Statutory Bonus Calculator
Work out the annual statutory bonus payable to an employee — 8.33% to 20% on salary capped at ₹7,000 or the minimum wage, with an instant eligibility check.
How the bonus is worked out
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Disclaimer: Indicative estimate under the Payment of Bonus Act 1965. Actual bonus depends on the employer's allocable surplus, set-on/set-off and applicable minimum wage notification.
Statutory bonus under the Payment of Bonus Act 1965
Every employee drawing a salary or wage up to ₹21,000 per month in an establishment of 20 or more workers is entitled to an annual bonus. The bonus is not calculated on the full salary — it is worked out on salary capped at ₹7,000 per month or the minimum wage for that scheduled employment, whichever is higher. The rate ranges from a statutory minimum of 8.33% to a maximum of 20%.
Worked examples
The salary used for the calculation is capped at ₹7,000 (or the minimum wage if higher), then multiplied by 12 months and the bonus percentage. Here is how the same ₹18,000/month employee is treated at different rates:
Key terms explained
Eligibility ceiling (₹21,000)
An employee must earn ₹21,000 or less per month to claim statutory bonus, and must have worked at least 30 days in the year. Anyone above the ceiling is outside the Act — bonus, if any, is contractual.
The ₹7,000 cap
Even if the actual salary is higher, bonus is computed on a salary capped at ₹7,000 per month or the notified minimum wage for that scheduled employment — whichever is higher.
8.33% vs 20%
The minimum bonus is 8.33% and is payable even in a loss year. The maximum is 20%, paid when the employer's allocable surplus allows it; the actual rate falls in between.
Allocable surplus
The share of the employer's gross profit (60% or 67%) available for bonus after prior charges. It determines whether the bonus rate rises above the 8.33% floor toward the 20% ceiling.
How is statutory bonus calculated?
Bonus is a percentage — between 8.33% and 20% — of the employee's salary or wage for the days worked in the accounting year. Where monthly wages exceed ₹7,000, the calculation is capped at ₹7,000 or the applicable minimum wage, whichever is higher.
Which salary components count as wages for bonus?
Basic wage and dearness allowance. House rent allowance, overtime, conveyance, bonus, commission and employer contributions to PF or gratuity are excluded.
What is the eligibility limit for bonus?
Employees drawing up to ₹21,000 a month who have worked at least 30 working days in the year. Someone earning above that ceiling has no statutory entitlement, though an employer may pay ex gratia.
Is statutory bonus taxable?
Yes. Bonus is fully taxable as salary in the year it is received, and TDS under section 192 applies in the month it is paid.
Can bonus be adjusted against a festival advance or ex gratia already paid?
Yes. Under section 17, a customary or festival bonus and any interim payment made for the same accounting year can be deducted from the statutory bonus payable.
Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.