Statutory bonus (India) is calculated using this formula:
Bonus = (Bonus-eligible salary × Bonus percentage × Eligible months) ÷ 12
Where:
- Bonus percentage: 8.33% (minimum) to 20% (maximum)
- Bonus-eligible salary: Capped as per law (explained below)
- Eligible months: Months worked in the accounting year (minimum 30 days)
This is the legally accepted calculation under the Payment of Bonus Act, 1965 (confirmed and in force).
Who Can Use This Bonus Calculator
This calculation applies to:
- Employees working in establishments covered by the Bonus Act
- Permanent, fixed-term, and contract employees (if conditions are met)
- Employees who have worked at least 30 days in the accounting year
It does not apply to:
- Apprentices under the Apprentices Act
- Employees earning above the statutory eligibility ceiling
Salary Limits That Decide Eligibility and Calculation
1. Eligibility Ceiling (Confirmed)
- Employees earning up to ₹21,000 per month (Basic + DA) are eligible for statutory bonus.
If your salary exceeds ₹21,000/month, statutory bonus is not mandatory, even if paid voluntarily.
2. Calculation Ceiling (Confirmed)
Even if your actual salary is higher, bonus calculation is restricted to:
- ₹7,000 per month, or
- Notified minimum wages for the scheduled employment
Whichever is higher
This cap is critical. Most bonus calculation errors happen here.
Calculate Your Bonus Amount
Use our bonus calculator to estimate your payable bonus based on the latest calculation method and proposed wage definition under the new labour codes.
Open Bonus CalculatorNote: Final applicability depends on official notification of labour codes.
Step-by-Step Bonus Calculation Example
Assumptions:
- Basic + DA: ₹18,000/month
- Minimum wage (notified): ₹12,000/month
- Bonus declared: 10%
- Months worked: 12
Step 1: Determine bonus-eligible salary
Higher of ₹7,000 or minimum wage → ₹12,000
Step 2: Apply the formula
Bonus = (₹12,000 × 10% × 12) ÷ 12
Bonus payable = ₹12,000
Minimum and Maximum Bonus You Can Receive
- Minimum bonus: 8.33%
Payable even if the company has no allocable surplus (subject to Act conditions) - Maximum bonus: 20%
Payable only if allocable surplus permits
The exact percentage is declared by the employer for each accounting year.
What Salary Components Are Considered
Included:
- Basic salary
- Dearness Allowance (DA)
Excluded:
- HRA
- Bonus already paid
- Incentives
- Overtime
- Allowances (travel, food, special, etc.)
Bonus is not calculated on gross salary or CTC.
Partial-Year Employment: Pro-Rata Bonus
If you worked for only part of the year:
- Bonus is calculated only for the months worked
- Minimum condition remains 30 working days
This applies equally to resignations, new joiners, and fixed-term contracts.
Important Compliance Notes (Confirmed Position)
- Bonus is a statutory obligation, not a performance incentive
- Bonus must be paid within 8 months from the close of the accounting year
- Showing bonus as “ex-gratia” does not override statutory liability if the Act applies
Practical Check for Employees and HR
Before accepting or paying bonus, verify:
- Basic + DA amount (not gross salary)
- Eligibility ceiling (₹21,000)
- Calculation ceiling (₹7,000 or minimum wage)
- Declared bonus percentage
- Months actually worked
If any one of these is wrong, the bonus amount will be incorrect.