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Statutory Bonus Calculator

Calculate Statutory Bonus

Enter monthly Basic + DA, the bonus rate, and months worked in the accounting year for an instant estimate.

Calculate Clear

Based on the Payment of Bonus Act, 1965 (as amended in 2015). Uses the ₹7,000/month calculation ceiling — some states notify a higher minimum wage, which applies instead if higher.

What Is Statutory Bonus?

Statutory bonus is a mandatory annual cash payment under the Payment of Bonus Act, 1965, meant to give eligible employees a share of the company's profits — on top of their regular salary. Unlike a discretionary or Diwali bonus, it is a legal entitlement, not a gesture.

Minimum: 8.33% of annual wages
Maximum: 20% of annual wages

The exact rate between these two limits depends on the employer's "allocable surplus" (profit-linked formula) for the accounting year — most small businesses without a formal profit-sharing declaration pay the statutory minimum of 8.33%.

Eligibility & Applicability

  • Applies to factories, and other establishments employing 20 or more persons on any day during the accounting year (some states notify a lower threshold)
  • Covers employees earning up to ₹21,000/month in Basic + DA
  • Employee must have worked at least 30 working days in the accounting year
  • Applies regardless of whether the company made a profit — a minimum bonus is payable even in a loss year

How the ₹7,000 Calculation Ceiling Works

The Act uses two different ceilings, which is where most confusion comes from:

  • Eligibility ceiling — ₹21,000/month: if Basic + DA is above this, the employee is not covered at all
  • Calculation ceiling — ₹7,000/month (or the applicable minimum wage, whichever is higher): even for an eligible employee earning ₹15,000 or ₹20,000, the bonus is computed as if they earned only ₹7,000/month (or the notified minimum wage, if that's higher)

In other words, earning more between ₹7,000 and ₹21,000 changes nothing about the bonus amount — it only changes whether the employee is covered at all.

Worked Example

An employee with monthly Basic + DA of ₹15,000, who worked the full accounting year, at the minimum statutory rate:

  • Eligible? Yes — ₹15,000 is under the ₹21,000 eligibility ceiling
  • Calculation wage: capped at ₹7,000 (not the actual ₹15,000)
  • Annual bonus: 8.33% × ₹7,000 × 12 = ₹6,997
  • Monthly equivalent: ≈ ₹583

Enter your own wage, rate, and months worked in the calculator above for an instant breakdown — this example just shows how the ceiling and percentage are applied.

Statutory Bonus vs. Ex-Gratia / Performance Bonus

  Statutory Bonus Ex-Gratia / Performance Bonus
Legal basisMandatory under the Payment of Bonus ActNo statutory backing — a company policy
Who is coveredEmployees earning up to ₹21,000/month (Basic + DA)Any employee, at the employer's discretion
Amount8.33%-20% of wages (₹7,000 calculation ceiling)Whatever the employer decides
Payable even in a loss year?Yes, the 8.33% minimum still appliesNo — entirely discretionary

A "Diwali bonus" or year-end bonus that companies announce informally is usually the ex-gratia kind — it can be paid alongside or instead of the statutory bonus, but it doesn't replace the legal obligation for employees who fall within the Act's coverage.

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FAQ

Frequently Asked Questions

Common questions about statutory bonus in India

Who is eligible for statutory bonus in India? −

Employees earning up to ₹21,000/month in Basic + DA, at an establishment covered by the Payment of Bonus Act (factories, and other establishments with 20 or more employees), are eligible — provided they worked at least 30 working days in the accounting year.

How is statutory bonus calculated? −

Bonus is calculated on a capped wage, not the employee's actual salary: take the lower of the employee's Basic + DA or ₹7,000/month (or the applicable state minimum wage, if higher), multiply by 12 months, then apply the bonus rate — a minimum of 8.33% and a maximum of 20%. For example, at 8.33% and a ₹7,000 calculation wage, the annual bonus is ₹6,997.

What is the minimum and maximum statutory bonus percentage? −

The Payment of Bonus Act sets a floor of 8.33% and a ceiling of 20% of annual wages (using the ₹7,000 calculation ceiling). The exact rate within that range depends on the employer's allocable surplus for the year — most small businesses without a formal profit-sharing declaration pay the 8.33% minimum.

Is statutory bonus payable even if the company makes a loss? +

When must employers pay the statutory bonus? +

Is a Diwali bonus the same as a statutory bonus? +

Is there a minimum bonus amount even for very low wages? +

Does SnapHRM calculate statutory bonus automatically during payroll? +

Have more questions? Check our documentation or contact us.

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