTIONS 

40.  Repeal and saving. 

THE FIRST SCHEDULE. 
THE SECOND SCHEDULE. 
THE THIRD SCHEDULE. 
THE FOURTH SCHEDULE. 

2 

 
 
 
 
THE PAYMENT OF BONUS ACT, 1965 
 ACT NO. 21 OF 19651 

2[An Act to provide for the payment of bonus to persons employed in certain establishments 

and for matters connected therewith.] 

BE it enacted by Parliament in the Sixteenth Year of the Republic of India as follows:— 

1.  Short  title,  extent  and  application.—(1)  This  Act  may  be  called  the  Payment  of Bonus 

[25th September, 1965.] 

Act, 1965. 

(2) It extends to the whole of India 3***. 

(3) Save as otherwise provided in this Act, it shall apply to— 

(a) every factory; and 

(b)  every  other  establishment  in  which  twenty  or  more  persons  are  employed  on  any  day 

during an accounting year: 
4[Provided that the appropriate Government may, after giving not less than two months’ notice of 
its  intention  so  to  do,  by  notification  in  the  Official  Gazette,  apply  the  provisions  of  this  Act  with 
effect from such accounting year as may be specified in the notification, to any establishment or class 
of establishments [including an establishment being a factory within the meaning of sub-clause (ii) of 
clause  (m)  of  section 2 of  the  Factories  Act, 1948 (63 of 1948)]  employing  such  number  of  persons 
less than twenty as may be specified in the notification; so, however, that the number of persons so 
specified shall in no case be less than ten.] 

(4) Save as otherwise provided in this Act, the provisions of this Act shall, in relation to a factory 
or  other  establishment  to  which  this  Act  applies,  have  effect  in  respect  of  the  accounting  year 
commencing on any day in the year 1964 and in respect of every subsequent accounting year: 

5[Provided that in relation to the State of Jammu and Kashmir*, the reference to the accounting 
year  commencing  on  any  day  in  the  year 1964 and  every  subsequent  accounting  year  shall  be 
construed  as  reference  to  the  accounting  year  commencing  on  any  day  in  the  year 1968 and  every 
subsequent accounting year:] 

6[Provided further  that  when  the  provisions  of  this  Act  have  been  made  applicable  to  any 

establishment  or  class  of  establishments  by  the  issue  of  a  notification  under  the  proviso  to               
sub-section  (3),  the  reference  to  the  accounting  year  commencing  on  any  day  in  the  year 1964 and 
every  subsequent  accounting  year  or,  as  the  case  may  be,  the  reference  to  the  accounting  year 
commencing on any day in the year 1968 and every subsequent accounting year, shall, in relation to 
such  establishment  or  class  of  establishments,  be  construed  as  a  reference  to  the  accounting  year 
specified in such notification and every subsequent accounting year.] 

(5)  An  establishment  to  which  this  Act  applies 7***  shall  continue  to  be  governed  by  this  Act 
notwithstanding that the number of person employed therein falls below twenty 8[or, as the case may 
be, the number specified in the notification issued under the proviso to sub-section (3)]. 

1. The Act has been extended to Goa, Daman and Diu by Act 6 of 1977, s. 2 and the Schedule. 
2. Subs. by Act 43 of 1977, s. 3, for the long title (w.e.f. 3-9-1977). 
3. The words “except the State of Jammu and Kashmir” omitted by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971). 
4. The proviso added by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).  
5. The proviso added by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971). 
6. The proviso inserted by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975). 
7. The words, brackets, letter and figure “under clause (b) of sub-section (3)” omitted by s. 3, ibid. (w.e.f. 25-9-1975).  
8. Certain words, brackets and figure added by s. 3, ibid. (w.e.f. 25-9-1975).  
*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu 

and Kashmir and the Union territory of Ladakh. 

3 

 
 
 
                                                           
2. Definitions.—In this Act, unless the context otherwise requires,— 

(1) “accounting year” means— 

(i)  in  relation  to  a  corporation,  the  year  ending  on  the  day  on  which  the  books  and 

accounts of the corporation are to be closed and balanced; 

(ii) in relation to a company, the period in respect of which any profit and loss account of 
the company laid before it in annual general meeting is made up, whether that period is a year 
or not; 

(iii) in any other case— 

(a) the year commencing on the 1st day of April; or 
(b) if the accounts of an establishment maintained by the employer thereof are closed 
and  balanced  on  any  day  other  than  the 31st  day  of  March,  then,  at  the  option  of  the 
employer, the year ending on the day on which its accounts are so closed and balanced: 
Provided  that  an  option  once  exercised  by  the  employer  under  paragraph  (b)  of  this           

sub-clause shall not again be exercised except with the previous permission in writing of the 
prescribed authority and upon such conditions as that authority may think fit; 
(2) “agricultural income” shall have the same meaning as in the Income-tax Act; 
(3)  “agricultural  income-tax  law” means  any  law  for  the  time  being  in  force  relating  to  the 

levy of tax on agricultural income; 

(4) “allocable surplus” means— 

(a) in relation to an employer, being a company 1[(other than a banking company)] which 
has not made the arrangements prescribed under the Income-tax Act for the declaration and 
payment  within  India  of  the  dividends  payable  out  of  its  profits  in  accordance  with  the 
provisions  of  section 194 of  that  Act,  sixty-seven  per  cent.  of  the  available  surplus  in  an 
accounting year; 

(b) in any other case, sixty per cent. of such available surplus; 
* 

* 

* 

2* 
(5) “appropriate Government” means— 

* 

(i) in relation to an establishment in respect of which the appropriate Government under 
the  Industrial  Disputes  Act,1947 (14 of 1947),  is  the  Central  Government,  the  Central 
Government; 

(ii) in relation to any other establishment, the Government of the State in which that other 

establishment is situate; 
(6) “available surplus” means the available surplus computed under section 5; 
(7)  “award” means  an  interim  or  a  final  determination  of  any  industrial  dispute  or  of  any 
question  relating  thereto  by  any  Labour  Court,  Industrial  Tribunal  or  National  Tribunal 
constituted  under  the  Industrial  Disputes  Act, 1947 (14 of  1947),  or  by  any  other  authority 
constituted  under  any  corresponding  law  relating  to  investigation  and  settlement  of  industrial 
disputes in force in a State and includes an arbitration award made under section 10A of that Act 
or under that law; 

in 

the  State Bank  of 

(8)  “banking  company” means  a  banking  company  as  defined  in  section 5 of  the Banking 
Companies Act, 1949 (10 of 1949), and includes the State Bank of India, any subsidiary bank as 
(Subsidiary  Banks)  Act, 1959 (38 of 1959), 3[any 
defined 
corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition 
and Transfer of Undertakings) Act, 1970 (5 of 1970),  1[any corresponding new bank constituted 
under  section 3 of 
the Banking  Companies  (Acquisition  and  Transfer  of  Undertakings) 
Act, 1980 (40 of 1980),]  any  co-operative  bank  as  defined  in  clause  (vii)  of  section 2 of  the 
Reserve  bank  of  India  Act, 1934 (2 of 1934),]  and  any  other  banking  institution  which  may  be 
notified in this behalf by the Central Government; 

India 

1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980). 
2. The words, brackets and figures “and includes any amount treated as such under sub-section (2) of section 34” omitted by 

Act 23 of 1976, s. 4 (w.e.f. 25-9-1975).  

3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975). 

4 

 
 
 
 
 
 
 
 
                                                           
(9)  “company” means  any  company  as  defined 

the  Companies 
Act, 1956 (1 of 1956), and includes a foreign company within the meaning of section 591 of that 
Act; 

is  section 3 of 

(10) “co-operative society” means a society registered or deemed to be registered under the              

Co-operative Societies Act, 1912 (2 of 1912), or any other law for the time being in force in any 
State relating to co-operating societies; 

(11) “corporation” means any body corporate established by or under any Central, Provincial 

or State Act but does not include a company or a co-operative society; 

(12) “direct tax” means— 

(a) any lax chargeable under— 

(i) the Income-tax Act; 

(ii) the Super Profits Tax Act, 1963 (14 of 1963); 

(iii) the Companies (Profits) Surtax Act, 1964 (7 of 1964); 

(iv) the agricultural income-tax law; and 

(b) any other tax which, having regard to its nature or incidence, may be declared by the 
Central Government, by notification in the Official Gazette, to be a direct tax for the purposes 
of this Act; 

(13) “employee” means any person (other than an apprentice) employed on a salary or wage 
not  exceeding 1[twenty-one  thousand  rupees] per  mensem  in  any  industry  to  do  any  skilled  or 
unskilled  manual,  supervisory, managerial,  administrative,  technical  or  clerical  work  for hire  or 
reward, whether the terms of employment be express or implied; 

(14) “employer” includes— 

(i) in relation to an establishment which is a factory, the owner or occupier of the factory, 
including the agent of such owner or occupier, the legal representative of a deceased owner or 
occupier and where a person has been named as a manager of the factory under clause (f) of                 
sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and 

(ii) in relation to any other establishment, the person who, or the authority which, has the 
ultimate control over the affairs of the establishment and where the said affairs are entrusted 
to  a  manager,  managing  director  or  managing  agent,  such  manager,  managing  director  or 
managing agent; 

(15) “establishment in private sector” means any establishment other than an establishment in 

public sector; 

(16) “establishment in public sector” means an establishment owned, controlled or managed 

by— 

(a)  a  Government  company  as  defined 

in 

section 617 of 

the  Companies 

Act, 1956 (1 of 1956); 

(b)  a  corporation  in  which  not  less  than  forty  per  cent.  of  its  capital  is  held  (whether 

singly or taken together) by— 

(i) the Government; or 

(ii) the Reserve Bank of India; or 

(iii) a corporation owned by the Government or the Reserve Bank of India; 

(17)  “factory”  shall  have  the  same meaning  as  in  clause  (m)  of  section 2 of  the  Factories 

Act, 1948 (63 of 1948); 

1. Subs. by Act 6 of 2016, s. 2, for “ten thousand rupees” (w.e.f. 1-4-2014). 

5 

 
                                                           
(18) “gross profits” means the gross profits calculated under section 4; 

(19) “Income-tax Act” means the Income-tax Act, 1961 (43 of 1961); 

(20) “prescribed” means prescribed by rules made under this Act; 

(21)  “salary  or  wage” means  all  remuneration  (other  than  remuneration  in  respect  of  over-
time  work)  capable  of  being  expressed  in  terms  of  money,  which  would,  if  the  terms  of 
employment,  express  or  implied,  were  fulfilled,  be  payable  to  an  employee  in  respect  of his 
employment or of work done in such employment and includes dearness allowance (that is to say, 
all cash payments, by whatever name called, paid to an employee on account of a rise in the cost 
of living), but does not include— 

(i) any other allowance which the employee is for the time being entitled to; 

(ii)  the  value  of  any  house  accommodation  or  of  supply  of  light,  water, medical 
attendance or other amenity or of any service or of any concessional supply of foodgrains or 
other articles; 

(iii) any travelling concession; 

(iv) any bonus (including incentive, production and attendance bonus); 

(v)  any  contribution  paid  or  payable  by  the  employer  to  any  pension  fund  or  provident 

fund or for the benefit of the employee under any law for the time being in force; 

(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to 

the employee or any ex gratia payment made to him; 

(vii) any commission payable to the employee. 

Explanation.—Where an employee is given in lieu of the whole or part of the salary or wage 
payable  to him,  free  food  allowance  or  free  food  by his  employer,  such  food  allowance  or  the 
value of such food shall, for the purpose of this clause, be deemed to  from part of the salary or 
wage of such employee; 

(22)  words  and  expressions  used  but  not  defined  in  this  Act  and  defined  in  the  Industrial 
Disputes  Act, 1947 (14 of  1947),  shall  have  the meanings  respectively  assigned  to  them  in  that 
Act. 

3.  Establishments  to  include  departments,  undertakings  and  branches.—Where  an 
establishment  consists  of  different  department  or  undertakings  or  has  branches,  whether  situated  in 
the same place or in different places, all such departments or undertakings or branches shall be treated 
as parts of the same establishment for the purpose of computation of bonus under this Act: 

Provided that where for any accounting year a separate balance-sheet and profit and loss account 
are prepared and maintained in respect of any such department or undertaking or branch, then, such 
department or undertaking or branch shall be treated as a separate establishment for the purpose of 
computation of bonus, under this Act for that year, unless such department or undertaking or branch 
was,  immediately  before  the  commencement  of  that  accounting  year  treated  as  part  of  the 
establishment for the purpose of computation of bonus. 

1[4.  Computation  of  gross  profits.—The  gross  profits  derived  by  an  employer  from  an 

establishment in respect of any accounting year shall— 

(a)  in  the  case  of  a  banking  company,  be  calculated  in  the  manner  specified  in  the  First 

Schedule; 

(b) in any other case, be calculated in the manner specified in the Second Schedule.] 

1. Subs. by Act 66 of 1980, s. 3, for section 4 (w.e.f. 21-8-1980). 

6 

 
 
 
                                                           
5. Computation of available surplus.—The available surplus in respect of any accounting year 

shall be the gross profits for that year after deducting therefrom the sums referred to in section 6: 

1[Provided that the available surplus in respect of the accounting year commencing on any day in 

the year 1968 and in respect of every subsequent accounting year shall be the aggregate of— 

(a) the gross profits for that accounting year after deducting therefrom the sums referred to in 

section 6; and 

(b) an amount equal to the difference between— 

(i) the direct tax, calculated in accordance with the provisions of section 7, in respect of 
an  amount  equal  to  the  gross  profits  of  the  employer  for  the  immediately  preceding 
accounting year; and 

(ii) the direct tax, calculated in accordance with the provisions of section 7, in respect of 
an amount equal to the gross profits of the employer for such preceding accounting year after 
deducting therefrom the amount of bonus which the employer has paid or is liable to pay to 
his employees in accordance with the provisions of this Act for that year.] 

6. Sums deductible from gross profits.—The following sums shall be deducted from the gross 

profits as prior charges, namely:— 

(a)  any  amount  by  way  of  depreciation  admissible  in  accordance  with  the  provisions  of                        

sub-section (1) of section 32 of the Income-tax Act, or in accordance with the provisions of the 
agricultural income-tax law, as the case may be: 

Provided that where an employer has been paying bonus to his employees under a settlement or 
an award or agreement made before the 29the May, 1965, and subsisting on that date after deducting 
from the gross profits notional normal depreciation, then, the amount of depreciation to be deducted 
under this clause shall, at the option of such employer (such option to be exercised once and within 
one year from the date) continue to be such notional normal depreciation; 

(b)  any  amount  by  way  of  2[development  rebate  or  investment  allowance  or  development 

allowance] which the employer is entitled to deduct from his income under the income-tax Act; 

(c) subject to the provisions of section 7, any direct tax which the employer is liable to pay 

for the accounting year in respect of his income, profits and gains during that year; 

(d) such further sums as are specified in respect of the employer in the 3[Third Schedule]. 

7.  Calculation  of  direct  tax  payable  by  the  employer.—4[Any  direct  tax  payable  by  the 
employer] for any accounting year shall, subject to the following provisions, be calculated at the rates 
applicable to the income of the employer for that year, namely:— 

(a) in calculating such tax no account shall be taken of— 

(i)  any  loss  incurred  by  the  employer  in  respect  of  any  previous  accounting  year  and 

carried forward under any law for the time being in force relating to direct taxes; 

(ii) any arrears of depreciation which the employer is entitled to add to the amount of the 
allowance for depreciation for any following accounting year or years under sub-section (2) 
of section 32 of the Income-tax Act; 

(iii) any exemption conferred on the employer under section 84 of the Income-tax Act or 
of any deduction to which he is entitled under sub-section (1) of section 101 of that Act, as in 
force immediately before the commencement of the Finance Act, 1965 (10 of 1965); 

(b)  where  the  employer  is  a  religious  or  a  charitable  institution  to  which  the  provisions  of 
section 32 do  not  apply  and  the  whole  or  any  part  of  its  income  is  exempt  from  tax  under  the 

1. The proviso added by Act 8 of 1969, s. 2 (w.e.f. 26-3-1965).  
2. Subs. by Act 66 of 1980, s. 4, for “development rebate or development allowance” (w.e.f. 21-8-1980). 
3. Subs. by s. 4, ibid., for “Second Schedule” (w.e.f. 21-8-1980). 
4.  Subs.  by  Act  8  of  1969,  s. 3, for  “For  the purpose of  clause  (c)  of  section  6,  any  direct  tax  payable  by  the  employer”  

(w.e.f. 26-3-1965).  

7 

 
                                                           
 
Income-tax Act, then, with respect to the income so exempted, such institution shall be treated as 
if it were a company in which the public are substantially interested within the meaning of that 
Act; 

(c)  where the employer  is individual  or  a  Hindu  undivided  family,  the tax  payable by  such 
employer  under  the  Income-tax  Act  shall  be  calculated  on  the  basis  that  the  income  derived 
by him from the establishment is his only income; 

(d) where the income of any employer includes any profits and gains derived from the export 
of any goods or merchandise out of India and any rebate on such income in allowed under any 
law  for the time  being  in  force relating  to direct  taxes,  then,  no account shall be  taken  of  such 
rebate; 

(e)  no  account  shall  be  taken  of  any  rebate 1[(other  than  development  rebate  or  investment 
allowance  or  development  allowance)]  or  credit  or  relief  or  deduction  (not  herein 
before mentioned in this section) in the payment of any direct tax allowed under any law for the 
time  being  in  force  relating  to  direct  taxes  or  under  the  relevant  annual  Finance  Act,  for  the 
development of any industry. 

8.  Eligibility  for  bonus.—Every  employee  shall  be  entitled  to  be  paid  by his  employer  in  an 
accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the 
establishment for not less than thirty working days in that year. 

9.  Disqualification  for  bonus.—Notwithstanding  anything  contained  in  this  Act,  an  employee 

shall be disqualified from receiving bonus under this Act, if he is dismissed from service for— 

(a) fraud; or 

(b) riotous or violent behaviour while on the premises of the establishment; or 

(c) theft, misappropriation or sabotage of any property of the establishment. 

2[10. Payment of minimum bonus.—Subject to the other provisions of this Act, every employer 
shall be bound to pay to every employee in respect of the accounting year commencing on any day in 
the  year  1979  and  in  respect  of  every  subsequent  accounting  year,  a  minimum  bonus  which  shall 
be 8.33  per  cent.  of  the  salary  of  wage  earned  by  the  employee  during  the  accounting  year  or  one 
hundred  rupees,  whichever  is  higher,  whether  or  not  the  employer  has  any  allocable  surplus  in  the 
accounting year: 

Provided that where an employee has not completed fifteen years of age at the beginning of the 
accounting year, the provisions of this section shall have effect in relation to such employees as if for 
the words “one hundred rupees”, the words “sixty rupees” were substituted. 

 11. Payment of maximum bonus.—(1) Where in respect of any accounting year referred to in 
section 10,  the  allocable  surplus  exceeds  the  amount  of  minimum  bonus  payable  to  the  employees 
under  that  section,  the  employer  shall,  in  lieu  of  such  minimum  bonus,  be  bound  to  pay  to  every 
employee  in  respect  of  that  accounting  year  bonus  which  shall  be  an  amount  in  proportion  to  the 
salary or wage earned by the employee during the accounting year subject to a maximum of twenty 
per cent. of such salary or wage. 

(2) In computing the allocable surplus under this section, the amount set on or the amount set off 
under  the  provisions  of  section 15 shall  be  taken  into  account  in  accordance  with  the  provisions  of 
that section.] 

3[12. Calculation of bonus with respect to certain employees.—Where the salary or wage of an 
employee exceeds 4[seven thousand rupees or the minimum wage for the scheduled employment, as 
fixed by the appropriate Government, whichever is higher]  per mensem, the bonus payable to such 
employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary 

1. Subs. by Act 66 of 1980, s. 5, for “(other than development rebate or development allowance)” (w.e.f. 21-8-1980). 
2. Subs. by s. 6, ibid., for section 10 (w.e.f. 21-8-1980). 
3.  Ins. by Act 67 of 1985, s. 3 (w.e.f. 7-11-1985). 
4. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014). 

8 

 
                                                           
or wage were 1[seven thousand rupees or the minimum wage for the scheduled employment, as fixed 
by the appropriate Government, whichever is higher] per mensem.] 

2[Explanation.—For  the  purposes  of  this  section,  the  expression  “scheduled  employment”  shall 

have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948                     
(11 of 1948).] 

3[13. Proportionate reduction in bonus in certain cases.—Where an employee has not worked 
for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the 
case may be, of sixty rupees, if such bonus is higher than 8.33 per cent. of his salary or wage for the 
days he has worked in that accounting year, shall be proportionately reduced.] 

14.  Computation  of  number  of  working  days.—For  the  purposes  of  section 13,  an  employee 
shall  be  deemed  to  have  worked  in  an  establishment  in  any  accounting  year  also  on  the  days  on 
which— 

(a)  he  has  been  laid  off  under  an  agreement  or  as  permitted  by  standing  orders  under  the 
Industrial  Employment  (Standing  Orders)  Act, 1946 (20 of 1946),  or  under  the  Industrial 
Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment; 

(b) he has been on leave with salary or wage; 

(c) he has been absent due to temporary disablement caused by accident arising out of and in 

the course of his employment; and 

(d)  the  employee  has  been  on  maternity  leave  with  salary  or  wage,  during  the  accounting 

year. 
4[15. Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable 
surplus exceeds the amount of maximum bonus payable to the employees in the establishment under 
section 11, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of 
the employees employed in the establishment in that accounting year, be carried forward for being set 
on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be 
utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule. 

(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect 
of  that  year  falls  short  of  the  amount  of  minimum  bonus  payable  to  the  employees  in  the 
establishment under section 10, and there is no amount of sufficient amount carried forward and set 
on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, 
then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being 
set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year 
in the manner illustrated in the Fourth Schedule. 

(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other 
cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this 
Act. 

(4) Where in any accounting year any amount has been carried forward and set on or set off under 
this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set 
off carried forward from the earliest accounting year shall first be taken into account.] 

16. Special provisions with respect to certain establishments.—5[(1) Where an establishments 
newly  set  up,  whether  before  or  after  the  commencement  of  this  Act,  the  employees  of  such 
establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of 
sub-sections (1A), (1B) and (1C). 

1. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014). 
2. The Explanation inserted by s. 3, ibid. (w.e.f. 1-4-2014). 
3. Subs. by Act 66 of 1980, s. 8, for section 13 (w.e.f. 21-8-1980). 
4. Subs. by s. 9, ibid., for section 15 (w.e.f. 21-8-1980). 
5. Subs. by Act 23 of 1976, s. 12, for sub-section (1) and the Explanation thereto (w.e.f. 25-9-1975). 

9 

 
                                                           
(1A) In the first five accounting years following the accounting year in which the employers sells 
the  goods  produced  or  manufactured  by  him  or  renders  services,  as  the  case  may  be,  from  such 
establishment, bonus shall be payable only in respect of the accounting year in which the employer 
derives  profit  from  such  establishment  and  such  bonus  shall  be  calculated  in  accordance  with  the 
provisions of this Act in relation to that year, but without applying the provisions of section 15. 

(1B)  For  the  sixth  and  seventh  accounting  years  following  the  accounting  year  in  which  the 
employer sells the goods produced or manufactured by him or renders services, as the case may be, 
from  such  establishment,  the  provisions  of  section  15  shall  apply  subject  to  the  following 
modifications, namely:— 

(i) for the sixth accounting year— 
set on or set off, as the case may be, shall be made in  the manner illustrated in the  1[Fourth 
Schedule]  taking  into  account  the  excess  or  deficiency,  if  any,  as  the  case  may  be,  of  the 
allocable surplus set on or set off in respect of the fifth and sixth accounting years; 

(ii) for the seventh accounting year— 
set on or set off, as the case may be, shall be made in the manner illustrated in the  1[Fourth 
Schedule]  taking  into  account  the  excess  or  deficiency,  if  any,  as  the  case  may  be,  of  the 
allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years. 

(1C) From the eighth accounting year following the accounting year in which the employer sells 
the  goods  produced  or  manufactured  by  him  or  renders  services,  as  the  case  may  be,  from  such 
establishment, the provisions of section 15 shall apply in relation to such establishment as they apply 
in relation to any other establishment. 

Explanation I.—For the purpose of  sub-section (1), an establishment shall not be deemed to be 

newly set up merely by reason of a change in its location, management, name or ownership. 

Explanation II.—For the purpose of sub-section (1A), an employer shall not be deemed to be have 

derived profit in any accounting year unless— 

(a) he has made provision for that year’s depreciation to which he is entitled under the 

Income-tax Act or, as the case may be, under the agricultural income-tax law; and 

(b)  the  arrears  of  such  depreciation  and  losses  incurred  by  him  in  respect  of  the 

establishment for the previous accounting years have been fully set off against his profits. 

Explanation  III.—For  the  purposes  of  sub-sections  (1A),  (1B)  and  (1C),  sale  of  the  goods 
produced or manufactured during the course of the trial running of any factory or of the prospecting 
stage of any mine or an oil field shall not be taken into consideration and where any question arises 
with  regard  to  such  production  or  manufacture,  the  decision  of  the  appropriate  Government,  made 
after giving the parties a reasonable opportunity of representing the case, shall be final and shall not 
be called in question by any court or other authority.] 

(2) The provisions of 2[sub-sections (1), (1A), (1B) and (1C)] shall, so far as may be, apply to new 

departments or undertakings or branches set up by existing establishments: 

Provided  that  if  an  employer  in  relation  to  an  existing  establishment  consisting  of  different 
(departments  or  undertakings  or  branches  (whether  or  not  in  the  same  industry)  set  up  at  different 
periods has, before the 29th May, 1965, been paying bonus to the employees of all such departments 
or  undertakings  or  branches  irrespective  of  the  date  on  which  such  departments  or  undertakings  or 
branches  were  set  up,  on  the  basis  of  the  consolidated  profits  computed  in  respect  of  all  such 
departments  or  undertakings  or  branches,  then,  such  employer  shall  be  liable  to  pay  bonus  in              
accordance with the provisions of this Act to the employees of all such departments or undertakings 
or branches (whether set up before or after that date) on the basis of the consolidated profits computed 
as aforesaid. 

1. Subs. by Act 66 of 1980, s. 10, for “Third Schedule” (w.e.f. 21-8-1980). 
2. Subs. by Act 23 of 1976, s. 12, for “sub-section (1)” (w.e.f. 25-9-1975). 

10 

 
                                                           
17.  Adjustment  of  customary  or  interim  bonus  against  bonus  payable  under  the                  

Act.—Where in any accounting year— 

(a) an employer has paid any puja bonus or other customary bonus to an employee; or 

(b) an employer has paid a part of the bonus payable under this Act to an employee before the 

date on which such bonus becomes payable, 

then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus 
payable by him to the employee under this Act in respect of that accounting year and the employee 
shall be entitled to receive only the balance. 

18.  Deduction  of  certain  amounts  from  bonus  payable  under  the  Act.—Where  in  any 
accounting year, an employee is found guilty of misconduct causing financial loss to the employer, 
then,  it  shall  be  lawful  for  the  employer  to  deduct  the  amount  of  loss  from  the  amount  of  bonus 
payable  by him  to  the  employee  under  this  Act  in  respect  of  that  accounting  year  only  and  the 
employee shall be entitled to receive the balance, if any. 

19. Time-limit for payment of bonus.—1[All amounts] payable to an employee by way of bonus 

under this Act shall be paid in cash by his employer— 

(a) where there is a dispute regarding payment of bonus pending before any authority under 
section 22,  within  a  month  from  the  date  on  which  the  award  becomes  enforceable  or  the 
settlement comes into operation, in respect of such dispute; 

(b) in any other case, within a period of eight months from the close of the accounting year: 

Provided that the appropriate Government or such authority as the appropriate Government may 
specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, 
by order, extend the said period of eight months to such further period or periods as it thinks fit; so, 
however, that the total period so extended shall not in any case exceed two years. 

2* 
3* 

* 

* 

* 

* 

* 

* 

*. 

*. 

20.  Application  of  Act  to  establishments  in  public  sector  in  certain  cases.—4[(1)]  If  in  any 
accounting year an establishment in public sector sells any goods produced or manufactured by it or 
renders  any  services,  in  competition  with  an  establishment  in  private  sector,  and  the  income  from 
such sale or services or both is not less than twenty per cent. of the gross income of the establishment 
in  public  sector  for  that  year,  then,  the  provisions  of  this  Act  shall  apply  in  relation  to  such 
establishment in public sector as they apply in relation to a like establishment in private sector. 

5[(2)  Save  as  otherwise  provided  in  sub-section  (1),  nothing  in  this  Act  shall  apply  to  the 

employees employed by any establishment in public sector.] 

21. Recovery of bonus due from an employer.—Where any money is due to an employee by 
way of bonus from his employer under a settlement or an award or agreement, the employee himself 
or  any  other  person  authorised  by  him  in  writing  in  this  behalf,  or  in  the  case  of  the  death  of  the 
employee,  his  assignee  or  heirs  may,  without  prejudice  to  any  other  mode  of  recovery,  make  an 
application  to  the  appropriate  Government  for  the  recovery  of  the  money  due  to  him,  and  if  the 
appropriate Government or such authority as the appropriate Government may specify in this behalf 
is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who 
shall proceed to recover the same in the same manner as an arrear of land revenue: 

Provided that every such application shall be made within one year from the date on which the 

money became due to the employee from the employer: 

1. Subs. by Act 23 of 1976, s. 13, for “(1) Subject to this provisions of this section, all amounts” (w.e.f. 25-9-1975). 
2. Sub-sections (2) to (7) omitted by s. 13, ibid. (w.e.f. 25-9-1975). 
3. Sub-section (8) omitted by Act 55 of 1973, s. 2 (w.e.f. 1-9-1973). 
4. Section 20 renumbered as sub-section (1) thereof by Act 66 of 1980, s. 11 (w.e.f. 21-8-1980).  
5. Ins. by s. 11, ibid. (w.e.f. 21-8-1980). 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Provided further that any such application may be entertained after the expiry of the said period 
of one year, if the appropriate Government is satisfied that the applicant had sufficient cause for not 
making the application within the said period. 

Explanation—In this section and in  1[sections 22, 23, 24 and 25], “employee” includes a person 

who is entitled to the payment of bonus under this Act but who is no longer in employment. 

22.  Reference  of  disputes  under  the  Act.—Where  any  dispute  arises  between  an  employer 
and his employees with respect to the bonus payable under this Act or with respect to the application 
of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial 
dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding 
law relating to investigation and settlement of industrial disputes in force in a State and the provisions 
of  that  Act  or,  as  the  case  may  be,  such  law,  shall,  save  as  otherwise  expressly  provided,  apply 
accordingly. 

23.  Presumption  about  accuracy  of  balance-sheet  and  profit  and  loss  account  of 
corporations and companies.—(1) Where, during the course of proceedings before any arbitrator or 
Tribunal  under  the  Industrial  Disputes  Act,  1947  (14  of  1947),  or  under  any  corresponding  law 
relating  to  investigation  and  settlement  of  industrial  disputes  in  force  in  a  State  (hereinafter  in  this 
section 2[and in 3[sections 24 and 25] referred to as the “said authority”) to which any dispute of the 
nature specified in section 22 has been referred, the balance-sheet and the profit and loss account of 
an employer, being a corporation or a company (other than a banking company), duly audited by the 
Comptroller  and  Auditor-General  of  India  or  by  auditors  duly  qualified  to  act  as  auditors  of 
companies under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), are produced 
before  it,  then,  the  said  authority  may  presume  the  statements  and  particulars  contained  in  such 
balance-sheet  and  profit  and  loss  account  to  be  accurate  and  it  shall  not  be  necessary  for  the 
corporation or the company to prove the accuracy of such statements and particulars by the filing of 
an affidavit or by any other mode: 

Provided that where the said authority is satisfied that the statement and particulars contained in 
the balance-sheet or the profit and loss account of the corporation or the company are not accurate, it 
may take such steps as it thinks necessary to find out the accuracy of such statements and particulars. 

(2)  When  an  application  is  made  to  the  said  authority  by  any  trade  union  being  a  party  to  the 
dispute or where there is no trade union, by the employees being a party to the dispute, requiring any 
clarification  relating  to  any  item  in  the  balance-sheet  or  the  profit  and  loss  account,  it  may,  after 
satisfying itself that such clarification is necessary, by order, direct the corporation or, as the case may 
be, the company, to furnish to the trade union or the employees such clarification within such time as 
may  be  specified  in  the  direction  and  the  corporation  or,  as  the  case  may  be,  the  company,  shall 
comply with such direction. 

4[24. Audited accounts of banking companies not to be questioned.—(1) Where any dispute of 
the nature specified in section 22 between an employer, being a banking company, and its employees 
has  been  referred  to  the  said  authority  under  that  section  and  during  the  course  of  proceedings  the 
accounts  of  the  banking  company  duly  audited  are  produced  before  it,  the  said  authority  shall  not 
permit any trade union or employees to question the correctness of such accounts, but the trade union 
or  the  employees  may  be  permitted  to  obtain  from  the  banking  company  such  information  as  is 
necessary for verifying the amount of bonus due under this Act. 

(2) Nothing contained in sub-section (1) shall enable the trade union on the employees to obtain 
any  information  which  the  banking  company  is  not  compelled  to  furnish  under  the  provisions  of 
section 34A of the Banking Regulation Act, 1949 (10 of 1949).] 

25.  Audit  of  accounts  of  employers,  not  being  corporations  or  companies.—(1)  Where  any 
dispute  of  the  nature  specified  in  section 22 between  an  employer,  not  being  a  corporation  or  a 
company,  and his  employees  has  been  referred  to  the  said  authority  under  that  section  and  the 

1. Subs. by Act 66 of 1980, s. 12, for “sections 22, 23 and 25” (w.e.f. 21-8-1980). 
2. Subs. by Act 23 of 1976, s. 16, for “and in sections 24 and 25” (w.e.f. 25-9-1975). 
3. Subs. by Act 66 of 1980, s. 13, for “section 25” (w.e.f. 21-8-1980). 
4. Ins. by s. 14, ibid. (w.e.f. 21-8-1980). 

12 

 
                                                           
accounts of such employer audited by any auditor duly qualified to act as auditor of companies under 
sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), are produced before the said 
authority, the provisions of section 23, shall, so far as may be, apply to the accounts so audited. 

(2) When the said authority finds that the accounts of such employer have not been audited by 
any such auditor and it is of opinion that an audit of the accounts of such employer is necessary for 
deciding  the  question  referred  to  it,  then,  it  may,  by  order,  direct  the  employer  to  get his  accounts 
audited within such time as may be specified in the direction or within such further time as it may 
allow by such auditor or auditors as it thinks fit and thereupon the employer shall comply with such 
direction. 

(3) Where an employer fails to get the accounts audited under sub-section (2) the said authority 
may,  without  prejudice  to the  provisions  of  section 28,  get  the  accounts  audited  by  such  auditor  or 
auditors as it thinks fit. 

(4)  When  the  accounts  are  audited  under  sub-section  (2)  or  sub-section  (3)  the  provisions  of 

section 23 shall, so far as may be, apply to the accounts so audited. 

(5)  The  expenses  of,  and  incidental  to,  any  audit  under  sub-section  (3)  (including  the 
remuneration  of  the  auditor  or  auditors)  shall  be  determined  by  the  said  authority  (which 
determination  shall  be  final)  and  paid  by  the  employer  and  in  default  of  such  payment  shall  be 
recoverable from the employer in the manner provided in section 21. 

 26. Maintenance of registers, records, etc.—Every employer shall prepare and maintain such 

registers, records and other documents in such form and in such manner as may be prescribed. 

27.  Inspectors.—(1)  The  appropriate  Government  may,  by  notification  in  the  Official  Gazette, 
appoint such person as it thinks fit to be Inspectors for the purposes of this Act and may define the 
limits within which they shall exercise jurisdiction. 

(2)  An  Inspector  appointed  under  sub-section  (1)  may,  for  the  purpose  of  ascertaining  whether 

any of the provisions of this Act has been complied with— 

(a) require an employer to furnish such information as he may consider necessary; 

(b)  at  any  reasonable  time  and  with  such  assistance,  if  any,  as  he  thinks  fit,  enter  any 
establishment or any premises connected therewith and require any one found in charge thereof to 
produce before him for examination any accounts, books, registers and other documents relating 
to the employment of persons or the payment of salary of wage or bonus in the establishment; 

(c)  examine  with  respect  to  any  matter  relevant  to  any  of  the  purposes  aforesaid,  the 
employer, his agent  or servant  or  any  other  person  found in  charge  of the  establishment  or  any 
premises connected therewith or any person whom the Inspector has reasonable cause to believe 
to be or to have been an employee in the establishment; 

(d) make copies of, or take extracts from, any book, register or other document maintained in 

relation to the establishment; 

(e) exercise such other powers as may be prescribed. 

(3) Every Inspector shall be deemed to be a public servant within the meaning of the Indian penal 

Code (45 of 1860). 

(4)  Any  person  required  to  produce  any  accounts,  book,  register  or  other  documents  or  to  give 

information by an Inspector under sub-section (1) shall be legally bound to do so. 

1[(5) Nothing contained in this section shall enable an Inspector to require a banking company to 
furnish or disclose any statement or information or to produce, or give inspection of, any of its books 
of account or other documents, which a banking company cannot be compelled to furnish, disclose, 
produce  or  give  inspection  of,  under  the  provisions  of  section  34A  of  the Banking  Regulation 
Act, 1949 (10 of 1949).] 

1. Ins. by Act 66 of 1980, s. 15 (w.e.f. 21-8-1980). 

13 

 
                                                           
 28. Penalty.—If any person— 

(a) contravenes any of the provisions of this Act or any rule made thereunder; or 

(b) to whom a direction is given or a requisition is made under this Act fails to comply with 

the direction or requisition,  

he shall be punishable with imprisonment for a term which may extend to six months, or with fine 
which may extend to one thousand rupees, or with both. 

29.  Offences  by  companies.—(1)  If  the  person  committing  an  offence  under  this  Act  is  a 
company,  every  person  who,  at  the  time  the  offence  was  committed,  was  in  charge  of,  and  was 
responsible to, the company for the conduct of business of the company, as well as the company, shall 
be  deemed  to  be  guilty  of  the  offence  and  shall  be  liable  to  be  proceeded  against  and  punished 
accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment if he proves that the offence was committed without his knowledge or that he exercised 
all due diligence to prevent the commission of such offence. 

(2)  Notwithstanding  anything  contained  in  sub-section (1), where  an  offence  under this  Act  has 
been committed by a company and it is proved that the offence has been committed with the consent 
or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or 
other officer of the company, such director, manager, secretary or other officer shall also be deemed 
to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section,— 

(a)  “company” means  any  body  corporate  and  includes  a  firm  or  other  association  of 

individuals; and 

(b) “director”, in relation to a firm, means a partner in the firm. 

30. Cognizance of offences.—(1) No court shall take cognizance of any offence punishable under 
this  Act,  save  on  complaint  made  by  or  under  the  authority  of  the  appropriate  Government  1[or  an 
officer of that Government (not below the rank of a Regional Labour Commissioner in the case of an 
officer of the Central Government, and not below the rank of a Labour Commissioner in the case of 
an officer of the State Government) specially authorised in this behalf by that Government]. 

(2) No court inferior to that of a presidency magistrate or a magistrate of the first class shall try 

any offence punishable under this Act. 

31. Protection of action taken under the Act.—No suit, prosecution or other legal proceeding 
shall lie against the Government or any officer of the Government for anything which is in good faith 
done or intended to be done in pursuance of this Act or any rule made thereunder. 

2[31A.  Special  provision  with  respect  to  payment  of  bonus  linked  with  production  or 

productivity.—Notwithstanding anything contained in this Act,— 

(i)  where  an  agreement  or  a  settlement  has  been  entered  into  by  the  employees  with  their 
(Amendment) 

commencement 

the  Payment 

of Bonus 

of 

the 
employer 
Act, 1976 (23 of 1976), or 

before 

(ii)  where  the  employees  enter  into  any  agreement  or  settlement  with  their  employer  after 

such commencement, 

for  payment  of  an  annual  bonus  linked  with  production  or  productivity  in  lieu  of  bonus  based  on 
profits payable under this Act, then, such employees shall be entitled to receive bonus due to them 
under such agreement or settlement, as the case may be: 

3[Provided that any such agreement or settlement whereby the employees relinquish their right to 
receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive 
them of such right:]] 

1. Ins. by Act 66 of 1980, s. 16 (w.e.f. 21-8-1980).  
2. Ins. by Act 23 of 1976, s. 19 (w.e.f. 25-9-1975). 
3. Ins. by Act 66 of 1980, s. 17 (w.e.f. 21-8-1980). 

14 

 
                                                           
1[Provided further that] such employees shall not be entitled to be paid such bonus in excess of 

twenty per cent. of the salary or wage earned by them during the relevant accounting year. 

32. Act not to apply to certain classes of employees.—Nothing in this Act shall apply to— 

(i)  2[employees  employed  by  any  insurer  carrying  on  general  insurance  business  and  the] 

employees employed by the Life Insurance Corporation of India; 

(ii)  seamen  as  defined  in  clause  (42)  of  section  3  of  the  Merchant  Shipping  Act,  1958                 

(44 of 1958); 

(iii)  employees  registered  or  listed  under  any  scheme  made  under  the  Dock  Workers 
(Regulation  of  Employment)  Act,  1948  (9  of  1948),  and  employed  by  registered  or  listed 
employers; 

(iv) employees employed by an establishment engaged in any industry carried on by or under 
the  authority  of  any  department  of  the  Central  Government  or  a  State  Government  or  a  local 
authority; 

(v) employees employed by— 

(a)  the  Indian  Red  Cross Society  or  any  other  institution  of  a  like  nature  (including  its 

branches); 

(b) universities and other educational institutions; 

(c)  institutions  (including  hospitals,  chambers  of  commerce  and  social  welfare 

institutions) established not for purposes of profit; 
3* 
4* 

* 

* 

* 

* 

* 

* 

*; 

*; 

(viii) employees employed by the Reserve Bank of India; 

(ix) employees employed by— 

(a) the Industrial Finance Corporation of India; 

(b)  any  Financial  Corporation  established  under  section  3,  or  any  Joint  Financial 

Corporation  established  under  section  3A,  of  the  State  Financial  Corporations  Act,  1951            
(63 of 1951); 

(c) the Deposit Insurance Corporation; 
5[(d) the National Bank for Agriculture and Rural Development;] 

(e) the Unit Trust of India; 

(f) the Industrial Development Bank of India; 
6[(fa) the Small Industries Development Bank of India established under section 3 of the 

Small Industries Development Bank of India Act, 1989 (39 of 1989);] 

7[(ff) the National Housing Bank;] 

1. Subs. by Act 66 of 1980, s. 17, for “Provided that” (w.e.f. 21-7-1980). 
2. The words in brackets shall stand omitted (date to be notified) by Act 62 of 1968, s. 41. 
3. Clause (vi) omitted by Act 45 of 2007, s. 4 (w.e.f. 1-4-2006). 
4. Clause (vii) omitted by Act 66 of 1980, s. 18 (w.e.f. 21-7-1980). 
5. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for sub-clause (d) (w.e.f. 2-7-1982). 
6. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990). 
7. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988). 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
(g)  any  other  financial  institution  1[(other  than  a  banking  company)],  being  an 
establishment  in  public  sector,  which  the  Central  Government  may,  by  notification  in  the 
Official Gazette, specify, having regard to— 

(i) its capital structure; 

(ii) its objectives and the nature of its activities; 

(iii) the nature and extent of financial assistance or any concession given to it by 

the Government; and 

(iv) any other relevant factor; 

2* 
* 
(xi)  employees  employed  by  inland  water  transport  establishments  operating  on  routes 

*; 

* 

* 

passing through any other country. 

33. [ Act to apply to certain pending disputes regarding payment of bonus.]—Rep. by the Payment 

of Bonus (Amendment) Act, 1976 (23 of 1976), s. 23 (w.e.f. 25-9-1975). 

3[34.  Effect  of  laws  and  agreements inconsistent with  the  Act.—Subject to  the  provisions  of 
section  31A,  the  provisions  of  this  Act  shall  have  effect  notwithstanding  anything  inconsistent 
therewith  contained  in  any  other  law  for  the  time  being  in  force  or  in  the  terms  of  any  award, 
agreement, settlement or contract of service.] 

35. Saving.—Nothing contained in this Act shall be deemed to affect the provisions of the Coal 
Mines  Provident  Fund  and  Bonus  Schemes  Act,  1948  (46  of  1948),  or  of  any  scheme  made 
thereunder. 

36. Power of exemption.—If the appropriate Government, having regard to the financial position 
and other relevant circumstances of any establishment or class of establishment, is of opinion that it 
will  not  be  in  public  interest  to  apply  all  or  any  of  the  provisions  of  this  Act  thereto,  it  may,  by 
notification in the Official Gazette, exempt for such period as may be specified therein and subject to 
such conditions as it may think fit to impose, such establishment or class of establishments from all or 
any of the provisions of this Act. 

37. 

[Power 

to  remove  difficulties].—Rep.  by 

the  Payment  of  Bonus 

(Amendment) 

Act, 1976 (23 of 1976), s. 23 (w.e.f. 25-9-1975). 

38.  Power  to  make  rules.—4[(1)  The  Central  Government  may,  subject  to  the  condition  of 
previous publication, by notification in the Official Gazette, make rules to carry out the provisions of 
this Act.] 

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may 

provide for— 

(a) the authority for granting permission under the proviso to sub-clause (iii) of clause (1) of 

section 2; 

(b)  the  preparation  of  registers,  records  and  other  documents  and  the  form  and  manner  in 

which such registers, records and documents may be maintained under section 26; 

(c) the powers which may be exercised by an Inspector under clause (e) of sub-section (2) of 

section 27; 

(d) any other matter which is to be, or may be, prescribed. 

(3) Every rule made under this section shall be laid as soon as may be after it is made, before each 
House of Parliament while it is in session for a total period of thirty days, which may be comprised in 
one  session 5[or  in  two  or  more  successive  sessions],  and  if  before  the  expiry  of  the 
session 6[immediately following the session or the successive sessions aforesaid], both Houses agree 

1. Ins. by Act 66 of 1980, s. 18 (w.e.f. 21-8-1980). 
2. Clause (x) omitted by Act 23 of 1976, s. 20 (w.e.f. 25-9-1975). 
3. Subs. by s. 22, ibid., for section 34 (w.e.f. 25-9-1975). 
4. Subs. by Act 6 of 2016, s. 4, for sub-section (1) (w.e.f. 1-4-2014). 
5. Subs. by Act 23 of 1976, s. 24, for “or in two successive sessions” (w.e.f. 25-9-1975). 
6. Subs. by s. 24, ibid., for “in which it is so laid or the session immediately following” (w.e.f. 25-9-1975). 

16 

 
 
 
 
 
 
 
 
                                                           
in making any modification in the rule or both Houses agree that the rule should not be made, the rule 
shall  thereafter  have  effect  only  in  such  modified  form  or  be  of  no  effect,  as  the  case  may  be;  so, 
however,  that  any  such  modification  or  annulment  shall  be  without  prejudice  to  the  validity  of 
anything previously done under that rule. 

39.  Application  of  certain  law  not  barred.—Save  as  otherwise  expressly  provided,  the 
provisions  of  this  Act  shall  be  in  addition  to  and  not  in  derogation  of  the  Industrial  Disputes 
Act, 1947 (14 of 1947), or any corresponding law relating to investigation and settlement of industrial 
disputes in force in a State. 

40.  Repeal  and  saving.—(1)  The  Payment  of Bonus  Ordinance, 1965 (3 of 1965),  is  hereby 

repealed. 

(2)  Notwithstanding  such  repeal,  anything  done  or  any  action  taken  under  the  said  Ordinance 
shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th 
May, 1965. 

17 

 
 
 
1[THE FIRST SCHEDULE 

[See section 4 (a)] 

COMPUTATION OF GROSS PROFITS 

Accounting Year ending ...... 

Item 
No. 

2[1. 

Particulars 

Amount of 
sub-items 

Amount of  
main items 

Remarks 

Net  Profit,  as  show  in  the  Profit  and 
Loss  Account  after  making  usual  and 
necessary provisions. 

Rs. 

Rs. 

2. 

Add back provision for: 

(a) Bonus to employees. 

(b) Depreciation. 

(c) Development Rebate Reserve. 

(d) Any other reserves. 

Total of Item No. 2     .         .             . 

Rs. 

3. 

Add back also: 

(a) Bonus paid to employees in respect 

of previous accounting years. 

See foot-note (1) 

See foot-note (1) 

See foot-note (1) 

See foot-note (1) 

(b)  The  amount  debited  in  respect  of 
to 
the 

payable 
or 
excess  of 

paid 
gratuity 
employees 
in 
aggregate of— 

(i)  the  amount,  if  any,  paid  to,  or 
provided  for  payment  to,  an 
approved gratuity fund; and 

(ii)  the  amount  actually  paid  to 
employees  on  their  retirement 
or  on 
their 
termination  of 
employment for any reason. 

(c)  Donations  in  excess  of  the  amount 

admissible for income-tax. 

1. Ins. by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980). 
2. Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on income 

is shown, the actual provision for taxes on income shall be deducted from the profit. 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Item 
No. 

Particulars 

Amount of 
sub-items 

Amount of main 
items 

Remarks 

Rs. 

Rs. 

See foot-note (1) 

(d)  Capital  expenditure  (other 
than  capital  expenditure  on 
scientific  research  which  is 
allowed as a deduction under 
any law for the time being in 
force relating to direct taxes) 
and capital losses (other than 
losses  on  sale  of  capital 
assets  on  which  depreciation 
has 
for 
been 
income-tax). 

allowed 

(e)  Any  amount  certified  by  the 
Reserve  Bank  of  India  in 
terms  of  sub-section  (2)  of 
section  34A  of  the  Banking 
Regulation 
(10 of 1949). 

Act, 

1949           

(f)  Losses  of,  or  expenditure 
to,  any  business 

relating 
situated outside India. 

Total of Item No. 3.     .    .       . 

Rs. 

4. 

Add also income, profits or gains 
to 
(if  any)  credited  directly 
published  or  disclosed  reserves, 
other than— 

(i)  capital  receipts  and  capital 
profits  (including  profits  on 
the  sale  of  capital  assets  on 
which  depreciation  has  not 
been  allowed  for  income-
tax); 

(ii)  profits  of,  and 

receipts 
to,  any  business 

relating 
situated outside India; 

(iii)  income  of  foreign  banking 
companies  from  investment 
outside India. 

Net total of Item No. 4.  .  .  .   .     

Rs. 

5. 

Total of Item Nos. 1, 2, 3 and 4 

 Rs. 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Particulars 

 Amount of 
sub-items 
Rs. 

Amount of  
main items 
Rs. 

Remarks 

Item 
No. 

6. 

Deduct: 
(a)  Capital  receipts  and  capital 
profits  (other  than  profits  on 
the  sale  of  assets  on  which 
depreciation 
been 
allowed for income-tax). 

has 

(b)  Profits  of,  and 

receipts 
to,  any  business 

relating 
situated outside India. 

(c)  Income  of  foreign  banking 
companies  from  investments 
outside India. 

(d) Expenditure or losses (if any) 
debited  directly  to  published 
or  disclosed  reserves,  other 
than— 
(i)  capital  expenditure  and 
(other 
losses 
capital 
than  losses  on  sale  of 
capital  assets  on  which 
depreciation  has  not 
for 
allowed 
been 
income-tax); 

(ii)  losses  of  any  business 
situated outside India. 

(e) In the case of foreign banking 
proportionate 
companies 
administrative 
(overhead) 
expenses  of  Head  Office 
allocable to Indian business. 
(f)  Refund  of  any  excess  direct 
tax 
previous 
for 
accounting  years  and  excess 
provision, if any, of previous 
accounting  years,  relating  to 
or 
bonus, 
if 
development 
written back. 

depreciation, 
rebate, 

paid 

(g)  Cash  subsidy,  if  any,  given  by 
the Government or by any body 
corporate  established  by  any 
law  for  the  time  being  in  force 
or by any other agency through 
budgetary grants, whether given 
directly  or  through  any  agency 
for  specified  purposes  and  the 
proceeds  of  which  are  reserved 
for such purposes. 

Total of Item No. 6.     .    .     . 
Gross  Profits  for  purposes  of 
bonus  (Item  No.  5  minus  Item 
No. 6) 

7. 

See foot-note (2) 

See foot-note (2) 

See foot-note (2) 

See foot-note (3) 

See foot-note (2) 

See foot-note (2) 

Rs. 

Rs. 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[Explanation.—In  sub-item  (b)  of  Item  3,  “approved  gratuity  fund”  has  the  same  meaning 

assigned to it in clause (5) of section 2 of the Income-tax Act. 

Foot-notes— 

(1) It, and to the extent, charged to Profit and Loss Account. 

(2) If, and to the extent, credited to Profit and Loss Account. 

(3)  In  the  proportion  of  Indian  Gross  Profit  (Item  No.  7)  to  Total  World  Gross  Profit  (as  per 

Consolidated Profit and Loss Account adjusted as in Item No. 2 above only).] 

21 

 
1[THE SECOND SCHEDULE] 
2[See section 4(b)] 

COMPUTATION OF GROSS PROFITS 

Accounting Year ending...... 

Item 
No. 

Particulars 

Amount of 
sub-items 

Amount of  
main items 

Remarks 

Rs. 

Rs. 

1. 

Net  Profit  as  per  Profit  and  Loss 
Account. 

2. 

Add back provision for: 

(a) Bonus to employees. 

(b) Depreciation. 

(c)  Direct 

taxes, 

the 
provision  (if  Any)  for  previous 
accounting years. 

including 

See foot-note (1) 

See foot-note (1) 

See foot-note (1) 

3[(d) development 

rebate/Investment 
allowance/development 
allowance reserve.] 

(e) Any other reserves. 

Total of Item No. 2.  .    .      .   . 

Rs. 

3. 

Add back also : 

(a)  Bonus  paid  to  employees  in 
respect  of  previous  accounting 
years. 

4[(aa)  The  amount  debited 

in 
respect  of  gratuity  paid  or 
payable  to  employees  in 
excess of the aggregate of— 

(i)  the  amount,  if  any,  paid  to, 
or provided for payment to, 
an  approved  gratuity  fund; 
and 

(ii)  the  amount  actually  paid  to 
employees 
their 
retirement or on termination 
of their employment for any 
reason.] 

on 

1.  The First Schedule renumbered as the Second Schedule by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980). 
2. Subs. by s. 19, ibid., for “(See section 4)” (w.e.f. 21-8-1980).  
3. Subs. by s. 19, ibid., for entry (d) (w.e.f. 21-8-1980). 
4. Ins. by Act 23 of 1976, s. 26 (w.e.f. 25-9-1975). 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Ite
m 
No. 

Particulars 

Amount of 
sub-items 

Amount of           
main items 

Remarks 

Rs. 

Rs. 

(b) Donations in excess of the among 

admissible for income-tax. 

(c)  Any  annuity  due,  or  commuted 
value  of  any  annuity  paid,  under 
the provisions of section 280D of 
the  Income-tax  Act  during  the 
accounting year. 

See foot-note (1) 

(d)  Capital  expenditure  (other  than 
capital  expenditure  on  scientific 
research  which  is  allowed  as  a 
deduction  under  any  law  for  the 
time  being  in  force  relating  to 
direct  taxes)  and  capital  losses 
(other  than  losses  on  sale  of 
which 
capital 
depreciation has been allowed for 
income-tax 
or 
income-tax). 

assets 

on 

agricultural              

(e) Losses of, or expenditure relating 
to, any business situated outside 
India. 

Total of Item No. 3    .           .         . 

Rs. 

4.  Add  also  Income,  profits  or  gains  (if 
any)  credited  directly  to  reserves, 
other than— 

(i)  capital  receipts  and  capital  profits 
(including  profits  on  the  sale  of 
which 
capital 
depreciation has not been allowed 
for 
income-tax  or  agricultural 
income-tax); 

assets 

on 

(ii) profits of, and receipts relating to, 
any  business  situated  outside 
India; 

(iii) income of foreign concerns from 

investments outside India. 

Net total of Item No. 4 .     .    .      . 

Rs. 

5.  Total of Item Nos. 1, 2, 3, and 4 .   .  . 

Rs. 

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 
No. 

Particulars 

Amount of 
sub-items 

Amount of  
main items 

Remarks 

Rs. 

Rs. 

See foot-note (2) 

See foot-note (2) 

See foot-note (2) 

See foot-note (3) 

See foot-note (2) 

6. 

Deduct : 

(a)  Capital  receipts  and  capital 
profits  (other  than  profits  on 
the  sale  of  assets  on  which 
depreciation  has  been  allowed 
for  income-tax  or  agricultural            
income-tax). 

(b) Profits of, and receipts relating 
situated 
any  business 

to, 
outside India. 

(c)  Income  of  foreign  concerns 
from investment outside India. 

(d)  Expenditure  or  losses  (if  any) 
debited  directly  to  reserves, 
other than— 

(i)  capital  expenditure  and 
capital  losses  (other  than 
losses  on  sale  of  capital 
assets 
which 
on 
depreciation  has  not  been 
allowed  for  income-tax  or 
agricultural income-tax); 

(ii) 

losses  of  any  business 
situated outside India. 

(e) In the case of foreign concerns 
proportionate 
administrative 
(overhead)  expenses  of  Head 
Office  allocable 
Indian 
business. 

to 

(f)  Refund  of  any  direct  tax  paid 
for  previous  accounting  years 
and excess provision, if any, of 
years 
previous 
relating to bonus, depreciation, 
taxation or development rebate 
or  development  allowance,  if 
written back. 

accounting 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 
No. 

Particulars 

Amount of 
sub-items 

Amount of main 
items 

Remarks 

Rs. 

Rs. 

1[(g) Cash subsidy, if any, given by 
the  Government  or  by  any 
body  corporate  established 
by any law for the time being 
in  force  or  by  any  other 
through  budgetary 
agency 
grants, 
given 
through  any 
directly  or 
specified 
for 
agency 
purposes and the proceeds of 
which  are  reserved  for  such 
purposes.] 

whether 

Total of Item No. 6 .         .           . 

7. 

Gross Profit for purposes of bonus 
(Item No. 5 minus Item No. 6) 

Rs. 

Rs. 

2[Explanation.—In  sub-item  (aa)  of  Item  3,  “approved  gratuity  fund”  has  the  same  meaning 

assigned to it in clause (5) of section 2 of the Income-tax Act.] 

Foot-notes— 

(1) If, and to the extent, charged to Profit and Loss Account. 

(2) If, and to the extent, credited to Profit and Loss Account. 

(3)  In  the  proportion  of  Indian  Gross  Profit  (Item  No. 7)  to  Total  World  Gross  Profit  (as  per 

Consolidated Profit and Loss Account, adjusted as in Item No. 2 above only).  

1. Subs. by Act 23 of 1976, s. 26, for sub-item (g) (w.e.f. 25-9-1975). 
2. Explanation inserted by s. 26, ibid. (w.e.f. 25-9-1975). 

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
1[THE THIRD SCHEDULE] 

[See section 6(d)] 

Item 
No. 

(1) 

1. 

Category of employer 

Further sums to be deducted 

(2) 

(3) 

2[Company,  other  than  a  banking 
company] 

  (i)  The  dividends  payable  on  its  preference 
share  capital  for 
the  accounting  year 
calculated  at  the  actual  rate  at  which  such 
dividends are payable; 

 (ii)  8.5  per  cent.  of  its  paid  up  equity  share 
capital  as  at  the  commencement  of  the 
accounting year; 

 (iii)  6  per  cent.  of  its  reserves  shown  in  its 
balance-sheet  as  at  the  commencement  of 
the  accounting  year,  including  any  profits 
carried 
previous 
accounting year: 

forward 

from 

the 

Provided that  where  the  employer  is  a  foreign 

of          

the  meaning 

company  within 
section  591  of  the  Companies  Act,  1956                 
(1 of 1956), the total amount to be deduced 
under this Item shall be 8.5 per cent. on the 
aggregate of the value of the net fixed assets 
and  the  current  assets  of  the  company  in 
India  after  deducting  the  amount  of  its 
current  liabilities  (other  than  any  amount 
shown  as  payable  by  the  company  to  its 
Head  Office  whether  towards  any  advance 
made  by  the  Head  Office  or  otherwise  or 
any  interest  paid  by  the  company  to  its 
Head Office) in India. 

3[2.  Banking company 

(i)  The  dividends  payable  on  its  preference 
the  accounting  year 
the  rate  at  which  such 

share  capital  for 
calculated  at 
dividends are payable; 

(ii)  7.5  per  cent.  of  its  paid  up  equity  share 
capital  as  at  the  commencement  of  the 
accounting year; 

(iii)  5  per  cent.  of  its  reserves  shown  in  its 
balance sheet as at the commencement of 
the accounting year, including any profits 
the  previous 
forward 
carried 
accounting year; 

from 

1. The Second Schedule renumbered as the Third Schedule by Act 66 of 1980, s. 20 (w.e.f. 21-8-1980). 
2.  Subs. by s. 20, ibid., for “Company” (w.e.f. 21-8-1980). 
3. Ins. by s. 20, ibid. (w.e.f. 21-8-1980). 

26 

 
 
  
  
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
                                                           
 
Item No. 

Category of employer 

Further sums to be deducted 

(1) 

(2) 

(3) 

(iv) any sum which, in respect of the accounting 

year, is transferred by it— 

(a)  to  a  reserve  fund  under    sub-section  (1) 
of section 17 of the Banking Regulation 
Act, 1949 (10 of 1949); or 

(b)  to  any  reserves  in  India  in  pursuance  of 
any  direction  or  advice  given  by  the 
Reserve Bank of India. 

whichever is higher: 

Provided that  where  the  banking  company  is  a 
foreign  company  within  the  meaning  of 
section  591  of  the  Companies  Act,  1956              
(1  of  1956),  the  amount  to  be  deducted 
under this Item shall be the aggregate of— 

(i)  the  dividends  payable  to  its  preference 
shareholders for the accounting year at the 
rate  at  which  such  dividends  are  payable 
the  same 
on  such  amount  as  bears 
proportion  to  its  total  preference  share 
capital  as  its  total  working  funds  in  India 
bear to its total world working funds; 

(ii)  7.5  per  cent.  of  such  amount  as  bears  the 
same proportion to its total paid up equity 
share  capital  as  its  total  working  funds  in 
India bear to its total world working funds; 

(iii)  5  per  cent.  of  such  amount  as  bears  the 
same  proportion  to  its  total    disclosed 
reserves as its working funds in India bear 
to its total world working funds; 

(iv) any sum which, in respect of the accounting 
year,  is  deposited  by  it  with  the  Reserve 
Bank  of  India  under  sub-clause  (ii)  of 
clause (b) of   sub-section (2) of section 11 
of  the  Banking  Regulation  Act,  1949  (10 
of  1949),  not  exceeding 
the  amount 
required  under  the  aforesaid  provision  to 
be so deposited.] 

(i)  8.5 per cent. of its paid up capital as at the 
commencement of the accounting year; 

(ii)  6 per cent. of its reserves, if any, shown in 
its  balance-sheet as  at  the  commencement 
of  the  accounting  year,  including  any 
profits  carried  forward  from  the  previous 
accounting year. 

27 

3. 

Corporation 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item No. 

Category of employer 

Further sums to be deducted 

(1) 

(2) 

4. 

Co-operative society 

5. 

Any other employer not falling 
under any of the aforesaid 
categories. 

(3) 

(i) 8.5 per cent. of the capital invested by such 
society  in  its  establishment  as  evidenced 
from 
the 
its  books  of  accounts  at 
commencement of the accounting year; 

(ii)  such  sum  as  has  been  carried  forward  in 
respect of the accounting year to a reserve 
fund  under  any 
to  co-
operative  societies  for  the  time  being  in 
force. 

law  relating 

 (iii) 8.5 per cent. of the capital invested by him 
in his establishment as evidenced from his 
books  of  accounts  at  the  commencement 
of the accounting year: 

Provided that where such employer is a person 
to  whom  Chapter  XXIIA  of 
Income-tax Act applies, the annuity deposit 
payable by him under the provisions of that 
Chapter  during  the  accounting  year  shall 
also be deducted: 

the              

it  from 

Provided further that where such employer is a 
firm, an amount equal to 25 per cent. of the 
gross  profits  derived  by 
the 
establishment  in  respect  of  the  accounting 
in 
year  after  deducting  depreciation 
accordance  with  the  provisions  of  clause 
(a) of section 6 by way of remuneration to 
all the partners taking part in the conduct of 
business  of  the  establishment  shall  also  be 
deducted,  but  where 
the  partnership 
agreement,  whether  oral  or  written, 
provides  for  the  payment of  remuneration 
to any such partner, and— 

is less 

(i)  the  total  remuneration  payable  to  all  such 
partners 
the  said  25  per 
than 
cent., the  amount  payable,  subject to  a 
maximum  of    forty-eight thousand  rupees 
to each such partner; or 

(ii)  the  total  remuneration  payable  to  all  such 
partners is higher than the said 25 per cent., 
such percentage, or a sum calculated at the 
rate of  forty-eight  thousand  rupees to  each 
such  partner,  whichever  is  less,  shall  be 
deducted under this proviso: 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item No. 

Category of employer 

Further sums to be deducted 

(1) 

(2) 

(3) 

Provided also  that  where  such  employer is  an 
individual or a Hindu undivided family,—   
(i)  an  amount  equal  to  25  per cent.  of  the 
gross profits derived by such employer 
from the establishment in respect of the 
deducting 
accounting year 
depreciation 
the 
provisions of clause (a) of section 6; or 

in  accordance with 

after 

(ii) forty-eight thousand rupees, 

whichever  is  less,  by  way  of  remuneration  to 
such employer, shall also be deducted. 

6. 

Any employer falling under Item No. 
1 of Item No. 3 or Item No. 4 or 
Item  No.  5  and  being  a  licensee 
of 
within 
the Electricity 
(Supply)  Act, 
1948               (54 of 1948). 

the  meaning 

to  be  appropriated by 

In addition to the sums deductible under any 
of the aforesaid Items, such sums as are 
required 
the 
licensee  in  respect  of  the accounting 
year 
the Sixth 
Schedule 
that  Act  shall  also be 
deducted. 

to  a  reserve  under 

to 

Explanation.—The expression “reserves” occurring in column (3) against Item Nos. 1[1(iii), 2(iii) 

and 3(ii)] shall not include any amount set apart for the purpose of— 

(i) payment of any direct tax which, according to the balance-sheet, would be payable; 

(ii) meeting  any  depreciation  admissible  in  accordance  with  the  provisions  of  clause  (a)  of 

section 6; 

(iii) payment of dividends which have been declared, 

but shall include— 

(a) any amount, over and above the amount referred to in clause (i) of this Explanation, set 

apart as specific reserve for purpose of payment of any direct tax; and 

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

accordance with the provisions of clause (a) of section 6. 

1. Subs. by Act 66 of 1980, s. 20, for “1(iii) and 3(ii)” (w.e.f. 21-8-1980). 

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
1[THE FOURTH SCHEDULE 

(See sections 15 and 16) 

In this Schedule, the total amount of bonus equal to 8. 33 per cent.  of the annual salary or wage 
payable to all the employees is assumed to be Rs. 1, 04, 167. Accordingly, the maximum bonus to 
which all the employees are entitled to be paid (twenty per cent. of the annual salary or wage of all 
the employees) would be Rs. 2, 50, 000. 

Year  Amount equal To sixty per 

cent. or sixty-seven               

Amount 
payable as 
bonus 

Set on or set off of 
the year carried 
forward 

Total set on or set off 
carried forward 

per cent., as the case may 
be, of available surplus 
allocable as bonus 

(1) 

(2) 

(3) 

(4) 

(5) 

Rs. 

1,04,167 

6,35,000 

2,20,000 

1 

2 

3 

Rs. 

Rs. 

1,04,167** 

Nil 

Rs.  

Nil 

2,50,000* 

Set on 

Set on  

2,50,000* 

2,50,000* 

2,50,000* 
(inclusive of 
30,000 from 
year-2) 

Nil 

 of (year) 

(2) 

(2) 

 (2)  

 (4) 

 (2)  

 (4) 

(2) 
(4) 

(6) 

(6) 

(8) 

Set on  

2, 20,000 

Set on  

2,20,000  

1,25,000 

Set on  

1,10,000  

1,25,000 

Set on  

Nil+ 
1,25,000 

60,000 

Set on  

35,000 

Set off  

69,167 

4 

3,75,000 

2,50,000* 

Set on  

5 

1,40,000 

6 

3,10,000 

7 

1,00,000 

1,25,000 

Nil 

Set on  

60,000 

Nil 

2,50,000* 
(inclusive of 
1,10,000 from 
year-2) 

2,50,000* 

2,50,000* 
(inclusive of 
1,25,000 from 
year-4 and 
25,000 from 
year-6) 

8 

Nil 

(due to loss) 

1,04,167** 
(inclusive of 
35,000 from 
year-6) 

Set off  

69,167 

1. Subs. by Act 66 of 1980, s. 21, for the Third Schedule (w.e.f. 21-8-1980). 

30 

 
 
  
  
  
  
  
  
  
  
  
  
  
                                                           
(1) 

(2) 

(3) 

(4) 

(5) 

Set off  

69,167  

94,167 

Set off  

52,501 

(8) 
(9) 

(9) 

9 

10,000 

1,04,167** 

Set off  

94,167 

Nil 

1,04,167** 
(after setting 
off 69,167 
from year-8 
and 41,666 
from year-9) 

10 

2,15,000 

Notes— 

* Maximum 

+ The balance of Rs. 1,10,000 set on from year-2 lapses. 

**Minimum.] 

31 

 
  
 
