Hello Everyone,
I hope this message finds you well. I am reaching out to seek some clarification regarding the treatment of statutory bonuses in terms of their categorization and taxation. I understand that this might vary based on jurisdiction and company policies, but I'm eager to gather insights and experiences from the community.
The specific questions I have are:
1. Nature of Statutory Bonus: Salary Component or Profit Sharing?
In your organization or based on your understanding, is the statutory bonus considered a part of the employee's salary structure, or is it viewed as a form of profit-sharing?
2.Tax Deduction at Source (TDS) on Statutory Bonus: Yes or No?
What is the prevalent practice when it comes to deducting TDS from statutory bonuses? Are there specific rules or guidelines that determine whether TDS should be deducted or not?
3.Any Regulatory or Organizational Insights:
If applicable, could you share any relevant regulations or company policies that shed light on the treatment of statutory bonuses?
4.Impact on Employees:
How do employees generally perceive the treatment of statutory bonuses? Have there been any notable changes or updates in this regard that employees should be aware of?
5.Your Personal Experience or Recommendations:
If you have personal experiences or recommendations on handling statutory bonuses, I would greatly appreciate your insights.
Please feel free to share any relevant information, and if there are specific resources or articles that you find helpful on this topic, I would be grateful for those recommendations as well.
Thank you in advance for your time and expertise. I look forward to a fruitful discussion!
Best regards,
Shlesha Parmar
Human Resource Executive
Sadhrasya SoftTech Private Limited
Vadodara, Gujarat
From India, Vadodara
I hope this message finds you well. I am reaching out to seek some clarification regarding the treatment of statutory bonuses in terms of their categorization and taxation. I understand that this might vary based on jurisdiction and company policies, but I'm eager to gather insights and experiences from the community.
The specific questions I have are:
1. Nature of Statutory Bonus: Salary Component or Profit Sharing?
In your organization or based on your understanding, is the statutory bonus considered a part of the employee's salary structure, or is it viewed as a form of profit-sharing?
2.Tax Deduction at Source (TDS) on Statutory Bonus: Yes or No?
What is the prevalent practice when it comes to deducting TDS from statutory bonuses? Are there specific rules or guidelines that determine whether TDS should be deducted or not?
3.Any Regulatory or Organizational Insights:
If applicable, could you share any relevant regulations or company policies that shed light on the treatment of statutory bonuses?
4.Impact on Employees:
How do employees generally perceive the treatment of statutory bonuses? Have there been any notable changes or updates in this regard that employees should be aware of?
5.Your Personal Experience or Recommendations:
If you have personal experiences or recommendations on handling statutory bonuses, I would greatly appreciate your insights.
Please feel free to share any relevant information, and if there are specific resources or articles that you find helpful on this topic, I would be grateful for those recommendations as well.
Thank you in advance for your time and expertise. I look forward to a fruitful discussion!
Best regards,
Shlesha Parmar
Human Resource Executive
Sadhrasya SoftTech Private Limited
Vadodara, Gujarat
From India, Vadodara
If you're curious about how statutory bonuses work in terms of categories and taxes, Keep in mind that the details can vary depending on where you are and your company's policies, so it's smart to chat with a local tax pro or legal expert for the most accurate info.
Categories of Bonuses:
Must-Have vs. Your Call:
Must-Have Bonuses: Some places make it a must for employers to pay specific bonuses, like a share of profits or rewards for sticking around.
Your Call Bonuses: Others are optional and depend on what's in your work agreement.
Performance Boost: Bonuses might be linked to how well you or the whole company is doing. Hit those goals, get those bonuses!
Sharing Profits: Ever heard of profit-sharing? It's when you and your coworkers get a cut of the company's profits.
Taxing Bonuses:
Extra Cash? Tax Bash: Most places see bonuses as extra cash you've got to pay taxes on. Yep, a chunk might be taken out for taxes.
Tax Tag Team: Your employer usually handles taking out taxes from your bonus and sending them to the tax folks. There might be different tax rates for bonuses.
Save Some for Later: You and your employer might need to chip in for social security or healthcare based on your bonus.
Bosses Get Breaks Too: Sometimes, employers catch a break with tax deductions linked to the bonuses they dole out.
When Tax Time Hits: Taxes on bonuses can happen when you earn them or when you actually get the cash. It depends on local rules.
Paperwork Alert: Your employer usually has to let tax folks know about the bonus cash they're giving out. You might get a note about it too.
Perks and Loopholes: Some places might cut you some slack on certain bonuses, especially if they're for things like education or health.
Playing it Safe:
Follow the Rules: Make sure your employer is sticking to the local laws about bonuses. It's good for everyone.
Keep the Papers: Save any info about bonus plans and payments. It's handy in case anyone asks questions.
Remember, it's always a good idea to double-check with local experts to make sure you're on the right track for your area and job.
Happy bonus hunting!
From India, Kolkata
6Categories of Bonuses:
Must-Have vs. Your Call:
Must-Have Bonuses: Some places make it a must for employers to pay specific bonuses, like a share of profits or rewards for sticking around.
Your Call Bonuses: Others are optional and depend on what's in your work agreement.
Performance Boost: Bonuses might be linked to how well you or the whole company is doing. Hit those goals, get those bonuses!
Sharing Profits: Ever heard of profit-sharing? It's when you and your coworkers get a cut of the company's profits.
Taxing Bonuses:
Extra Cash? Tax Bash: Most places see bonuses as extra cash you've got to pay taxes on. Yep, a chunk might be taken out for taxes.
Tax Tag Team: Your employer usually handles taking out taxes from your bonus and sending them to the tax folks. There might be different tax rates for bonuses.
Save Some for Later: You and your employer might need to chip in for social security or healthcare based on your bonus.
Bosses Get Breaks Too: Sometimes, employers catch a break with tax deductions linked to the bonuses they dole out.
When Tax Time Hits: Taxes on bonuses can happen when you earn them or when you actually get the cash. It depends on local rules.
Paperwork Alert: Your employer usually has to let tax folks know about the bonus cash they're giving out. You might get a note about it too.
Perks and Loopholes: Some places might cut you some slack on certain bonuses, especially if they're for things like education or health.
Playing it Safe:
Follow the Rules: Make sure your employer is sticking to the local laws about bonuses. It's good for everyone.
Keep the Papers: Save any info about bonus plans and payments. It's handy in case anyone asks questions.
Remember, it's always a good idea to double-check with local experts to make sure you're on the right track for your area and job.
Happy bonus hunting!
From India, Kolkata
Statutory Bonus means the bonus declared or paid in accordance with Payment of Bonus Act. The Act applies to every factory (without reference to the number of workers employed) and other establishments which employ 20 or more employees. The Act has an infancy protection period of five years but if you make profits in any of these years, it will become liable to pay bonus to eligible employees. The payment of bonus will then become a part of your business even if in the later years you end up in loss.
As per law bonus is payable to those employees whose salary does not exceed Rs 21000. In respect of employees whose salary is above Rs 7000, bonus shall be calculated on 7000 or such amount as the government has notified as minimum salary for the kind of employment whichever is higher. Those who are getting more than Rs 21000 as salary will nt be entitled to get any (statutory) bonus.
The rate of bonus is decided by the profitability of the establishment. Accordingly, it shall vary from 8.33% to 20% of the above salary. As such, statutory bonus is depended on profitability of the establishment as well as salary of the employees.
Bonus is part of remuneration and as such tax should be deducted from the bonus part also. Normally, an employee whose salary is below Rs 21000 per month may not be under the tax brackets but if the employee is in receipt of other benefits like HRA, Conveyance and other allowances like overtime wages which are not considered for Bonus, he would very well come under the tax brackets.
Bonus is usually paid during festival season and as such it would be good for an employee to have this amount. The majority of bonus amounts would be converted into capital because the workers often buy capital goods with this amount. The market will flourish only when there are more companies offering bonus during seasons.
My perception is that the law governing the payment of bonus should be amended to make it applicable to all employees without any reference to their salary. No a days, most of the states (Kerala for example) have minimum wages more than Rs 21000. Obviously, the workers will be out of the Payment of Bonus Act. If you want that the workers get a handsome amount for spending during festival season or getting it converted into capital, more workers should be brought under bonus brackets. For that we should ignore the celling of Rs 21000. Moreover, the amount of bonus should be calculated on the actual salary and not on Rs 7000 or the statutory minimum wages notified. These changes can be easily brought into at an organisational level because the organisations do not offer salaries but they offer only CTCs which can include any future payments and contributions either in monthly basis or annual basis.
From India, Kannur
As per law bonus is payable to those employees whose salary does not exceed Rs 21000. In respect of employees whose salary is above Rs 7000, bonus shall be calculated on 7000 or such amount as the government has notified as minimum salary for the kind of employment whichever is higher. Those who are getting more than Rs 21000 as salary will nt be entitled to get any (statutory) bonus.
The rate of bonus is decided by the profitability of the establishment. Accordingly, it shall vary from 8.33% to 20% of the above salary. As such, statutory bonus is depended on profitability of the establishment as well as salary of the employees.
Bonus is part of remuneration and as such tax should be deducted from the bonus part also. Normally, an employee whose salary is below Rs 21000 per month may not be under the tax brackets but if the employee is in receipt of other benefits like HRA, Conveyance and other allowances like overtime wages which are not considered for Bonus, he would very well come under the tax brackets.
Bonus is usually paid during festival season and as such it would be good for an employee to have this amount. The majority of bonus amounts would be converted into capital because the workers often buy capital goods with this amount. The market will flourish only when there are more companies offering bonus during seasons.
My perception is that the law governing the payment of bonus should be amended to make it applicable to all employees without any reference to their salary. No a days, most of the states (Kerala for example) have minimum wages more than Rs 21000. Obviously, the workers will be out of the Payment of Bonus Act. If you want that the workers get a handsome amount for spending during festival season or getting it converted into capital, more workers should be brought under bonus brackets. For that we should ignore the celling of Rs 21000. Moreover, the amount of bonus should be calculated on the actual salary and not on Rs 7000 or the statutory minimum wages notified. These changes can be easily brought into at an organisational level because the organisations do not offer salaries but they offer only CTCs which can include any future payments and contributions either in monthly basis or annual basis.
From India, Kannur
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Amendment to Payment of Bonus Act 2015.jpg
Statutory Compliance of a Industrial or Commercial Unit.xls
Bonus act amendment gazette copy.pdf