How does the bonus payment limit work under the Payment of Bonus Act?

Under the Payment of Bonus Act, employees drawing wages (basic plus DA) of up to ₹21,000 per month and having worked at least 30 days in the accounting year are eligible for a statutory bonus. The bonus is between a minimum of 8.33% and a maximum of 20% of the qualifying wages, depending on the employer’s allocable surplus.

A separate calculation ceiling applies: bonus is computed on ₹7,000 per month or the applicable state minimum wage, whichever is higher — so even an employee earning ₹20,000 has the bonus calculated on the lower ceiling, not full salary. The Act applies to establishments with 20 or more employees (10 or more for factories), and the bonus must be paid within eight months of the close of the accounting year. Only basic and DA count toward eligibility and calculation, not other allowances.