THE PAYMENT OF BONUS ACT, 1965 INTRODUCTION
The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 11!" 11!" In certain cases cases of industrial industrial disputes demand demand for payment payment of bonus was also included" In 1#0$ the Full ench of the &abour 'ppellate evolved a formula for determination determination of bonus" bonus" ' plea was made to raise raise that formula in 1#" 't the second second and third meetings meetings of the (ighteenth (ighteenth )ession of )tanding )tanding &abour *ommittee +," -"I". held in /ew elhi in arch2'pril 130$ it was agreed that a *ommission be appointed to go into the 4uestion of bonus and evolve suitable norms" ' Tripartite *ommission was set up by the ,overnment of India to consider in a comprehensive comprehensive manner$ the 4uestion of payment payment of bonus based on profits to employees employed in establishments and to make recommendations to the ,overnment" ,overnment" The ,overnment ,overnment of India accepted accepted the recommendations recommendations of the *ommis mmiss sion ion sub5ect ect to certai tain modif odific icat atiions" ns" To imp implemen ment these ese recommendations the 6ayment of onus -rdinance$ 13# was promulgated on 7th ay$ 13#" 13#" To replace replace the said -rdinance -rdinance the 6ayment of onus ill was introduced in the 6arliament" STATEMENT OF OBJECT AND REASONS
' Tripartite Tripartite *ommission *ommission was set by the ,overnment ,overnment of India by their th resolu resolutio tion n /o"W8 /o"W870 70+ +.23 .231$ 1$ dated dated 3 ecembe mber$ 131 31 to cons onside ider in a comprehensive manner$ the 4uestion of payment of bonus based on profits to employe employees es employe employed d in establis establishmen hments ts and to make recommenda recommendation tions s to the ,overnment" ,overnment" The *ommission9s *ommission9s :eport :eport containing containing their recommendations recommendations was was th received by the ,overnment on 7;
The 6ayment of onus ill having been passed by both the >ouses of 6arliament received the assent of the 6resident on 7# th )eptember$ )eptember$ 13#" It came on the )tatute ook as T>( 6'?(/T -F-/@) '*T$ 13# +71 of 13#." LIST OF AMENDING ACTS
1" 7"
The The Insu Insuran rance ce +'me +'mendm ndmen ent. t. 'ct$ ct$ 13A 13A +37 +37 of 13 13A." A." The The 6aym 6ayment ent of on onus us +'m +'mend endmen ment. t. 'ct$ 13 13 +A of of 13. 13."" 1
=" ;" #" 3" !" A
10" 11" 11" 17" 1=" 1;" 1#" 13
The *entral *entral &abou &abourr &aws &aws +(xt +(xtensi ension on of of ousin >ousing g ank ank 'ct$ 'ct$ 1A! 1A! +#= of 1A!." 1A!." The )mall )mall Industries Industries evelopme evelopment nt ank of India 'ct$ 'ct$ 1A += of 1A." The 6ayment 6ayment of onus onus +'mendme +'mendment. nt. 'ct$ 'ct$ 1# 1# +=; +=; of of 1#." 1#."
7
THE PAYMENT OF BONUS ACT, 1965
+71 of 13#. 1 C7#th )eptember$ 13#D 7
C'n 'ct to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith"D
( it enacted by 6arliament in the )ixteenth ?ear of the :epublic of India as followsE8 1" Short "8+1.. This his 'ct may may be call called ed the the Short tt!", tt!", "#t"$t "#t"$t %$& %''!( %''!(%t %to$ o$ "8+1 6ayment of onus 'ct$ 13#" +7. +7. It ext exten ends ds to to the the who whole le of of Indi India a =CD" +=." )ave )ave as otherwi otherwise se provided provided in in this 'ct$ 'ct$ it shall shall apply apply to G +a. +a. ever every y fac facto tory ryHH and and +b. +b. every othe ther est establis lishment ment in which ich twenty or more more perso rsons are are employed on any day during an accounting year" ; C6rovided that the appropriate ,overnment may$ after giving not less than two months9 notice of its intention so to do$ by notification in the -fficial -fficial ,aette$ apply the provisions of this 'ct with effect fromH such accounting year as may be specifie specified d in the notifica notification tion$$ to any establi establishme shment nt or class class of establis establishmen hmentt Cincluding an establishment being a factory within the meaning of sub8clause +ii. of clause +m. of section 7 of the Factories 'ct$ 1;A +3= of 1;A.D employing such number of persons less than twenty as may be specified in the notificationH so$ however$ that the number of persons so specified shall in no case be less than ten"D +;." )ave )ave as otherwi otherwise se provided provided in this 'ct$ 'ct$ the provisio provisions ns of this 'ct 'ct shall$ in relation to a factory or other establishment establishment to which this 'ct 'ct applies$ have effect effect in respect of the accounting year commencing on any day in the year 13; and in respect of every subse4uent accounting yearE #
C6rovided that in relation to the )tate of
C6rovided further that when the provisions of this 'ct have been made applicable to any establishment or class of establishments by the issue of a notification under under the the prov proviso iso to sub8se sub8sect ction ion +=.$ +=.$ the the refere referenc nce e to the acco account unting ing year year 1
The 'ct has been extended to ,oa$ aman and ie by 'ct 3 of 1!!$ sec" 7 and sch" )ubs" by 'ct 7= of 1!3$ sec" 7$ for the long title +w"r"e"f 7#881!#." = The words Jexcept the )tate of
=
commencing on any day in the year 13; and every subse4uent accounting year or$ as the case may be the reference to the accounting year commencing on any day in the year 13A and every subse4uent accounting year$ shall$ in relation to such establishment or class of establishments$ be construed as a reference to the accounting year specified in such notification and every subse4uent accounting year"D +#. 'n establishment to which this 'ct applies 1CD shall continue to be governed by this 'ct notwithstanding that the number of person employed therein falls below twenty 7Cor$ as the case may be$ the number specified in the notification issued under the proviso to sub8section +=.D" 2"
D")$to$*+ In this 'ct$ unless the context otherwise re4uires$8
+1. +i.
Kaccounting yearJ means 8 in relation to a corporation$ the year ending on the day on which the books and accounts of the corporation are to be closed and balanced"
+ii.
in relation to a company$ the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up$ whether that period is a year or notH
+iii. in any other case 8 +a. the year commencing on the 1 st day of 'prilH or +b. if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the =1 st day of arch$ then$ at the option of the employer$ the year ending on the day on which its accounts are so closed and balancedE 6rovided that an option once exercised by the employer under paragraph +b. of this sub8clause shall not again be exercised except with the previous permission in writing of the prescribed authority and upon such conditions as that authority may think fitH +7.
Kagricultural incomeJ shall have the same meaning as in the Income8tax 'ctH +=. Kagricultural income8tax lawJ means any law for the time being in force relating to the levy of tax on agricultural incomeH +;. Kallocable surplusJ means8 +a. in relation to an employer$ being a company =C+other than a banking company.D which has not made the arrangements prescribed under the Income8tax 'ct for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of 1
The words Kunder clause +b. of sub8section +=.J omitted by 'ct pf 1!3$ sec" = +w"r"e"f" 7#""1!#. 'dded by 'ct 7= of 1!3$ sec" = +w"r"e"f" 7#""1!#. = -mitted by 'ct 7= of 1!3$ sec" ;+w"r"e"f" 7#""1!#. and ins" by 'ct 33 of 1A0$ sec" 7 +w"r"e"f" 71"A"1A0. 7
;
section 1; of that 'ct$ sixty8seven per cent of the available surplus in an accountingH yearH +b. in any other case$ sixty percent of such available surplusH 1
CD
+#.
Kappropriate ,overnmentJ means8 +i.
in relation to an establishment in respect of which the appropriate ,overnment under the Industrial isputes 'ct$ 1;! +1; of 1;!.$ is the *entral ,overnment$ the *entral ,overnmentH +ii. in relation to any other establishment$ the ,overnment of the )tate in which that other establishment is situateH +3. Kavailable surplusJ means the available surplus computed under section #H +!. KawardJ means an interim or a final determination of any industrial dispute or of any 4uestion relating thereto by any &abour *ourt$ Industrial Tribunal or /ational Tribunal constituted under the Industrial isputes 'ct$ 1;! +1; of 1;!.$ or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a )tate and includes an arbitration award made under section 10' of that 'ct or under that lawH +A. Kbanking companyJ means a banking company as defined in section # of the anking *ompanies 'ct$ 1; +10 of 1;.$ and includes the )tate ank of India$ any subsidiary bank as defined in the )tate ank of India +)ubsidiary anks. 'ct$ 1# +=A of 1#. 7Cany corresponding new bank specified in the First )chedule to the anking *ompanies +'c4uisition and Transfer of @ndertakings. 'ct$ 1!0 +# of 1!0.$ =Cany corresponding new bank constituted under section = of the anking *ompanies +'c4uisition and Transfer of @nder takings. 'ct$ 1A0 +;0 of 1A0.$D any co8operative bank as defined in clause +bii. of section 7 of the :eserve ank of India 'ct$ 1=; +7 of 1=;.$D and any other banking institution which may be notified in this behalf by the *entral ,overnmentH +. KcompanyJ means any company as defined is section= of the *ompanies 'ct$ 1#3 +1 of 1#3.$ and includes a foreign company within the meaning of section #1 of that 'ctH +10. Kco8operative societyJ means society registered or deemed to be registered under the *o8operative )ocieties 'ct$ 117 +7 of 117.$ or any other law for the time being in force in any )tate relating to co8operating societiesH +11. KcorporationJ means any body corporate established by or under any *entral$ 6rovincial or )tate 'ct but does not include a company or a co8 operative societyH +17. Kdirect taxJ means8 +a. any tax chargeable under8 +i. the Income8tax 'ctH +ii. the )uper 6rofits Tax 'ct$ 13= +1; of 13=.H +iii. the *ompanies +6rofits. )urtax 'ct$ 13; +! of 13;.H +iv. the agricultural income8tax lawH and 1
*ertain words omitted by 'ct 7= of 1!3$ sec" ; +w"r"e"f" 7#""1!#. Ins" by 'ct 7= of 1!3$ sec" ; +w"r"e"f" 7#""1!#. = Ins" by 'ct 33 of 1A0$ sec" 7 +w"r"e"f" 71"A"1A0. 7
#
+b.
any other tax which$ having regard to its nature or incidence$ may by declared by the *entral ,overnment$ by notification in the -fficial ,aette$ to be a direct tax for the purposes of this 'ctH +1=. KemployeeJ means any person +other than an apprentice. employed on a salary or wage not exceeding 1Cthree thousand and five hundred rupeesD per mensem 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 impliedH +1;. Kemployer includes8 +i. in relation to an establishment which is a factory$ the owner or occupier of the factory$ including the agent of such owner or occupier$ the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause +f. of sub8 section +1. of section ! of the Factories 'ct$ 1;A +3= of 1;A.$ the person so namedH and +ii. in relation to any other establishment$ the person who$ or the authority which$ has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager$ managing director or managing agent$ such manager$ managing director or managing agentH +1#. Kestablishment in private sectorJ means any establishment other than an establishment in public sectorH +13. Kestablishment in public sectorJ means an establishment owned$ controlled or managed by8
+1!. +1A. +1. +70. +71.
1
+a. a ,overnment company as defined in section 31! of the *ompanies 'ct$ 1#3 +1 of 1#3.H +b. a corporation in which not less than forty per cent of its capital is held +whether singly or taken together. by8 +i. the ,overnmentH or +ii. the :eserve ank of IndiaH or +iii. a corporation owned by the ,overnment or the :eserve ank of IndiaH KfactoryJ shall have the same meaning as in clause +m. of section 7 of the Factories 'ct$ 1;A +3= of 1;A.H Kgross profitsJ means the gross profits calculated under section ;H KIncome8tax 'ctJ means the Income8tax 'ct$ 131 +;= of 131.H KprescribedJ means prescribed by rules made under this 'ctH Ksalary or wageJ means all remuneration +other than remuneration in respect of over8time work. capable of being expressed in terms of money$ which would$ if the terms of employment$ express or implied$ were fulfilled$ be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance +that is to say$ all cash payments$ by whatever name called$ paid to an employee on account of a rise in the cost of living.$ but does not include8 +i. any other allowance which the employee is for the time being entitled toH
subs" by 'ct =; of 1#$ sec" 7 for Ltwo thousand and five hundred rupees9 +w"r"e"f" 1";"1=.
3
+ii. the value of any house accommodation or supply of light$ water$ medical attendance or other amenity or of any service or of any concessional supply of food grains or other articlesH +iii. any traveling concessionH +iv. any bonus +including incentive$ production and attendance bonus.H +v. any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in forceH +vi. any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to himH +vii. any commission payable to the employee" Explanation. G Where an employee is given in lieu of the whole or part of the salary or wage payable to him$ free food allowance or free food by his employer$ such food allowance or the value of such food shall$ for the purpose of this clause$ be deemed to from part of the salary or wage of such employeeH
+77. words and expressions used but not defined in this 'ct and defined in the Industrial isputes 'ct$ 1;! +1; of 1;!. shall have the meanings respectively assigned to them in that 'ct" * E-t%.!-h/"$t- to $(!0&" &"'%rt/"$t-, 0$&"rt%$- %$& .r%$(h"-*++ Where an establishment consists of different department or undertakings or has branches$ whether situated in the same place or in different places$ allH such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this 'ctE
6rovided that where for any accounting year a separate balance8sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch$ then such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus$ under this 'ct for that year$ unless such department or undertaking or branch was$ immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus" 1 C3* Co/'0t%to$ o) ro-- 'ro)t-* MThe gross profits derived by an employer from an establishment in respect of the accounting year shallM +a. in the case of a banking company$ be calculated in the manner specified in the First )cheduleH +b. in any other case$ be calculated in the manner specified in the )econd )cheduleHD 5* Co/'0t%to$ o) %4%!%.!" -0r'!0-* MThe 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 3H 7 C6rovided that the available surplus in respect of the accounting year commencing on any day 13A and in respect of every subse4uent accounting year shall be the aggregate of G
1 7
)ubs" by 'ct 33 of 1A0$ sec" =$ for section ; +w"r"e"f" 71"A"1A0. 'dded by 'ct A of 13$ sec" 7 +w"r"e"f" 73"="13.
!
+a. the gross profits for that accounting year after deducting therefrom the sums referred to in section 3H and +b. an amount e4ual to the difference between 88 +i.
the direct tax$ calculated in accordance with the provisions of section !$ in respect of an amount e4ual to the gross profits of the employer for the immediately preceding accounting yearH and +ii. the direct tax$ calculated in accordance with the provisions of section !$ in respect of an amount e4ual 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 'ct for that year"D 6* S0/- &"&0(t.!" )ro/ ro-- 'ro)t-* MThe following sums shall be deducted from the gross profits as prior charges$ namelyE8
+a. any amount by way of depreciation admissible in accordance with the provisions of sub8section +1. of section =7 of the Income8tax 'ct$ or in accordance with the provisions of the agricultural income8tax law$ as the case may beE 6rovided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 7th ay$ 13#$ and subsisting on that date after deducting from the gross profits notional normal depreciation$ then$ the amount of depreciation to be deducted under this clause shall$ at the option of such employer +such option to be exercised once and within one year from the date. continue to be such notional normal depreciationH +b. any amount by way of 1Cdevelopment rebate or investment allowance or development allowanceD which the employer is entitled to deduct from his income under the income8tax 'ctH +c. sub5ect to the provisions of section !$ any direct tax which the employer is liable to pay for the accounting year in respect of his income$ profits and gains during that yearH +d. such further sums as are specified in respect of the employer in the 7 CThird )cheduleD" * C%!(0!%to$ o) &r"(t t%# '%%.!" . th" "/'!o"r* M=C'ny direct tax payable by the employerD for any accounting year shall$ sub5ect to the following provisions$ be calculated at the rates applicable to the income of the employer for that year$ namelyE8 +a. in calculating such tax no account shall be taken of 88 +i. any loss incurred by the employer in respect of any previous accounting year and carried forward under any law for the time being in force relating to direct taxesH 1
)ubs" by 'ct 33 of 1A0$ sec" ;$ for Edevelopment rebate or development allowanceJ +w"r"e"f" 71"A"1A0. 7 )ubs" by 'ct of 1A0$$ sec" ;$ for K)econd )cheduleE +w"r"e"f" 71"A"1A0. = )ubs" by 'ct A of 13$ )ec" =$ for KFor the purpose of clause +c. of section 3$ direct tax payable by the employer K +w"r"e"f" 73"="13.
A
+ii. any arrears of depreciation which the employer is entitled to add to the amount of the allowance for depreciation for any following accounting year or years under sub8section +7. of section =7 of the Income8tax 'ctH +iii. any exemption conferred on the employer under section A; of the Income8tax 'ct or of any deduction to which he is entitled under sub8section +1. of section$101 of that 'ct$ as in force immediately before the commencement of the Finance 'ct$ 13# +10 of 13#.H +b.
+c.
+d.
+e.
where the employer is a religious or a charitable institution to which the provisions of section =7 do not apply and the whole or any part of its income is exempt from tax under the Income8tax 'ct$ then$ with respect to the income so exempted$ such institution shall be treated as if it were a company in which the public are substantially interested within the meaning of that 'ctH where the employer is individual or a >indu @ndivided Family$ the tax payable by such employer under the Income8tax 'ct shall be calculated on the basis that the income derived by him from the establishment is his only incomeH where the income of any employer includes any profits and gains derived from the export of any goods or merchandise out of India and any rebate on such income in allowed under any law for the time being in force relating to direct taxes$ then$ no account shall be taken of such rebateH no account shall be taken of any rebate 1C+other than development rebate or investment allowance or development allowance.D or credit or relief or deduction +not herein before mentioned in this section. in the payment of any direct tax allowed under any law for the time being in force relating to direct taxes or under the relevant annual Finance 'ct$ for the development of any industry"
7* E!.!t )or .o$0-*M(very employee shall be entitled to be paid by his employer in an accounting year$ bonus$ in accordance with the provisions of this 'ct$ provided he has worked in the establishment for not less than thirty working days in that year" 9* D-80%!)(%to$ )or .o$0-*M/otwithstanding anything contained in this 'ct$ an employee shall be dis4ualified from receiving bonus under this 'ct$ if he is dismissed from service for 88 +a. fraudH or +b. riotous or violent behaviour while on the premises of the establishmentH or +c. theft$ misappropriation or sabotage of any property of the establishment" 1 1:* P%/"$t o) /$/0/ .o$0-* M)ub5ect to the other provisions of this 'ct$ every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1! and in respect of 1
subs" by 'ct 33 of 1A0$ sec" #$ K+other than development rebate or development allowance.J )ection 10$ subs" by 'ct 7= of 1!3$ sec" ! +w"r"e"f" 7#""1!#. and again subs" 'ct of 33 of 1A0$ sec" 3 +w"r"e"f" 71"A"1A0. 1
every subse4uent accounting year$ a minimum bonus which shall be A"== per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees$ whichever is higher$ whether or not the employer has any allocable surplus in the accounting yearE 6rovided that where an employee has not completed fifteen years of age at the beginning of the accounting year$ the provisions of this section shall have effecting relation to such employee as if for the words Kone hundred rupeesJ$ the words Ksixty rupeesJ were substituted"D 7
11* P%/"$t o) /%#/0/ .o$0-* M+1. Where in respect of any accounting year referred to in section 10$ the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section$ the employer shall$ in lieu of such minimum bonus$ be bound to pay to every employee in respect of that accountingH year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year sub5ect to a maximum of twenty per cent$ of such salary or wage"
+7. In computing the allocable surplus under this section$ the amount set on or the amount set off under the provisions of section 1# shall be taken into account in accordance with the provisions of that section"D =
12* C%!(0!%to$ o) .o$0- ;th r"-'"(t to ("rt%$ "/'!o""-* MWhere the salary or wage of an employee exceeds ;Ctwo thousand and five hundred rupeesD per mensem$ the bonus payable to such employee under section 10 or$ as the case may be$ under section 11$ shall be calculated as if his salary or wage were Ctwo thousand and five hundred rupeesD per mensem"D #
1* Pro'orto$%t" r"&0(to$ $ .o$0- $ ("rt%$ (%-"-*MWhere an employee has not worked for all the working days in an accounting year$ the minimum bonus of one hundred rupees or$ as the case may be$ of sixty rupees$ if such bonus is higher than A"== per cent$ of his salary or wage for the days he has worked in that accounting year$ shall be proportionately reduced"D 13* Co/'0t%to$ o) $0/."r o) ;or$ &%-*MFor the purposes of section 1=$ an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which88 +a. he has been laid off under an agreement or as permitted by standing orders under the Industrial (mployment +)tanding -rders. 'ct$ 1;3 +70 of 1;3.$ or under the Industrial isputes 'ct$ 1;! +1; of 1;!.$ or under any other law applicable to the establishmentH +b. he has been on leave with salary or wageH +c. he has been absent due to temporary disablement caused by accident arising out of and in the course of his employmentH and 7
)ection 11 omitted by 'ct 7= of 1!3$ sec" A +w"r"e"f" . and ins" by 'ct 33 of 1A0$ sec" 3 +w"r"e"f" 71"A"1A0. = )ection 17 omitted by 'ct =0of 1A#$ sec" 7 and ins" by 'ct 3!of 1A#$ sec" = +w"r"e"f"!"11"1A#. ; subs" by 'ct =; of 1#$ sec" = for Lone thousand and six hundred rupees9 +w$"r"e"f" 1";"1=. # subs by 'ct 33 of 1A0$ sec" A$ for section 1= +w"r"e"f" 71"A"1A0.
10
+d. the employee has been on maternity leave with salary or wage$ during the accounting year" 1 15* S"t o$ %$& -"t o)) o) %!!o(%.!" -0r'!0-* M +1. Where for any accounting year$ the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11$ then$ the excess shall$ sub5ect to a limit of twenty per cent" of the total salary or wage of the employees employed in the establishment in that accounting year$ be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilied for the purpose of payment of bonus in the manner illustrated in the Fourth )chedule" +7. Where for any accounting year$ there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10$ and there is no amount of sufficient amount carried forward and set on under sub8section +1. which could be utilied for the purpose of payment of the minimum bonus$ then$ such minimum amount or the deficiency$ as the case may be$ shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth )chedule" +=. The principle of set on and set off as illustrated in the Fourth )chedule shall apply to all other cases not covered by sub8section +1. or sub8section +7. for the purpose of payment of bonus under this 'ct" +;. Where in any accounting year any amount has been carried forward and set on or set off under this section$ then$ in calculating bonus for the succeeding accounting year$ the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account"D 16* S'"(%! 'ro4-o$- ;th r"-'"(t to ("rt%$ "-t%.!-h/"$t M 7C+1. Where an establishment newly set up$ whether before or after the commencement of this 'ct$ the employees of such establishment shall be entitled to be paid bonus under this 'ct in accordance with the provisions of sub8section +1'.$ +1. and +1*."
+1'. In the first five accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services$ as the case may be$ from such establishment$ bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this act in relation to that year$ but with out applying the provisions of section 1#" +1. For the sixth and seventh accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services$ as the case may be$ from such establishment$ the provisions of section 1# shall apply sub5ect other following modifications$ namelyE88 +i. for the sixth accounting year 88 1 7
)ubs" by 'ct 33 of 1A0$ sec" $ for section 1= +w"r"e"f" 71"A"1A0. )ubs" by 'ct 7= of 1!3$ sec" 10$ for sub8section +1. and (xplanation thereto +w"r"e"f" 7#""1!#.
11
set on or set off$ as the case may be$ shall be made in the manner illustrated in the 1CFourth )cheduleD taking into account the excess or deficiency$ if any$ as the case may be$ of the allocable surplus set on or set off in respect of the fifth and sixth accounting yearsH +ii. for the seventh accounting year 88 set on or set off$ as the case may be$ shall be made in the manner illustrated in the 1CFourth )cheduleD taking into account the excess or deficiency$ if any$ as the case may be$ of the allocable surplus set on or set off in respect of the fifth$ sixth and seventh accounting year" +1*. From the eighth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services$ as the case may be$ from such establishment$ the provisions of section 1# shall apply in relation to such establishment as they apply in relation to any other establishment" Explanation I " G For the purpose of sub8section +1.$ an establishment shall not be newly set up merely by reason of a change in its location$ management$ name or ownership" Explanation II. 88 For the purpose of sub8section +1'.$ an employer shall not be deemed to have derived profit in any accounting year unless G
+a. he has made provision for that year9s depreciation to which he is entitled under the Income8tax 'ct or$ as the case may be$ under the agricultural income8tax$ lawH and +b. the arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits" Explanation III. – For the purpose of sub8section +1'.$ +1. and +1*.$ sale of the goods produced or manufactured during the course of the trial running of any factory or of the prospecting stage of any mine or an oil field shall not be taken into consideration and where any 4uestion arises with regard to such production or manufacture$ the decision of the appropriate ,overnment$ made after giving the parties a reasonable opportunity of representing the case$ shall be final and shall not be called in 4uestion by any court or other authority"D
+7. The provisions of 1Csub8section +1.$ +1'.$ +1. and +1*.D shall$ so far as may be$ apply to new departments or undertakings or branches set up by existing establishmentsE 6rovided that if an employer in relation to an existing establishment consisting of different +departments or undertakings or branches +whether or not 1 1
)ubs" by 'ct 33 of 1A0$ sec" 10$ for KThird )cheduleJ +w"r"e"f" 71"A"1A0. )ubs by 'ct 7= of 1!3$ sec" 17$ for Ksub8section +1. K +w"r"e"f" 7#""1!#.
17
in the same industry. set up at different periods has$ before the 7 th ay$ 13#$ been paying bonus to the employees of allH such departments or undertakings or branches$ irrespective of the date on which such departments or undertakings or branches were set up$ on the basis of the consolidated profits computed in respect of all such departments or undertaking or branches$ then$ such employer shall be liable to pay bonus in accordance with the provisions of this 'ct to the employees of all such departments or undertaking or branches +whether set up before or after that date. on the basis of the consolidated profits computed as aforesaid" 1* A&<0-t/"$t o) (0-to/%r or $t"r/ .o$0- %%$-t .o$0- '%%.!" 0$&"r th" A(t* MWhether in any accounting year 88
+a. an employer has paid any pu5a bonus or other customary bonus to an employeeH or +b. an employer has paid a part of the bonus payable under this 'ct to an employee before the date on which such bonus becomes payable" then$ the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this 'ct in respect of that accounting year and the employee shall be entitled to receive only the balance" 17* D"&0(to$ o) ("rt%$ %/o0$t- )ro/ .o$0- '%%.!" 0$&"r th" A(t* G Where in any accounting year$ an employee is found guilty of misconduct causing financial loss to the employer$ then$ it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this 'ct in respect of that accounting year only and the employee shall be entitled to receive the balance$ if any" 19* T/"+!/t )or '%/"$t o) .o$0-* G 7C'll amountsD payable to an employee by way of bonus under this 'ct shall be paid in cash by his employer 88
+a. where there is a dispute regarding payment of bonus pending before any authority under section 77$ within a month from the date on which the award becomes enforceable or the settlement comes into operation$ in respect of such disputeH +b. in any other case$ within a period of eight months from the close of the accounting yearE 6rovided that the appropriate ,overnment or such authority as the appropriate ,overnment may specify in this behalf may$ upon an application made to it by the employer and for sufficient reasons$ by order$ extended the said period of eight months to such further period or periods as it thinks fitH so$ however$ that the total period so extended shall not in any case exceed two years"
7
subs" by 'ct 7= of 1!3$ sec" 1=$ for K+1. sub5ect to the provisions of this section$ all amounts E +w"r"e"f" 7#""1!#.
1=
1
CD CD 2:* A''!(%to$ o) A(t to "-t%.!-h/"$t- $ '0.!( -"(tor $ ("rt%$ (%-"-*+ = C+1.D If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services$ in competition with an establishment in private sector$ and the income from such sale or services or both less than twenty percent of the gross income of the establishment in public sector for that year$ then$ the provision of this 'ct shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector" 7
;
C+7. )ave as otherwise provided in sub8section +1.$ nothing in this 'ct shall apply to the employees employed by any establishment in public sectorD 21* R"(o4"r o) .o$0- &0" )ro/ %$ "/'!o"r*+ Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement$ the employee himself or any other person authorised by him in writing in this behalf$ or in the case of the death of the employee$ his assignee or heirs may$ without pre5udice to any other mode of recovery$ make an application to the appropriate ,overnment or such authority as the appropriate ,overnment may specify in this behalf is satisfied that any money is so due$ it shall issue a certificate for that amount to the *ollector who shall proceed to recover the same in the same manner as an arrears of land revenue"
6rovided that every such application shall be made within one year from the date on which the money became due to the employee from the employer" 6rovided further that any such application may be entertained after the expiry of the said period of one year$ if the appropriate ,overnment is satisfied that the applicant had sufficient cause for not making the application within the said period" Explanation- In this section and in #Csections 77$7=$ 7; and 7#D$ KemployeeJ includes a person who is entitled to the payment of bonus under this 'ct but who is no longer in employment"
22* R")"r"$(" o) &-'0t"- 0$&"r th" A(t*+ Where any dispute arises between an employer and his employees with respect to the bonus payable under this 'ct or with respect to the application of this 'ct to an establishment in public sector$ then$ such dispute shall be deemed to be an industries dispute within the meaning of the Industrial isputes 'ct$ 1;! +1; of 1;!.$ or of any corresponding law relating to investigation and settlement of industrial disputes in 1
)ub8sections +7. to +!. ins" by 'ct 3A of 1!7$ sec" ; +w"r"e"f" 1""1!7. and omitted by 'ct 7= of 1!3$ sec" 1= +w"r"e"f" 7#""1!#. 7 )ub8section +A. ins" by 'ct = of 1!=$ sec" ;+w"r"e"f" 1""1!=. and omitted by 'ct ## of 1!=$ sec" 7 +w"r"e"f 1""1!=. = The brackets and figure +1. omitted by 'ct 7= of 1!3$ sec" 1; +w"r"e"f" 7#""1!#. and again section 70 re8numbered as sub8section +1. thereof by 'ct 33 of 1A0$ sec" 11 +w"r"e"f" 7!"17"1A0. ; sub8section +7. omitted by 'ct of 1!3$ sec$ 1;+w"r"e"f" 7#""1!#. and ins" by 'ct 33 of 1A0$ sec" 11 +w"r"e"f" 7!"17"1A0. # )ubs" y 'ct 33 of 1A0$ sec" 17$ for Ksections 77$7= and 7#J +w"r"e"f" 71"A"1A0.
1;
force in a )tate and the provisions of that 'ct or$ as the case may be$ such law$ shall$ save as otherwise expressly provided$ apply accordingly" 2* Pr"-0/'to$ %.o0t %((0r%( o) .%!%$("+-h""t %$& 'ro)t %$& !o-%((o0$t o) (or'or%to$ %$& (o/'%$"-*+ Where$ during the course of proceedings before any arbitrator or Tribunal under the Industrial isputes 'ct$ 1;! +1; of 1;!. or under any corresponding law relating to investigation and settlement of industrial disputes in force in a )tate +hereinafter in this section 1 Cand in 7Csections 7; and 7#D referred to as the Ksaid authorityJ . to which any dispute of the nature specified in section 77 has been referred$ the balance8sheet and the profit and loss account of an employer$ being a corporation or a company +other than a banking company.$ duly audited by the comptroller and 'uditor8 ,eneral of India or by auditors duly 4ualified to 'ct as auditors of companies under sub8section +1. of section 773 of the *ompanies 'ct$ 1#3 +1 of 1#3.$ are produced before it$ then$ the said authority may presume the statements and particulars contained in such balance8sheet and profit and loss account to be accurate and it shall not be necessary for the corporation or the company to prove the accuracy of such statements and particulars by the filing of an affidavit or by any other mode" 6rovided that where the said authority is satisfied that the statement and particulars contained in the balance8sheet or the profit and loss account of the corporation or the company are not accurate$ it may take such steps as it thinks necessary to find our the accuracy of such statement and particulars" +7. When an application is made to the said authority by any trade union being a party to the dispute or where there is no trade union$ by the employees being a party to the dispute re4uiring any clarification relating to any item in the balance8sheet or the profit and loss account it may$ after satisfying itself that such clarification is necessary$ by order$ direct the corporation or$ as the case may be$ the company$ to furnish to the trade union or the employees such clarification within such time as may be specified in the direction and the corporation or $ as the case may be$ the company$ shall comply with such direction" =
23* A0&t"& %((o0$t- o) .%$$ (o/'%$"- $ot to ." 80"-to$"& " G+1. Where any dispute of the nature specified in section 77 between an employer $ being a banking company$ and its employees has been referred to the said authority under that section and during the course of proceedings the accounts of the banking company duly audited and produced before it$ the said authority shall not permit any trade union or employees to 4uestion the correctness of such accounts $ but the trade union or employees to 4uestion the correctness of such accounts$ but the trade union or employees may be permitted to obtain from the banking company such information as is necessary for verifying the amount of bonus due under this 'ct" +7. /othing contained in sub8section +1. shall enable trade union of the employees to obtain any information which the banking company is not compelled to furnish under the provisions of section =;' of the anking :egulation 'ct$ 1; +10 of 1;.D" 1
)ubs" by 'ct 7= of 1!3 $ )ec" 13$ for Kand in sections 7; and 7#J +w"r"e"f" 7#""1!#." )ubs" by 'ct 33 of 1A0$ sec" 1=$ for Ksection 7#J +w"r"e"f" 71"A"1A0. = Ins" by 'ct 33 of 1A0 $ sec" 1; +w"r"e"f" 71"A"1A0. 7
1#
25* A0&t o) %((o0$t- o) "/'!o"r-, $ot ."$ (or'or%to$- or (o/'%$"-*+ +1. Where any dispute of the nature specified in section 77 between an employer$ not being a corporation or a company$ and his employees has been referred to the said authority under that section and the accounts of such employer audited by any auditor duly 4ualified to act as auditor of companies under sub8section +1. of section 773 of the *ompanies 'ct$ 1#3 +1 of 1#3. $ are produced before the said authority$ the provisions of section 7=$ shall $ so far as may be$ apply to the accounts so audited"
+7. When the said authority finds that the accounts of such employer of such employer have not been audited by any such auditor and it is of opinion that an audit of the accounts of such employer is necessary for deciding the 4uestion referred to it$ then$ it may$ by order direct the employer to get his accounts audited within such time as may be specified in the direction or within such further time as it may allow by such auditor or auditors as it thinks fit and thereupon the employer shall comply with such direction" +=. Where an employer fails to get the accounts audited under sub8section +7. the said authority may$ without pre5udice to the provisions of section 7A$ get the accounts audited by such auditor or auditors as it thinks fit" +;. When the accounts are audited under sub8section +7. or sub8section +=. the provision of section 7= shall$ so far as may be$ apply to the accounts so audited" +#. The expenses of and incidental to$ any audit under sub8section +=. +including the remunerating of the auditor or auditors. shall be determined by the said authority +which determination shall be final. and paid by the employer and in default or such payment shall be recoverable from the employer in the manner provided in section 71" 26* M%$t"$%$(" o) r"-t"r, r"(or&-, etc * G (very employer shall prepare and maintain such registers$ records and other documents in such form and in such manner as may prescribed" 2* I$-'"(tor-* G +1. The appropriate ,overnment may$ by notification on the -fficial ,aette$ appoint such person as it think fit to be Inspectors for the purposes of this 'ct and may define the limits within which they shall exercise 5urisdiction" +7. 'n Inspector appointed under sub8section +1. may$ for the purpose of ascertaining whether any of the provisions of this 'ct has been complied with 88 +a. :e4uire an employer to furnish such information as he may consider necessaryH +b. at any reasonable time and with such assistance$ if any$ as he thinks fit enter any establishment or any premises connected therewith and re4uire any one found in charge thereof to produce before him for examination any accounts$ books$ registers and other documents
13
relating to the employment of persons or the payment of salary or wage or bonus in the establishmentH +c. examine with respect to any matter relevant to any of the purposes aforesaid$ the employer$ his agent or servant or any other person found in charge of the establishment or any premises connected therewith or any person whom the Inspector has reasonable cause to believe to be or to have been an employee in the establishmentH +d. make copies of$ or take extracts from$ any book$ register or other document maintained in relation to the establishmentH +e. exercise such other powers as may prescribed" +=. (very Inspector shall be deemed to be a public servant within the meaning of the Indian penal *ode +;# of 1A30." +;. 'ny person re4uired to produce any accounts$ book$ register or other documents or to give information by an Inspector under sub8section +1. shall be legally bound to do so" 1
C+#. /othing contained in this section shall enable an Inspector to re4uire a banking company to furnish or disclose any statement or information or to produce$ or give inspection of any its books of account or other documents which a banking company cannot be compelled to furnish$ disclose$ produce or give inspection of$ under the provision of section =;' of the anking :egulation 'ct$ 1; +10 of 1;." 27" P"$%!t*+ if any person8 +a. contravenes any of the provision of this 'ct or any rule made thereunder$ or +b. to whom a direction is given or a re4uisition is made under this 'ct fails to comply with the direction or re4uisition$ he shall be punishable with imprisonment for a term which may extend to six months$ or with fine which may extend to one thousand rupees$ or with both" 29* O))"$("- . (o/'%$"-*+ +1. If the person committing an offence under this 'ct is a company$ every person who$ at the time the offence was committed$ was in charge of$ and was responsible to$ the company for the conduct of business of the company$ as well as the company$ shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordinglyE 6rovided that nothing contained in this sub8section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised allH due diligence to prevent the commission of such offence" +7. /otwithstanding anything contained in sub8section +1.$ where an offence under this 'ct has been committed by a company and it is proved that the offence has been committed with the consent or connivance of$ or is attributable to any neglect on the part of$ any director$ manager$ secretary or other officer of the company$ such director$ manager$ secretary or other officer shall also be 1
Ins" by 'ct 33 of 1A0$ sec" 1# +w"r"e"f" 71"A"1A0.
1!
deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly" Explanation. G For the purposes of this section$ 88 +a. KcompanyJ means any body corporate and includes a firm or other association of individualsH and +b. KdirectorJ$ in relation to a firm$ means a partner in the firm" :* Co$=%$(" o) o))"$("-* G +1. /o court shall take cogniance of any offence punishable under this 'ct$ save on complaint made by or under the authority of the appropriate ,overnment 1Cor an officer of that ,overnment +not below the rank of a :egional &abour *ommissioner in the case of an officer of the *entral ,overnment$ and not below the rank of a &abour *ommissioner in the case of an officer of the )tate ,overnment. specially authorised in this behalf by that ,overnmentD" +7. /o court inferior to that of a presidency magistrate or a magistrate of the first class shall try any offence punishable under this 'ct" 1* Prot"(to$ o) %(to$ t%"$ 0$&"r th" A(t* G /o suit$ prosecution or other legal proceeding shall lie against the ,overnment or any officer of the ,overnment for anything which is in good faith done or intended to be done in pursuance of this 'ct or any rule made thereunder" 7
1A* S'"(%! 'ro4-o$ ;th r"-'"(t to '%/"$t o) .o$0- !$"& ;th 'ro&0(to$ or 'ro&0(t4t* G /otwithstanding anything contained in this 'ct$88 +i. where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the 6ayment of onus +'mendment. 'ct$ 1!3 +7= of 1!3.$ or +ii. where the employees enter into any agreement or settlement with their employer after such commencement$ for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this 'ct$ then$ such employees shall be entitled to receive bonus due to them under such agreement or settlement$ as the case may beE 1
C6rovided that any such agreement or settlement whereby the employees relin4uish their right to receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive them of such rightED 7
C6rovided further thatD such employees shall not be entitled to be paid such bonus in excess of twenty per cent" of the salary or wage earned by them during the relevant accounting year"
1 7
1 7
Ins" by 'ct 33 of 1A0$ sec" 13 +w"r"e"f" 71"A"1A0. Ins" by 'ct 7= of 1!3$ sec" 1 +w"r"e"f" 7#""1!#. Ins" by 'ct 33 of 1A0$ sec" 1! +w"r"e"f" 71"A"1A0. )ubs" by 'ct 33 of 1A0$ sec" 1!$ for K6rovided thatJ +w"r"e"f" 71"A"1A00
1A
2* A(t $ot to %''! to ("rt%$ (!%--"- o) "/'!o""-* G /othing in this 'ct shall apply to 88 +i. =CD employees employed by any insurer carrying on general insurance business and the employees employed by the &ife Insurance *orporation of IndiaH +ii. seamen as defined in clause +;7. of section = of the erchant )hipping 'ct$ 1#A + ;; of 1#A.H +iii. employees registered or listed under any scheme made under the ock Workers +:egulation of (mployment. 'ct$ 1;A + of 1;A.$ and employed by registered or listed employersH +iv. employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the *entral ,overnment or a )tate ,overnment or a &ocal authorityH +v. employees employed by 88 +a. the Indian :ed *ross )ociety or any other institution of a like nature +including its branches.H +b. universities and other educational institutionsH +c. institutions +including hospitals$ chambers of commerce and social welfare institutions. established not for purposes of profitH +vi. employees employed through contractor on building operationsH ; CD +viii. employees employed by the :eserve ank of IndiaH +ix. employees employed by 88 +a. the Industrial Finance *orporation of IndiaH +b. any Financial *orporation established under section =$ or any
1
C+fa. the )mall Industries evelopment ank of India established under section = of the )mall Industries evelopment ank of India 'ct$ 1AHD 7 C+ff.the /ational >ousing ankHD +g. any other financial institution =C+other than a banking company.D$ being an establishment in public sector$ which the *entral
=
the words Kemployees employed by any insurer carrying on general insurance business and theJ omitted by 'ct 37 of 13A$ sec" ;1" ; *lause +vii. omitted by 'ct 33 of 1A0$ sec$ 1A +w"r"e"f" 71"A"1A7. # )ubs" by 'ct of 1A1$ sec" 31 and )ch"II$ for sub8clause +d. +w"r"e"f" 17"!"1A7. 1 Ins" by 'ct = of 1A!$ sec" #= and )ch"II" 7 -mitted by 'ct 33 of 1A0$ sec" 1A +w"r"e"f" 71"A"1A0. and ins" by 'ct #= of 1A!$ sec" #3 and )ch" II +w"e""f "!"1AA." = Ins" by 'ct 33 of 1A0$ sec" 1A +w"r"e"f" 71"A"1A0.
1
,overnment may$ by notification in the -fficial ,aette$ specify$ having regard to 88 +i. its capital structureH +ii. its ob5ectives and the nature of its activitiesH +iii. the nature and extent of financial assistance or any concession given to it by the ,overnmentH and +iv. any other relevant factorH ; CD +xi. employees employed by inland water transport establishment operating on routes passing through any other country" * A(t to %''! to ("rt%$ '"$&$ &-'0t"- r"%r&$ '%/"$t o) .o$0-*8 [Rep. By the Payment of Bonus (Amendment) Act, !"# ($% of !"#), sec. $ (&.'.e.f. $-!-!"). #
3* E))"(t o) !%;- %$& %r""/"$t- $(o$--t"$t ;th th" A(t* > )ub5ect to the provisions of section =1'$ the provisions of this 'ct shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force or in the terms of any award$ agreement$ settlement or contract of service"D 5* S%4$* G /othing$ contained in this 'ct shall be deemed to affect the provisions of the *oal ines$ 6rovident Fund and onus )chemes 'ct$ 1;A +;A for 1;A.$ or of any scheme made thereunder" 6 Po;"r o) "#"/'to$* G If the appropriate ,overnment$ having regard to the financial position and other relevant circumstances of any establishment or class of establishment$ is of opinion that it will not be in public interest to apply all or any of the provisions of this 'ct thereto$ it may$ by notification in the -fficial ,aette$ exempt for such period as maybe specified therein and sub5ect to such conditions as it may think fit to impose$ such establishment or class of establishment from all or any of the provisions of this 'ct" * Po;"r to r"/o4" &))(0!t"-* G [Rep. *y the Payment of Bonus (Amendment) Act, !"# ($% of !"#), sec. $% (&.'.e.f. $-!-!"). 7* Po;"r to /%" r0!"-* G +1. The *entral ,overnment may make rule for the purpose of carrying into effect the provisions of this 'ct" +7. In particular$ and without pre5udice to the generality of the foregoing power$ such rules may provide for 88 +a. the authority for granting permission under the proviso to sub8clause +iii. of clause +1. of section 7H +b. the preparation of registers$ records and other documents and the form and manner in which such registers$ records and documents may be maintained under section 73H
; #
*lause +x. omitted by 'ct 7= of 1!3$ sec" 70 +w"r"e"f 7#""1!#. )ubs" by 'ct 7= of 1!3$ sec" 77$ for section =; +w"r"e"f" 7#""1!#.
70
+c. the powers which may be exercised by an inspector under clause +e. of sub8section +7. of section 7!H +d. any other matter which is to be$ or maybe prescribed" +=. (very rule made under this section shall be laid as soon as may be after it is made$ before each >ouse of 6arliament while it is in session for a total period of thirty days$ which may be comprised in one session Cor in two or more successive sessionsD$ and if before the expiry of the session Cimmediately following the session or the successive sessions aforesaidD$ both >ouses agree in making any modification in the rule or both >ouses agree that the rule should not be made$ the rule shall thereafter have effect only in such modified form or be of no effect$ as the case may beH so$ however$ that any such modification or annulment shall be without pre5udice to the validity of anything previously done under that rule" 9* A''!(%to$ o) ("rt%$ !%; $ot .%rr"&* G)ave as otherwise expressly provided$ the provisions of this 'ct shall be in addition to and not in derogation of the Industrial isputes 'ct$ 1;! +1; of 1;!.$ or any corresponding law relating to investigation and settlement of industrial disputes in force in a )tate" 3:* R"'"%! %$& -%4$* G +1. The 6ayment of onus -rdinance$ 13# += of 13#.$ is hereby repealed" +7. /otwithstanding such repeal$ anything done or any action taken under the said -rdinance shall be deemed to have been done or taken under this 'ct as if this 'ct had commenced on the 7 th ay$ 13#" CT>( FI:)T )*>(@&( C)ee section ;+a.D *-6@T'TI-/ -F ,:-)) 6:-FIT)
'ccounting year endingNNNNN"" Item /o" 1
7"
6articulars
'mount of 'mount of sub8items main items /et 6rofit show in the 6rofit and &oss 'ccount :s" :s" after making usual and necessary p rovisions" 'dd back provision forE +a. onus to employees" +b. epreciation +c. evelopment :ebate :eserve" +d. 'ny other reserves"
:emarks
)ee foot8note +1.
Total of Item /o" 7 :s"
Item /o"
6articulars
'mount of 'mount of sub8items main items
)ee foot8note +1.
:emarks
71
="
'dd back alsoE +a. onus paid to employees in respect of previous accounting years" +b. The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of G +i. the amount $ if any$ paid to$ or provided for payment to$ an approved gratuity fundH and +ii. the amount actually paid to employees on their retirement or on termination of their employment for any reason" +c. onations in excess of the amount admissible for income8 tax" +d. *apital expenditure +other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in force relating to direct taxes. and capital losses +other than losses on sale of capital assets on which depreciation has been allowed for income8tax."
:s"
:s" )ee foot8note +1.
)ee foot8note +1.
+e. 'ny amount certified by the :eserve ank of India in terms of sub8section +7. of section =;' of the anking :egulation 'ct$ 1; +10 of 1;.
)ee foot8note +1.
+f. &oses of$ or expenditure relating to$ any business situated outside India
;"
Total of Item /o" = 'dd also income$ profits or gains+if any. credited directly to published or disclosed reserves$ other thanM +i. capital receipts and capital profits +including profits on the sale of capital assets on which depreciation has not been allowed for income8tax.H +ii. profits of$ and receipts relating to$ any business situated outside IndiaH +iii. income of foreign banking companies from investment outside India" /et Total of Item /o" ;NN
#"
Total of Item /os" 1$7"= and ;
3"
eductE +a. *apital receipts and capital profits +other than profits on the sale of assets on which depreciation has been allowed for income8tax +b. 6rofits of$ and receipts relating to$ any business situated outside India" +c. Income of foreign banking companies from investments outside India
Item /o"
6articulars
:s"
:s" :s" )ee foot8note +1.
)ee foot8note +1.
)ee foot8note +1.
'mount of 'mount of sub8items main items
:emarks
77
+d. (xpenditure or losses +if any debited :s" :s" directly to published or disclosed reserves$ other than8 +i. capital expenditure and capital losses +other than losses on sale of capital assets on which depreciation has not been allowed for income8tax". +ii. &osses of any business situated outside India" )ee foot8note +1. +e. In the case of foreign banking companies proportionate administrative +overhead. expenses of head -ffice allocable o Indian business" +f. :efund of any excess direct tax paid for )ee foot8note +1. previous accounting years and excess provision$ if any$ of previous accounting years$ relating to bonus$ depreciation$ or development rebate$ if written back" +g. *ash subsidy$ if any$ given by the )ee foot8note +1. ,overnment or by any body corporate established by any law for the time being in force or by any other agency through budgetary grants$ whether given directly or though any agency for specified purposes and the proceeds of which are reserved for such purposes" :s" Total of Item /o" 3NN 88888888888888888 !" ,ross 6rofits for purposes of bonus 888888888888888 +Item /o" # minus Item /o" 3. :s" 8888888888888888 Explanation8 In sub8item +b. of item =$ Lapproved gratuity fund9 has the same meaning assigned to it in clause +#. of section 7 of the Income8Tax 'ct" Foot+Not"? +1. If$ and to the extent charged to 6rofit and &oss 'ccount" +7. If$ and to the extend$ credited to 6rofit and &oss 'ccount" +=. In the proportion of India ,ross 6rofit +Item /o"!. to Total World ,ross 6rofit +as per *onsolidated 6rofit and &oss 'ccount ad5usted as in Item /o" 7 above -nly."
1
THE SECOND SCHEDULE@
1
For the heading KT>( )(*-/ )*>(@&(J$ the heading LT>( FI:)T )*>(@&(J subs" by 'ct 7= of 1!3$ sec" 73 + w"r"e"f 7#""1!3. and again the First )chedule renumbered as the )econd )chedule by 'ct 33 of 1A0$ sec" 1 +w"r"e"f 71"A"1A0.
7=
7
Item /o" 1" 7"
="
C)ee section ;+a.D COMPUTATION OF GROSS PROFITS 'ccounting year endingNNNNN"" 6articulars 'mount of 'mount of :emarks sub8items main items /et 6rofit as per 6rofit and &oss 'ccount" :s" :s" 'dd back provision forE +a. onus to employees" +b. epreciation +c. irect taxes$ including the provision +if any. for previous accounting years" = C+d.evelopment :ebate2Investment allowance2evelopment 'llowance reserve" +d. 'ny other reserves" 88888888888888888 Total of Item /o" 7 :s 'dd back alsoE +a. onus paid to employees in respect of 88888888888888888 previous accounting years" ; C+aa.The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of G +i. the amount $ if any$ paid to$ or provided for payment to$ an approved gratuity fundH and +ii. the amount actually paid to employees on their retirement or on termination of their employment for any reasonD" +b. onations in excess of the amount admissible for income8 tax" +c. 'ny annuity due$ or commuted value of any annuity paid$ under the provisions of section 7A0 of the Income8tax during the accounting year" +d. *apital expenditure +other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in force relating to direct taxes. and capital losses +other than losses on sale of capital assets on which depreciation has been allowed for income8tax." +e. &osses of$ or expenditure relating to$ any business situated outside India" Total of Item /o" =
Item /o"
6articulars
)ee foot8note +1. )ee foot8note +1.
)ee foot8note +1.
)ee foot8note +1.
:s"
'mount of 'mount of sub8items main items
:emarks
7
For the sub8heading KCsee )ection ;+b.DJ$ the sub8heading K+)ee section ;.J subs by 'ct 7= of 1!3$ sec" 731 +w"r"e"f"7#""1!3. and again subs" by 'ct 33 of 1A0$ sec" 1 +w"r"e"f" 71"A"1A0." = )ubs" by 'ct 33 of 1A0$ sec" 1$ for entry +d. +w"r"e"f" 71"A"1A0." ; Ins" by 'ct 7= pf 1!3$ sec" 73 +w"e"r"f 7#""1!#.
7;
;"
'dd also income$ profits or gains+if any. credited directly to published or disclosed reserves$ other thanM +i. capital receipts and capital profits +including profits on the sale of capital assets on which depreciation has not been allowed for income8tax or agricultural Income8Tax.H +ii. profits of$ and receipts relating to$ any business situated outside IndiaH +iii. income of foreign concerns from investment outside India" /et Total of Item /o" ;NN
:s" :s
#"
Total of Item /os" 1$7"= and ;
3"
eductE +a. *apital receipts and capital profits +other than profits on the sale of assets on which depreciation has been allowed for income8 tax or agricultural income8tax. +b. 6rofits of$ and receipts relating to$ any business situated outside India" +c. Income of foreign concerns from investments outside India +d. (xpenditure or losses +if any debited directly to published or disclosed reserves$ other than8 +i. capital expenditure and capital losses +other than losses on sale of capital assets on which depreciation has not been allowed for income8tax". +ii. &osses of any business situated outside India" +e. In the case of foreign banking companies proportionate administrative +overhead. expenses of head -ffice allocable to Indian business" +f. :efund of any direct tax paid for previous accounting years and excess provision$ if any$ of previous accounting years$ relating to bonus$ depreciation$ taxation or development rebate or development allowance$ if written back" 1 C+g. *ash subsidy$ if any$ given by the ,overnment or by any body corporate established by any law for the time being in force or by any other agency through budgetary grants$ whether given directly or though any agency for specified purposes and the proceeds of which are reserved for such purposesD" :s" +5. Total of Item /o" 3NN 88888888888888888
Item /o" 1
6articulars
)ee foot8note +7.
)ee foot8note +7.
)ee foot8note +7.
)ee foot8note +=.
)ee foot8note +7.
'mount of 'mount of sub8items main items
:emarks
)ubs" by 'ct 7= of 1!3$ sec" 73$ for sub8item +g. +w"e"r"f 77#""1!#."
7#
!"
,ross 6rofits for purposes of bonus +Item /o" # minus Item /o" 3.
88888888888888888 :s" 88888888888888888
"
7
CExplanation8 In sub8item +aa. of item =$ Lapproved gratuity fund9 has the same meaning assigned to it in clause +#. of section 7 of the Income8Tax 'ct"D Foot+Not"-? +1. If$ and to the extent charged to 6rofit and &oss 'ccount" +7. If$ and to the extend$ credited to 6rofit and &oss 'ccount" +=. In the proportion of India ,ross 6rofit +Item /o"!. to Total World ,ross 6rofit +as per *onsolidated 6rofit and &oss 'ccount ad5usted as in Item /o" 7 above only."
=
THE THRID SCHEDULE C )ee section 3+d.D
tem /o" +1. 1"
*ategory of employer +7. ; C*ompany$ other than a banking companyD
+i.
+ii. +iii.
1 C7
1
7 anking company
+i.
Further sums to be deducted +=. The dividends payable on its preference share capital for the accounting year calculated at the actual rate at which such dividends are payableH A"# per cent of its paid up e4uity share capital as at the commencement of the accounting yearH 3 per cent of its reserves shown in its balance8sheet as at the commencement of the accounting year$ including any profits carried forward from the previous accounting year" 6rovided that where the employer is a foreign company within the meaning of section #1 of the *ompanies 'ct$ 1#3 +1 of 1#3.$ the total amount to be deducted under this Item shall be A"# per cent on the aggregate of the value of the net fixed assets and the current assets of their company in India after deducting the amount of its current liabilities +other than any amount shown as payable by the company to its >ead -ffice whether towards any advance made by the >ead -ffice or otherwise or any interest paid by the company to its >ead -ffice. in India"
= The dividends payable on its preference share capital
7
Ins" by 'ct 7= of 1!3$ sec" 73" +w"r"e"f 7#""1!3. For the heading K T>( T>I: )*>(@&(J T>( >('I/, K T>( )(*-/ )*>(@&(J subs" by 'ct 7= of 1!3$ sec" 7! +w"r"e"f" 17"A"1A0. ; )ubs by 'ct 33 of 1A0$ sec" 70$ for K *ompanyJ +w"r"e"f" 71"A"1A0. 1 Ins" by 'ct 33 of 1A0$ sec" 70 +w"r"e"f 7=1"A"1A0. =
73
for the accounting year calculated at the rate at which such dividends are payableH +ii. !"# per cent of its paid up e4uity share capital as at the commencement of the accounting yearH +iii. # per cent of its reserves shown in its balance8sheet as at the commencement of the accounting year$ including any profits carried forward from the previous accounting year" +iv. any sum which in respect of the accounting year$ is transferred by it8 +a. to a reserve fund under sub8section +1. of section 1! of the anking :egulation 'ct$ 1; +10 of 1;.H or +b. to any reserves in India in pursuance of any direction or advise given by the :eserve bank of India" Whichever is higherE 6rovided that where the banking company is a foreign company within the meaning of section #1 of the *ompanies 'ct$ 1#3 +1 of 1#3.$ the amount to be deducted under this Item shall be aggregate of8 +i. the dividends payable on its preference shareholders for the accounting year at the rate at which such dividends are payable on such amount as bears the same proportion to its total preference share capital as its total working funds in India bear to its total world working funds" H +ii. !"# per cent of such amount as bears the same proportion to its total paid up e4uity share capital as its total working funds in India bear to its total working funds in India bear to its total world working fundsH +iii. # per cent of such amount as bears the same proportion to its total disclosed reserves as its total working funds in India bear to its total world working fundsH +iv. any sum which$ in respect of the accounting year$ is deposited by it with the :eserve ank of India under sub8clause +ii. of clause +b. of sub8section +7. of section 11 of the anking :egulation 'ct$ 1; +10 of 1;.$ not exceeding the amount re4uired under the aforesaid provision to be so deposited"D
1
7
=
7!
="
;"
#"
*orporation
*o8operative society
'ny other employer not falling under any of the aforesaid categories"
+i. A"# percent$ of its paid up capital as at the commencement of the accounting year" +ii. 3 per cent$ of its reserves$ if any$ shown in its balance sheet as at the commencement of the accounting$ year including any profits carried forward from the previous accounting year" +i. A"# per cent$ of the capital invested by such society in its establishment as evidenced from its books of accounts at the commencement of the accounting yearH +ii. such sum as has been carried forward in respect of the accounting year to a reserve fund under any law relating to co8operative societies for the time being in force" A"# per cent$ of the capital invested by him in his establishment as evidence from his books of accounts at the commencement of the accounting year" 6rovided that where such employer is a person to whom *hapter OOII' of the Income8tax 'ct applies$ the annuity deposit payable by him under the provisions of that *hapter during the accounting year shall also be deducted" 6rovided further that where such employer is a firm$ an amount e4ual to 7# per cent$ of the gross profits derived by it from the establishment in respect of the accounting year after deducting depreciation in accordance with the provision of clause +a. of section 3 by way of remuneration to all the partners taking part in the conduct of business of the establishment shall also be deducted$ but where the partnership agreement$ whether oral or written$ provides for the payment of remuneration to any such partner$ and G +i. the total remuneration payable to all such partners is less than the said 7# per cent the amount payable$ sub5ect to a maximum of forty8 eight thousand rupees to each such partnerH or +ii. the total remuneration payable to all such partners is higher than the said 7# per cent such percentage$ or a sum calculated at the rate of forty8eight thousand rupees to each such partner$ whichever is less$ shall be deducted under this provisoH 6rovided also that where such employer is an individual or a >indu undivided family8 +i. an a mount e 4ual t o 7# p ercent o f the g ross profits derived by such employer from the establishment in respect of the accounting year after deducting depreciation in accordance with the provisions of clause +a. of section 3H or +ii. forty8eight thousand rupeesH whichever is less$ by way of remuneration to such employer$ shall also be deducted"
+1.
+7.
+=.
7A
3"
'ny employer failing In addition to the sums deductible under any of the under Item /o" 1 or Item aforesaid Items$ such sums as are re4uired to be /o" = or Item /o" ; or appropriate by the license in respect of the accounting year Item /o" # and being a to a reserve under the )ixth )chedule to that 'ct shall also license within the be deducted" meaning of the (lectricity +)upply. 'ct$ 1;A +#; of 1;A. 1 ExplanationE The expression LreservesJ occurring in column +=. against item /os" C1+iii.$ 7+iii. and =+ii.D shall not include any amount set apart for the purpose of8 +i. 6ayment of any direct tax which$ according to the balance Gsheet$ would be payableH +ii. meeting any depreciation admissible in accordance with the provisions of clause+a. of section 3H +iii. payment of dividends which have been declared"H but shall include8 +a. any amount$ over and above the amount referred to in clause+i. of this (xplanation" +b. any amount set apart for meeting any depreciation in excess of the amount admissible in accordance with the provisions of clause +a. of section 3"
7
THE FOURTH SCHEDULE +)ee section 1# and 13.
In the )chedule$ the total amount of bonus e4ual to A"== per cent of the annual salary or wage payable to all the employees is assumed to be :s" 1$0;$13!" 'ccordingly$ the maximum bonus to which all the employees are entitled to the paid +twenty per cent of the annual salary or wage of all the employees. would be :s" 7$#0$000"
1
)ubs" by 'ct 33 of 1A0$ sec" 70$ for K 1+iii. and =+ii.J +w"r"e"f 71"A"1A0. KT>( F-@:T> )*>(@&( K was subs" by KT>( T>I: )*>(@&(J ? 'ct 7= of 1!3$ sec" 7= +w"r"e"f" 7#""1!3. and T>( T>I: )*>(@&( so substituted was again subs" by 'ct 33 of 1A0$ sec" 71 +w"r"e"f" 71"A"1A0. 7
7
