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arvind (partner)     11 August 2012

Bonus act

Dear Learned Friends,

My query pertains to Section 16 of the Bonus Act. This section give exemption to a NEWLY set  up   ESTABLISHMENT from payment of Bonus for initial 5 years from the year of initial production. Total 6 Years (Production Year + 5 Years) . However, if in any year there is profit then Bonus is payable for that accounting year.

A Company who already owns 5 Factories in different states and set-up a NEW FACTORY in a different state, want to know whether exemption is applicable for the NEWLY set-up Factory under section 16 of Bonus Act. i.e. If there is no profit in that new factory  for first 5 years, will the Company need to pay Bonus to employees employed in that New Factory. This reply will invariably lead to other query, whether New Factory by an existing and old company comes under definition of "establishment".

Your valued and reasoned opinion is requested.

Regards

Arvind Chauhan, CS, LLB

 



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