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Unit 9: Payment of Bonus Act, 1965

Allocable Surplus Notes

“Allocable Surplus” means-
(a) in relation to an employer, being a company (other than a banking company) which has
not made the arrangements prescribed under the Income-tax Act for the declaration and
payment within India of the dividends payable out of its profits in accordance with the
provisions of section 194 of that Act, 67% of the available surplus in an accounting year;
(b) in any other case, 60% of such available surplus.

Available Surplus

“Available surplus” means the available surplus computed under Sec.5. The available surplus in
respect of any accounting year shall be the gross profits for that year after deducting therefrom
the sums referred to in section 6:
Provided that the available surplus in respect of the accounting year commencing on any day in
the year 1968 and in respect of every subsequent accounting year shall be the aggregate of--
(a) the gross profits for that accounting year after deducting therefrom the sums referred to in
section 6; and
(b) an amount equal to the difference between--

(i) the direct tax, calculated in accordance with the provisions of section 7, in respect of
an amount equal to the gross profits of the employer for the immediately preceding
accounting year; and
(ii) the direct tax, calculated in accordance with the provisions of section 7, in respect of
an amount equal to the gross profits of the employer for such preceding accounting
year after deducting therefrom the amount of bonus which the employer has paid or
is liable to pay to his employees in accordance with the provisions of this Act for that
year.

Direct Tax

“Direct Tax” means-
(a) any tax chargeable under-
(i) the Income-tax Act;
(ii) the Super Profits Tax Act, 1963 (14 of 1963);

(iii) the Companies (Profits) Surtax Act, 1964 (7 of 1964);
(iv) the agricultural income-tax law; and
(b) any other tax which, having regard to its nature or incidence, may be declared by the Central
Government, by notification in the Official Gazette, to be a direct tax for the purposes of
this Act.

Employee

“Employee” means any person (other than an apprentice) employed on a salary or wage not
exceeding 10,000/- rupees per month in any industry to do any skilled or unskilled manual,
supervisory, managerial, administrative, technical or clerical work for hire or reward, whether
the terms of employment be express or implied; (2007 amendment).

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