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Well I'm having difficulty in understanding with regard to calculation of Bonus, allocable surplus.

So can u pls explain me the process or method of calculation in detail with Examples.

at [url=mailto:akshita_ashu@rediffmail.com]akshita_ashu@rediffmail.com[/url]

Regards

Akshita

Salary above Rs. 2,500 is not considered for calculation of Bonus. [section 12]. Employee drawing salary/wage exceeding Rs 3,500 is not entitled to any bonus under the Act.

Thus, minimum bonus @ 8.33% will be Rs 2,500 and maximum @ 20% will be Rs 6,000 for the year, when salary of employee exceeds Rs 2,500 but is less than Rs 3,500.

Eligibility for bonus if worked for minimum 30 day** - E**very employee shall be entitled to be paid be 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. [section 8]

**Computation of amount available for distribution as bonus**** - **The establishment has to prepare a balance sheet and profit and loss account of the year and calculate the gross profit available, surplusand allocable surplus as per method and formula given in Bonus Act.

The first step is to calculateGross Profit. As per section 4, the gross profit in respect of any accounting year is required to be calculated as per First Schedule to Act in case of banking company and as per second schedule in case of other establishments. After calculation of Gross Profit as per section 4, next step is to calculate Available Surplus. As per section 5, available surplus is calculated by deducting sums as specified in section 6 from gross profit arrived at as per section 6 and adding difference equal to income tax on the bonus paid in the preceding year.

Thus, Available Surplus is equal to Gross Profit [as per section 4]

Allocable surplus is equal to 60% of available surplus calculated as per provisions of section 5. [In case of company which does not deduct tax at source as per provisions of section 194 of Income Tax Act, allocable surplus will be 67% of available surplus. Frankly, I am not able to visualise a situation where a company can legally ignore provisions of section 194 of Income Tax Act]. - - This allocable surplus has to be distributed as bonus among employees in proportion to the salary or wages actually earned by each employee during the year. However, this is subject to minimum 8.33% and maximum 20% as explained below.

Similarly, in a particular year, there may be lowerallocable surplus or noallocable surplus even for payment of 8.33% bonus. Such shortfall is also carried to next year. This is called carry forward for being set off in succeeding years. Thus, in every year, allocable surplusΓ is calculated. To this amount, set on from previous years is added. Similarly, set off, if any, from previous years is deducted. This gives amount which is available for distribution as bonus. The amount set off is carried forward only upto and inclusive of the fourth accounting year. If the amount carried forward is not set off in that period, it lapses. [section 15(2)]

While computing number of working days, an employee shall be deemed to have worked in an establishment even on the days on which (a) He was laid off (b) He was on leave with salary/wages(c) He was absent due to temporary disablement caused by accident arising out of and in course of employment and (d) Employee was on maternity leave with salary/wages. [section 14].

Thus, maximum bonus payable to employee is 20% in any accounting year.

Dear Dhuruv

For you kind information----

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Thanks & Regards

Akhil Gupta

AM-HR & Admin

Total likes : 1 times

Thanks for the update, Mr.Akhil

Yes, Bonus limit has been changed from 2,500/- to 3,500/- and the maximum limit is 10,000/-. In our practice Bonus is calculated on the basis of (Basic+FDA). If B+FDA is exceeds 10,000/- he is not eligible for bonus. The bonus calculation is minimum 8.33% and maximum 20%. If (Basic+FDA)>3,500/- we will take it as 3,500/- and if (B+FDA)<3,500/- we will take that (B+FDA) only. That amount is called "**Elgbl** **Amount"
**

Tha Bonus calculation is = (Elgbl Amount)*12*20% or (Elgbl Amount)*12*8.33%

Note : Loss of pay will be effected to this Bonus Eligible Amount.

HEELO,

I AM STUDENT OF MBA FROM KOLKATA..SO PLZ ANY BODY SOLVE THIS PROBLEM I WILL BE GREATFUL.BECAUSE I DONT KNOW THE EXACT AND PROPER WAY TO SOLVE THIS MATHEMATICAL PROBLEM.

MR.X JOINED A MANUFACTURING SCENARIO ON 1ST JUNE,2007 ON A BASIC SALARY OF INR 24000 PER MONTH PLUS DA @20% OF BASIC PLUS HRA @6% OF BASIC+DA PLUS TIFIN ALLOWANCE @ INR 30 PER DAY WORKED.ON 1ST JANUARY 2008 HE WAS PROMOTED WHEN HIS BASIC SALARY WAS ENHANCED TO INR 3500 PER MONTH.THE COMPANY DECLARED BONUS FOR THE ACCOUNTING YEAR 2008-09, 18% IS MR.X ENTITLED TO GET BONUS?IF YES BY HOW MUCH?

**Dear Sir,**

In case if we will bifurcate the Minimum Wages in all the category into two heads like Basic wage (78-80%) and other allowances.

How we will calculate the Bonus. If we will calculate the Bonus on Basic wage ie 78-80 of the Miimum Wage in all skills category that will be correct or not.

Please suggest us accordingly

Thanks

Anjum