Statutory Bonus in India 2026 – Eligibility, Calculation, Payment Rules & Legal Rights

 

📌 What is Statutory Bonus?

Statutory Bonus is a mandatory payment that employers must pay to eligible employees under the
👉 Payment of Bonus Act, 1965

It is not a gift or goodwill gesture — it is a legal obligation.

The purpose of this Act is to ensure employees receive a share in the profits of the organisation.

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🏢 When is an Employer Required to Pay Bonus?

An employer becomes legally liable to pay bonus when:

• The establishment employs 20 or more employees

• The organisation falls under the applicability of the Act

• Employees meet eligibility criteria

Once applicable, the employer must pay bonus every financial year.

Even if:

• The company has low profit

• The company has financial loss

👉 Minimum 8.33% bonus must still be paid.

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👩‍💼 When is an Employee Eligible?

An employee becomes eligible when:

• Monthly salary is ₹21,000 or less

• The employee has worked at least 30 days in a financial year

• The employee is on payroll (permanent, temporary, probation, contractual)

Resigned employees are also eligible if they completed 30 days during that financial year.

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💵 How Much Bonus Must Be Paid?

As per law:

• Minimum Bonus: 8.33%

• Maximum Bonus: 20%

Calculation Base:

₹7,000 per month
OR
Minimum wage for the employment
(whichever is higher)

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🔢 Example Calculation

If salary = ₹18,000 per month

Bonus will still be calculated on ₹7,000 (as per Act)

Minimum bonus:

8.33% × 7,000 × 12
= ₹6,997 approx.

Maximum bonus (20%):

20% × 7,000 × 12
= ₹16,800

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📅 When Must Employer Pay Bonus?

Legally:

• Bonus must be paid within 8 months from the close of the financial year (March 31).

• That means payment should be made before November 30.

Failure to pay within this period can attract legal penalties.

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🎇 Why Do Employers Pay Bonus at the Time of Diwali?

Many employees ask this.

There are 3 main reasons:

1️⃣ Legal Timing Matches Diwali

Financial year ends on 31 March.
8-month deadline ends around November — which usually falls near Diwali.

So employers choose Diwali for convenience.

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2️⃣ Cultural & Festive Significance

In India, Diwali is considered a festival of prosperity and wealth.
Employers symbolically distribute bonus during this time as:

• A gesture of appreciation

• A motivational incentive

• A goodwill practice

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3️⃣ Financial Planning Cycle

Companies finalize accounts after audit (around September–October).
After profit determination, bonus percentage is declared.

So Diwali becomes a natural payout period.

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⚖️ Is Diwali Bonus Compulsory?

Important clarification:

• Statutory Bonus is compulsory under the Act.

• “Diwali Bonus” as a festival gift (like sweets, extra ex-gratia amount) is not compulsory unless written in policy.

Some companies give:

• Statutory bonus

• Plus ex-gratia festival bonus

But only statutory bonus is legally mandatory.

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📉 What If Company Says “No Profit, So No Bonus”?

This is incorrect.

Even in loss:

👉 Minimum 8.33% must be paid.

The Act allows adjustment of excess/short payment in future years through "set-on" and "set-off" provisions.

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❌ When Can Employer Legally Deny Bonus?

Bonus may not be payable if:

• Salary exceeds ₹21,000 per month

• Employee worked less than 30 days

• Employee dismissed for proven fraud, theft, violent misconduct

Otherwise, denial is illegal.

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📝 What If Employer Does Not Pay Bonus?

You can:

1. Send written email to HR

2. Keep salary slips & attendance proof

3. File complaint with Labour Commissioner

4. Claim under Payment of Bonus Act

Non-payment is a punishable offence.

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🔎 Frequently Asked Questions (SEO Section)

Is statutory bonus part of CTC?

No. It is a statutory liability, not optional CTC component.

Is statutory bonus taxable?

Yes, fully taxable under Income Tax Act.

Is bonus payable to resigned employees?

Yes, if they completed minimum 30 days in that financial year.

Can employer delay bonus after Diwali?

Only within 8 months of financial year closure. Beyond that is a violation.

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📢 Final Conclusion

Statutory Bonus is:

✔ A legal right
✔ Mandatory for eligible employers
✔ Payable every financial year
✔ Commonly paid during Diwali due to legal timing

It is not charity — it is law.