How much tax is deducted on a bonus?

Tax deducted on a bonus depends on your overall annual income tax slab. Bonus is treated as part of salary under Section 17(1) of the Income Tax Act, and employers deduct TDS under Section 192 based on your applicable tax rate.

Is bonus mandatory even if the company suffers a financial loss?

Yes! Under Section 10 of the Payment of Bonus Act 1965, every covered establishment must pay a mandatory minimum bonus of 8.33% of basic wages (or ₹100, whichever is higher) to eligible employees, even if the employer suffers a net financial loss in that accounting year.

What is the salary limit for statutory bonus eligibility in India?

Under Section 2(13) of the Act, an employee drawing a monthly Basic Salary + Dearness Allowance (DA) of up to ₹21,000 is eligible for statutory bonus. Employees earning above ₹21,000 per month fall outside the statutory mandate.

What is the ₹7,000 calculation ceiling in statutory bonus?

Under Section 12 of the Act, if an eligible employee’s Basic + DA exceeds ₹7,000 per month, the bonus is calculated on ₹7,000 per month (or the scheduled minimum wage for that employment, whichever is HIGHER).

How much bonus will an employee earning ₹7,000 per month get?

For an employee earning ₹7,000 Basic+DA for 12 months: Minimum bonus (8.33%) = ₹7,000 × 8.33% × 12 = ₹6,997 per year. Maximum bonus (20.00%) = ₹7,000 × 20% × 12 = ₹16,800 per year.

Is Diwali bonus the same as statutory bonus?

Yes. In most Indian commercial establishments and factories, the annual statutory bonus required under the Payment of Bonus Act is customarily disbursed right before Diwali or major regional festivals.

How many days must an employee work to be eligible for bonus?

Under Section 8 of the Act, an employee must have worked in the establishment for not less than 30 working days in that financial/accounting year to become eligible for statutory bonus.

Are employees earning above ₹21,000 per month entitled to any bonus?

Employees drawing above ₹21,000 Basic+DA are not covered by the statutory mandate of the Act. However, employers may pay them contractual performance bonus or ex-gratia festival bonus as per company HR policy.

What is the minimum statutory bonus amount floor?

The minimum statutory bonus is 8.33% of calculation wages or ₹100 (₹60 for employees under 15 years of age), whichever is HIGHER, for employees who have worked a full year.

Is statutory bonus taxable under Income Tax in India?

Yes. Statutory bonus paid by an employer is treated as part of taxable salary income under Section 17(1) of the Income Tax Act and is subject to standard TDS deduction.

Are newly set-up companies exempt from paying minimum bonus?

Under Section 16 of the Act, newly set-up establishments are exempt from paying the 8.33% minimum bonus during their first 5 accounting years unless they earn net profits in any of those years.

Can an employee be disqualified from receiving statutory bonus?

Yes. Under Section 9 of the Act, an employee is disqualified from receiving bonus if dismissed from service for fraud, riotous or violent behavior on premises, or theft/misappropriation of property.

How do employers file proof of bonus payment?

Employers must maintain Form C (Register of Bonus) and file Form D (Annual Return of Bonus Paid) with the Inspector of Factories / Labour Department within 30 days of the payment deadline.

What is the statutory deadline for paying annual bonus in India?

Under Section 19 of the Payment of Bonus Act 1965, employers must pay the accrued annual bonus in cash within 8 months from the close of the financial year (typically by 30 November following the March financial year-end).

How much tax is deducted on a bonus?

Tax deducted on a bonus depends on your overall annual income tax slab. Bonus is treated as part of salary under Section 17(1) of the Income Tax Act, and employers deduct TDS under Section 192 based on your applicable tax rate.

Is bonus mandatory even if the company suffers a financial loss?

Yes! Under Section 10 of the Payment of Bonus Act 1965, every covered establishment must pay a mandatory minimum bonus of 8.33% of basic wages (or ₹100, whichever is higher) to eligible employees, even if the employer suffers a net financial loss in that accounting year.

What is the salary limit for statutory bonus eligibility in India?

Under Section 2(13) of the Act, an employee drawing a monthly Basic Salary + Dearness Allowance (DA) of up to ₹21,000 is eligible for statutory bonus. Employees earning above ₹21,000 per month fall outside the statutory mandate.

What is the ₹7,000 calculation ceiling in statutory bonus?

Under Section 12 of the Act, if an eligible employee’s Basic + DA exceeds ₹7,000 per month, the bonus is calculated on ₹7,000 per month (or the scheduled minimum wage for that employment, whichever is HIGHER).

How much bonus will an employee earning ₹7,000 per month get?

For an employee earning ₹7,000 Basic+DA for 12 months: Minimum bonus (8.33%) = ₹7,000 × 8.33% × 12 = ₹6,997 per year. Maximum bonus (20.00%) = ₹7,000 × 20% × 12 = ₹16,800 per year.

Is Diwali bonus the same as statutory bonus?

Yes. In most Indian commercial establishments and factories, the annual statutory bonus required under the Payment of Bonus Act is customarily disbursed right before Diwali or major regional festivals.

How many days must an employee work to be eligible for bonus?

Under Section 8 of the Act, an employee must have worked in the establishment for not less than 30 working days in that financial/accounting year to become eligible for statutory bonus.

Are employees earning above ₹21,000 per month entitled to any bonus?

Employees drawing above ₹21,000 Basic+DA are not covered by the statutory mandate of the Act. However, employers may pay them contractual performance bonus or ex-gratia festival bonus as per company HR policy.

What is the minimum statutory bonus amount floor?

The minimum statutory bonus is 8.33% of calculation wages or ₹100 (₹60 for employees under 15 years of age), whichever is HIGHER, for employees who have worked a full year.

Is statutory bonus taxable under Income Tax in India?

Yes. Statutory bonus paid by an employer is treated as part of taxable salary income under Section 17(1) of the Income Tax Act and is subject to standard TDS deduction.

Are newly set-up companies exempt from paying minimum bonus?

Under Section 16 of the Act, newly set-up establishments are exempt from paying the 8.33% minimum bonus during their first 5 accounting years unless they earn net profits in any of those years.

Can an employee be disqualified from receiving statutory bonus?

Yes. Under Section 9 of the Act, an employee is disqualified from receiving bonus if dismissed from service for fraud, riotous or violent behavior on premises, or theft/misappropriation of property.

How do employers file proof of bonus payment?

Employers must maintain Form C (Register of Bonus) and file Form D (Annual Return of Bonus Paid) with the Inspector of Factories / Labour Department within 30 days of the payment deadline.

What is the statutory deadline for paying annual bonus in India?

Under Section 19 of the Payment of Bonus Act 1965, employers must pay the accrued annual bonus in cash within 8 months from the close of the financial year (typically by 30 November following the March financial year-end).

Salary & HR Instant Real-time Calculation

Statutory Bonus Calculator (Payment of Bonus Act, 1965)

Calculate statutory Diwali & annual employee bonus under Payment of Bonus Act 1965. Compute minimum (8.33%), maximum (20%), ₹21,000 eligibility limit, and ₹7,000 calculation wage ceiling.

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Estimated Statutory Bonus (Selected Rate)

₹6,997

For a Monthly Basic+DA of ₹20,000 over 12 months in FY 2025-26, the calculation wage base is ₹7,000/month. Estimated bonus at 8.33% is ₹6,997 (Statutory Range: ₹6,997 – ₹16,800).

Calculation Wage Base Used (Capped)₹7,000 / month

Monthly Equivalent Bonus Outflow₹583 / month

Estimated Summary

For a Monthly Basic+DA of ₹20,000 over 12 months in FY 2025-26, the calculation wage base is ₹7,000/month. Estimated bonus at 8.33% is ₹6,997 (Statutory Range: ₹6,997 – ₹16,800).

* Estimate only — please verify exact tax & rate calculations with a qualified Chartered Accountant (CA).

Structure Employee Salary & Bonus Compensation:

Include this statutory bonus calculation in monthly salary slips or compare with net take-home salary & statutory gratuity:

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Financial Cost Breakdown

Estimated Statutory Bonus (Selected Rate)

Calculated at 8.33% on capped base of ₹7,000/month

₹6,997

Statutory Minimum Bonus (8.33% Floor)

Mandatory minimum floor under Section 10 (even in loss years)

₹6,997

Statutory Maximum Bonus (20.00% Ceiling)

Maximum ceiling under Section 11 based on allocable surplus

₹16,800

Statutory Eligibility Status

Statutory Eligible under Payment of Bonus Act, 1965 (Basic+DA ≤ ₹21,000).

Statutory Eligible

Calculation Wage Base Used (Capped)

min(Basic+DA, max(₹7,000, Min Wage ₹0)) as per Sec 12

₹7,000 / month

Monthly Equivalent Bonus Outflow

Equivalent monthly bonus allocation over 12 working months

₹583 / month

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Legal Guide & Reference Article

Statutory Bonus Calculator (Payment of Bonus Act 1965) – Free India Tool

Free online Statutory Bonus Calculator for Indian employees & HR teams under the Payment of Bonus Act, 1965. Calculate annual Diwali & festival bonus ranging from 8.33% to 20.00%, check Section 8 statutory eligibility (₹21,000 ceiling), apply Section 12 calculation caps (₹7,000 or scheduled minimum wage), factor in 30 working days qualification, and download official PDF summaries.

By the QuickDocIndia Editorial Team

Quick Answer

A bonus calculator is an online tool that calculates statutory bonus payouts under the Payment of Bonus Act 1965 in India. Using a statutory bonus calculator, salary bonus calculator, bonus calculator india, or bonus after tax calculator helps determine exact festival bonuses, tax deduction on bonus, and net payout after TDS.

Quick Answer: What is a Statutory Bonus Calculator?

A bonus calculator is a financial utility that helps Indian HR managers and employees compute annual bonus payouts. Whether you need a statutory bonus calculator under the Payment of Bonus Act 1965, a salary bonus calculator, a bonus calculator india tool, a how much tax on bonus calculator estimator, or a bonus after tax calculator, our free calculator provides accurate statutory calculations.

Quick Answer: What is Statutory Bonus in India?

Statutory bonus is a mandatory annual payment under the Payment of Bonus Act, 1965 ranging between 8.33% and 20.00% of basic wages. Employees earning monthly Basic+DA up to ₹21,000 who work $ge$ 30 days qualify. Calculations are capped at ₹7,000/month (or state minimum wage, whichever is higher).

1. What is the Payment of Bonus Act, 1965?
2. Who is Eligible for Statutory Bonus?
3. How is Statutory Bonus Calculated?
4. Minimum vs Maximum Bonus Rates
5. Payment Deadline & Form D Compliance
6. New Company Exemption (Sec 16)
7. Statutory vs Performance Bonus (>₹21k)
8. Income Tax Treatment of Bonus

1. What is the Payment of Bonus Act, 1965?

The Payment of Bonus Act, 1965 is a major Indian labor legislation that mandates commercial establishments and factories employing 20 or more persons (or 10+ in notified states) to share a portion of their annual profits with eligible employees in the form of an annual statutory bonus.

The Act aims to bridge the gap between actual wages paid and a living wage, while giving workers a statutory right to participate in the prosperity of the enterprise. It applies uniformly across private companies, factories, partnerships, and public sector undertakings.

Statutory Bonus Outflow Comparison: Min (8.33%) vs Max (20.00%)

Illustrative annual bonus comparison across different monthly Basic+DA salary levels for 12 months worked

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2. Who is Eligible for Statutory Bonus?

Under Section 8 of the Act, an employee must satisfy all of the following criteria to claim statutory bonus:

Salary Ceiling (Sec 2(13)): Draws a monthly Basic Salary + Dearness Allowance (DA) of ₹21,000 or less.
Minimum Working Days: Has worked in the establishment for at least 30 working days during the accounting year.
Establishment Coverage: Employed in a factory or establishment with 20 or more employees.
No Disqualification (Sec 9): Not dismissed for fraud, riotous behavior, theft, or sabotage on company premises.

Monthly Basic+DA vs Capped Calculation Wage Base (Sec 12 Cap)

Visual comparison showing how higher monthly salaries are capped at ₹7,000/month for statutory bonus math

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3. How is Statutory Bonus Calculated? (Formula & Worked Example)

Under Section 12, statutory bonus calculation relies on a capped wage base rather than actual gross salary:

Statutory Calculation Wage Base Formula:


          Calculation Base = min( Monthly Basic + DA , max( ₹7,000 , Scheduled Minimum Wage ) )

Annual Bonus = Calculation Base × Bonus Rate (%) × Months Worked

Verified Worked Example Table

Calculation breakdown for a 12-month accounting year with ₹7,000 calculation cap:

Monthly Basic+DA	Capped Base (Sec 12)	Min Bonus (8.33%)	Max Bonus (20.00%)	Statutory Status
₹6,000 / month	₹6,000 (Actual)	₹5,998 / yr	₹14,400 / yr	Eligible (Below Cap)
₹7,000 / month	₹7,000 (At Cap)	₹6,997 / yr	₹16,800 / yr	Eligible (At Cap)
₹15,000 / month	₹7,000 (Capped)	₹6,997 / yr	₹16,800 / yr	Eligible (Capped)
₹21,000 / month	₹7,000 (Capped)	₹6,997 / yr	₹16,800 / yr	Max Eligible Limit
₹25,000 / month	N/A	N/A	N/A	Exceeds ₹21k Ceiling

4. Minimum vs Maximum Bonus Rates (Sec 10 & 11)

The Act prescribes a statutory band between 8.33% and 20.00%:

Minimum Bonus (8.33% - Sec 10)

Every employer must pay a minimum bonus of 8.33% of wages earned (or ₹100, whichever is higher). This is mandatory regardless of whether the business earned a profit or suffered a loss.

Maximum Bonus (20.00% - Sec 11)

If the establishment has significant allocable surplus in the accounting year, the bonus rate increases proportionately up to a statutory maximum ceiling of 20.00%.

5. Payment Deadline & Form D Compliance

Under Section 19, employers must pay the statutory bonus within 8 months from the close of the accounting year:

FY 2025-26 Payment Deadline: 30 November 2026.
Form C & D Maintenance: Employers must record payments in Form C and submit Form D (Annual Return of Bonus Paid) to the Labour Inspector within 30 days of payment.

6. New Company Exemption Rules (Sec 16)

To encourage new business ventures, Section 16 provides temporary relief for newly set-up establishments:

During the first 5 accounting years following the start of commercial production or operations, a new company is required to pay bonus only for those years in which it derives a net profit. If it incurs a net loss in any of the first 5 years, no minimum bonus is mandatory for that year.

7. Statutory vs Performance Bonus (>₹21k Earners)

It is essential to distinguish statutory bonus from commercial performance bonus:

Feature	Statutory Bonus (Sec 8)	Contractual / Performance Bonus
Eligibility Limit	Basic+DA ≤ ₹21,000/mo	Basic+DA > ₹21,000/mo
Legal Mandate	Mandatory by Law	Discretionary / Contractual
Calculation Base	Capped at ₹7,000 / Min Wage	As per employment contract / CTC

8. Income Tax Treatment of Statutory Bonus

Under Section 17(1) of the Income Tax Act 1961, statutory bonus received from an employer is fully treated as taxable salary income. It is added to your annual gross salary for the financial year in which it is paid and is subject to TDS as per your applicable tax slab (Old or New Tax Regime).

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How to Create & Execute

Follow these step-by-step instructions to generate your professionally formatted document

Input Monthly Basic Salary + Dearness Allowance (DA)

Enter the employee’s monthly Basic salary plus Dearness Allowance in Rupees. This figure determines eligibility under the ₹21,000 ceiling.

Enter Months Worked in the Financial Year

Select total working months in the accounting year (1 to 12). Employees must work at least 30 working days to qualify for statutory bonus.

Select Bonus Rate (8.33% to 20.00%) & Optional Minimum Wage

Choose the declared bonus percentage. Enter state minimum wage if higher than ₹7,000 to apply the "whichever is higher" Section 12 rule.

View Instant Breakdown & Download PDF Summary

Examine statutory eligibility status, capped calculation base, minimum/maximum bonus ranges, and download an official PDF calculation report.

Frequently Asked Questions

Clear answers to key legal and procedural questions

Statutory bonus is calculated as: (Eligible Monthly Basic Salary + DA, capped at ₹7,000) × Bonus Percentage (8.33% to 20%) × Number of Months Worked in the financial year.