Statutory bonus calculator
Annual bonus under the Payment of Bonus Act, 1965, now Chapter IV of the Code on Wages, 2019: who is eligible at the ₹21,000 ceiling, what the bonus is computed on, and what 8.33% to 20% comes to. Ceilings as notified on 25 August 2026; figures as of 1 November 2026.
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How this is calculated
- Eligibility. Monthly wages (basic + DA + retaining allowance) must not exceed the eligibility ceiling, ₹21,000, and the employee must have worked at least 30 days in the accounting year. Here, months worked × 30 is compared against 30, so anything under one month fails.
- Calculation base. If monthly wages are ₹7,000 or less, bonus is computed on actual wages. If they exceed ₹7,000, the Code deems wages to be ₹7,000 or the minimum wage fixed for that employment, whichever is higher. That deeming is literal: with a ₹12,000 minimum wage, an employee on ₹10,000 is computed on ₹12,000.
- Annual bonus wages = calculation base × months worked. The Code says bonus is on wages earned in the year, so a mid-year joiner is pro-rated.
- Bonus = annual bonus wages × rate. The rate is at least 8.33% (one month's wages over twelve, payable even in a loss year) and at most 20%, depending on the allocable surplus. If 8.33% works out below ₹100, ₹100 is payable instead.
- Comparison table shows the same base at 8.33%, 10%, 15% and 20%, since most small companies pay the minimum unless a settlement or policy promises more.
Bonus is taxable as salary in the year it is paid, must be credited within eight months of the close of the accounting year (30 November for an April to March year), and belongs in the bonus register. ZekoHR carries it as a separate earning in the payroll run so TDS and the register entry follow automatically. Background and the worked example: statutory bonus explained: who gets it and how much. See also the gratuity calculator and salary structure explained.
Sources checked on 1 November 2026: SCC Online, "Centre notifies bonus eligibility and calculation rules under the Code on Wages, 2019" (26 August 2026); Labour Codes Advisor on S.O. 4710(E) and S.O. 4711(E); the Code on Wages, 2019 (sections 26 and 39).
Common questions
Who is eligible for statutory bonus?
An employee of a covered establishment whose monthly wages (basic, DA and retaining allowance) do not exceed ₹21,000 and who has worked at least 30 days in the accounting year. Apprentices are excluded, and an employee dismissed for fraud, violent misconduct or theft can be disqualified for that year. Permanent and fixed-term staff are treated alike.
Why is the bonus computed on ₹7,000 when the employee earns more?
The law separates eligibility from calculation. Anyone up to ₹21,000 is eligible, but where wages exceed ₹7,000 the bonus is computed as if wages were ₹7,000 or the minimum wage for that employment, whichever is higher. The central notification of 25 August 2026 kept both figures at the levels the 2015 amendment to the Payment of Bonus Act had set.
Which minimum wage applies, central or state?
The one fixed by the appropriate government for the employee's scheduled employment. The central notification refers to the minimum wage fixed by the central government because it governs central-sphere establishments; for most private shops, offices and factories the state is the appropriate government, so the state minimum wage for that category of work is the comparator. Enter the figure that applies to you.
Does a Diwali or performance bonus count toward the statutory bonus?
Only if its terms say so. A festival or performance bonus paid under a policy that describes it as being in lieu of, or adjustable against, statutory bonus can be set off. A bonus paid without that wording is an extra payment and the statutory amount remains due on top. Write the one-line policy before the payout, not after.
When must the bonus be paid, and is it taxable?
Within eight months of the close of the accounting year, which for an April to March year means by 30 November. Many companies pay it in the October payroll so it lands before Diwali. It is taxable as salary in the year it is paid, so TDS applies to it like any other earning and it should appear as its own line on the payslip.