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YTB-0069 · Financial › Salary & Payroll

Bonus Calculator India — FY 2025-26

Statutory bonus (Payment of Bonus Act) + performance bonus — eligibility, rates & tax

Monthly Basic + DA (₹)

Bonus Type

Bonus Percentage (%)

Working Days in FY (out of 365)

State Minimum Wage (₹/month)

Income Tax Slab

Monthly Basic + DA₹18,000

Statutory Eligibility—

Calculation Base (lower of actual / ₹7,000+min wage)—

Pro-rata Factor (days/365)—

Gross Bonus (before tax)—

Income Tax on Bonus—

Net Bonus (in hand)—

Payment Deadline (FY 2025-26)30 November 2026

Net Bonus

Tax

Why Statutory Bonus Is Not Calculated on Your Actual Salary

An employee earning ₹18,000/month in Basic + DA expects their 8.33% bonus to be ₹18,000 × 8.33% × 12 = ₹17,993. Their payslip shows ₹6,997. They assume an error. There's no error — the Payment of Bonus Act 1965 caps the calculation base at ₹7,000/month (or the state minimum wage, whichever is higher). Even if you earn ₹20,999/month, your statutory bonus is calculated on ₹7,000 to ₹15,000 (depending on state minimum wage). The "eligibility ceiling" of ₹21,000 is different from the "calculation ceiling" of ₹7,000+ — two numbers that most employees confuse. This calculator shows both.

Two Ceilings — Eligibility vs Calculation

Ceiling Type	Amount	What It Does
Eligibility Ceiling	₹21,000/month Basic+DA	Above this → NOT eligible for statutory bonus at all
Calculation Ceiling	₹7,000/month OR state minimum wage (higher)	Bonus % applied to this amount, not actual salary

Example: Employee earning ₹18,000/month basic in Karnataka (state minimum wage = ~₹14,000). Their bonus base is ₹14,000 (higher than ₹7,000). Minimum bonus = 8.33% × ₹14,000 × 12 = ₹13,994. Not ₹17,993 (8.33% × ₹18,000 × 12) and not ₹6,997 (8.33% × ₹7,000 × 12).

Statutory vs Performance vs Festival Bonus

Bonus Type	Legal Obligation?	Linked to Profit?	Taxability
Statutory Bonus	✅ Mandatory (Bonus Act)	Min 8.33% regardless of profit	Fully taxable as salary
Performance / Variable	❌ Contractual only	Typically yes	Fully taxable as salary
Festival / Diwali (ex-gratia)	❌ Discretionary	No	Fully taxable as salary (if >₹5,000)

Important Compliance Points for HR Teams

Payment deadline: Statutory bonus for FY 2025-26 must be paid by 30 November 2026 (8 months from FY end)
Forms required: Form A (allocable surplus), Form B (set-on/set-off), Form C (employee-wise details), Form D (annual return to labour office)
Record retention: 8 years
Penalty for non-payment: Section 28 — up to 6 months imprisonment and/or fine up to ₹1,000
New Code on Wages 2019: Consolidates Bonus Act but not yet fully notified in all states — existing Payment of Bonus Act 1965 continues to apply in most cases

💡 When can bonus be forfeited? An employee can be disqualified from bonus only in specific cases: dismissal for fraud, riotous or violent behaviour on premises, theft, misappropriation, or wilful damage to property. General misconduct, poor performance, or resignation do NOT disqualify an employee from statutory bonus for the days they worked. Pro-rata bonus for partial year must be paid based on actual days worked (minimum 30 days worked = eligible).

FAQ

Is bonus paid even when the company makes a loss? ＋

Yes — the minimum bonus of 8.33% must be paid regardless of profit or loss. Even in a loss year, employers are legally required to pay this minimum. However, if the company has paid minimum bonus in previous years (set-off against future surplus), they may be able to defer through the "set-on and set-off" mechanism. The maximum 20% bonus is only payable when allocable surplus is available. But the 8.33% floor has no profit condition — it's a statutory floor.

Does performance bonus count as part of statutory bonus? ＋

No — unless specifically designated by the employer in writing. Under Section 18 of the Payment of Bonus Act, an employer can offset interim bonus (specifically labelled as bonus under the Act) or advance amounts paid against statutory bonus. But a separate "performance bonus" or "Diwali gift" that is not explicitly declared as statutory bonus cannot be set off. Many companies pay both — statutory (Act-compliant) and performance (discretionary) — separately to maintain legal clarity.

What if I joined mid-year — am I still eligible? ＋

Yes, as long as you worked at least 30 days in the financial year (April-March). If you joined in November 2025 and worked through March 2026 (≈150 days), you are eligible for pro-rata statutory bonus: (Working days ÷ 365) × annual salary × bonus%. The 30-day minimum is the only threshold — there is no 6-month or 1-year waiting period for new joiners. Mid-year joiners should verify their bonus entitlement in their appointment letter and first annual payslip.