The Payment of Bonus Act sets a floor and a ceiling, minimum 8.33%, maximum 20%, but the number most people get wrong is the calculation base: bonus is worked out on a wage capped at ₹7,000/month even if you earn far more, as long as you’re under the separate ₹21,000/month eligibility ceiling. This calculator applies both correctly.
These are the two numbers that get confused most often. The eligibility ceiling (₹21,000/month bonus wage) decides whether the Act applies to you at all. The calculation ceiling (₹7,000/month, or your state’s minimum wage if that’s higher) decides what base the percentage is applied to, regardless of your actual salary. An employee earning ₹20,000/month is eligible, but their bonus is still computed on ₹7,000, not ₹20,000.
The Act applies to establishments employing 20 or more people, and to employees who have worked at least 30 days in the accounting year. Anything paid above the statutory minimum, up to the 20% cap, is at the employer’s discretion based on allocable surplus.
No. Statutory bonus is a legal entitlement under the Payment of Bonus Act, distinct from a discretionary performance bonus or variable pay plan, which our Variable Pay Payout Calculator covers separately.
The Act doesn’t apply, so any bonus paid is entirely at the employer’s discretion in both amount and structure.
It can be revised by government notification, and some states apply a higher figure tied to their own minimum wage notification, check ours if you need to look up a specific state’s rate. Confirm the current figure with your payroll team before relying on it for compliance purposes.
Many CTC structures already build in an assumed annual bonus as part of the offered package. Use our CTC to In-Hand Salary Calculator to see how that fits into your overall take-home.
Yes, statutory bonus is taxed as regular salary income, with TDS applied the same way it is on your monthly pay. Our TDS on Salary Calculator covers how that’s worked out across the year.
Bonus is a payment, not a deduction, but it’s worth checking it against the rest of your payslip. Our PF Calculator and Professional Tax Calculator cover the deduction side for the same wage band.