Page 240 - DMGT306_MERCANTILE_LAWS_II

Unit 12: Payment of Bonus Act, 1965

Notes

Task Does this Act prescribe any disqualifications also for claiming bonus? Explain.

Self Assessment

Fill in the blanks:
7. ........................... means all remuneration (other than remuneration in respect of over-time
work), includes dearness allowance.
8. An ........................... shall be disqualified from receiving bonus under this Act, if he is
dismissed from service for fraud.

9. Every employee receiving salary or wages up to ........................... and engaged in any kind
of work whether skilled, unskilled, managerial, supervisory etc. is entitled to bonus for
every accounting year if he has worked for at least 30 working days in that year.

12.4 Computation of Bonus Payment

The method for calculation of annual bonus is as follow:

12.4.1 Computation of Gross Profits [Sec. 4]

There few differences in computation of gross profits in case of banking company and other than
banking companies. For accurate computation of the gross profits in case of banking companies
refer to First schedule and for other companies but not banking companies refer to Second
schedule. But over view for computation of gross profits is mentioned below:
Net profit (P&L a/c) +Add following items

 Income tax
 Provision for: Bonus to employees, Depreciation, Direct taxes,
 Bonus paid to employees in respect of previous accounting years
 The amount, if any, paid to, or provided for payment to, an approved gratuity fund

 The amount actually paid to employees on their retirement or on termination of their
employment for any reason
 Donations

 annuity due
 Capital expenditure (other than capital expenditure on scientific research
 capital losses
 capital losses (other than losses on sale) of Capital assets on which depreciation has been
allowed for income-tax or agricultural income-tax).
 Losses of, or expenditure relating to, any business situated outside India.

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