Payment of Bonus Act, 1965 [Repealed]
[Repealed by Act 29 of 2019, S. 69(1) (w.e.f. the date to be notified)]
1[An Act 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]
PREAMBLE
Be it enacted by Parliament in the Sixteenth Year of the Republic of India as follows:
statement of objects and reasons
A Tripartite Commission was set up by the Government of India by their Resolution No. WB-20(9)/61, dated 6th December, 1961, to consider in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the Government. The Commission's Report containing their recommendations was received by the Government on 24th January, 1964. In their Resolution No. WB 20(3)/64, dated the 2nd September, 1964, the Government announced acceptance of the Commission's recommendations subject to a few modifications as were, mentioned therein. With a view to implement the recommendations of the Commission as accepted by the Government, the Payment of Bonus Ordinance, 1965, was promulgated on 29th May, 1965. The object of the Bill is to replace the said Ordinance.
The notes on clauses explain the various provisions of the Bill.
statement of objects and reasons of amending act 55 of 1973
The Payment of Bonus Act, 1965 (21 of 1965) was amended on the 1st September, 1973 by the Payment of Bonus (Amendment) Act, 1973 (39 of 1973) to provide for the payment of minimum bonus in respect of the accounting year commencing on any day in the year 1972 at the rate of 8 1/3 per cent of the salary or wage of the employee and for the deposit of apart of the bonus in certain cases in the provident fund accounts of the employees. A number of representations have been received for payment of the entire amount of bonus in cash. It is, therefore, proposed to amend the Act so that the entire bonus due to the employees in respect of the accounting year commencing on any day in the year 1972 be paid to them in cash.
The present Bill seeks to achieve the above object.
statement of objects and reasons of amending act 42 of 1974
The Payment of Bonus Act, 1965 (21 of 1965) was amended in September, 1973 by the Payment of Bonus (Amendment) Act, 1973 (39 of 1973) to provide, inter alia, for the payment of a minimum bonus in respect of the accounting year commencing on any day in the year 1972 at the rate of 8-1/3 per cent, of the salary or wage of an employee. The provision for the payment of such minimum bonus in respect of the accounting year commencing on any day in the year 1972 was made pending the receipt of the final report of the Bonus Review Committee. The Committee's final report is still awaited. Meanwhile, the bonus for the accounting year commencing on any day in the year 1973 has become payable. Pending the receipt of the final report of the Bonus Review Committee, it is considered necessary to provide for the payment of a minimum bonus also in respect of the accounting year commencing on any day in the year 1973, at the rate of 8-1/3 per cent, of the salary or wage of an employee.
2. The present Bill seeks to achieve the above object.
statement of objects and reasons of amending act 23 of 1976
The Government of India, by their Resolution No. U-23018/1-72-WB dated the 28th April, 1972, constituted a Committee known as the Bonus Review Committee to review the operation of the Payment of Bonus Act, 1965. The Committee submitted its final report on the 14th October, 1974. After careful consideration of the recommendations made and the view points expressed therein, Government decided inter alia that
(i) it should be made clear that the Act provides for payment of bonus on the basis of profits or on the basis of production or productivity and for matters connected therewith;
(ii) power should be given to the appropriate Governments to apply the Act to any establishment or class of establishments employing ten or more workers by giving two months notice in the Official Gazette;
(iii) payment of minimum bonus should be subject to the availability of allocable surplus, even if it be a marginal amount;
(iv) the minimum bonus should be equal to four per cent, of salary/wage. However, the amount of minimum bonus in absolute terms should be raised from Rs 25 to Rs 60 in the case of persons below 15 years and from Rs 40 to Rs 100 in the case of others;
(v) in respect of the accounting year commencing on any day in the year 1974, every employer should pay to every employee a minimum bonus as mentioned above whether or not the employer has any allocable surplus in that accounting year and that if any employer has paid a minimum bonus in excess of what is specified notwithstanding that such employer did not have the required allocable surplus for payment of such bonus, then, such employer shall deduct the excess amount of bonus so paid from the amount of bonus payable by him to the employees in respect of the three immediately succeeding accounting years;
(vi) banking companies should be excluded from the purview of the Act;
(vii) agreements settlements for the payment of bonus based on production/productivity in lieu of bonus based on profits should also be subject to a maximum of 20 per cent, as in the case of bonus based on profits;
(viii) Section 34(3) of the Act should be omitted;
(ix) Section 36 of the Income-tax Act should be amended to provide that deductions in respect of bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965, apply shall not exceed the amount of bonus payable under that Act.
2. An Ordinance, namely, the Payment of Bonus, (Amendment) Ordinance, 1975, was promulgated by the President under CI. (1) of Article 123 of the Constitution on the 25th September, 1975 to give effect to the power decisions and to provide for other connected matters. The Bill seeks to replace the. Ordinance.
statement of objects and reasons of amending act 43 of 1977
In 1975, a number of substantial amendments were made in the Payment of Bonus Act, 1965 by means of the Payment of Bonus (Amendment) Ordinance, 1975 promulgated on the 25th September, 1975. This Ordinance was later replaced by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976). As a result of these amendments, a minimum bonus for four per cent, only was payable in respect of the accounting year commencing on any day in the year 1974 and no minimum bonus was payable in respect of subsequent accounting years if there were no allocable surplus in those years. Some other changes made by the Amendment Act also adversely affected the workers.
2. Several representations on the amendments were received by the Government. After careful consideration of the matter. Government decided that the Payment of Bonus Act, 1965 should be amended to provide, inter alia, for the payment of a minimum bonus of 8.33 per cent, whether there was allocable surplus or not. It was also decided that these amendments should have effect in respect of the accounting year commencing on any day in the year 1976.
3. Since Parliament was not in session and since it was necessary to take immediate action, the Payment of Bonus (Amendment) Ordinance, 1977 was promulgated by the President on the 3rd September, 1977. The present Bill seeks to replace the aforesaid Ordinance.
statement of objects and reasons of amending act 48 of 1978
In 1975, a number of substantial amendments were made in the Payment of Bonus Act, 1965 by means of the Payment of Bonus (Amendment) Ordinance, 1975 promulgated on the 25th September, 1975. This Ordinance was later replaced by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976). As a result of these amendments a minimum bonus of four per cent only was payable in respect of the accounting year commencing on any day in the year 1974 and no minimum bonus was payable in respect of subsequent accounting years if there was no allocable surplus in those years. The banking companies and the Industrial Reconstruction Corporation of India, to which the Act was earlier applicable, were excluded from the purview of the Act. Some other changes were also made.
2. Considering an almost unanimous demand of the working class that the Payment of Bonus Act, 1965 should be amended to provide inter alia for payment of a minimum bonus whether there was an allocable surplus or not, the aforesaid Act was amended by the Payment of Bonus (Amendment) Act, 1977 (43 of 1977) to provide for payment of a minimum bonus of 8.33 per cent for the accounting year commencing on any day in the year 1976 irrespective of whether there was any allocable surplus. Banking companies and the Industrial Reconstruction Corporation of India were also bound to pay bonus under the Payment of Bonus (Amendment) Act, 1977. Investment allowance was allowed to be deducted as a prior charge, from the gross profits, in the computation of allocable surplus. Provisions for payment of bonus under an agreement on a formula different from that outlined in the Act was restored, subject to certain safeguards.
3. For the accounting year commencing on any day in the year 1977, the Government decided to maintain the status quo. A statement disclosing the decision was made in both the Houses of Parliament, during the last session. But it was not found possible for a Bill to be introduced and passed before that session adjourned. With a view to giving effect to the decision to pay bonus before the commencement of the festival season in September-October, the President promulgated the Payment of Bonus (Amendment) Ordinance, 1978 on the 8th September, 1978.
4. The present Bill seeks to replace, the aforesaid Ordinance.
statement of objects and reasons of amending act 50 of 1980
In 1975, a number of substantial amendments were made in the Payment of Bonus Act, 1965 by means of the Payment of Bonus (Amendment) Ordinance, 1975, promulgated on the 25th September, 1975. This Ordinance was later replaced by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976). As a result of these amendments, a minimum bonus of four per cent, only was payable in respect of the accounting year commencing on any day in the year 1974 and no minimum bonus was payable in respect of subsequent accounting years if there were no allocable surplus in those years. The banking companies and the Industrial Reconstruction Corporation of India, to which the Act was earlier applicable, were excluded from the purview of the Act. Some other changes were also made.
2. Considering an almost unanimous demand of the working class that the Payment of Bonus Act, 1965 should be amended to provide, inter alia, for payment of a minimum bonus whether there was an allocable surplus or not, the aforesaid Act was amended by the Payment of Bonus (Amendment) Act, 1977 (43 of 1977) to provide for payment of a minimum bonus of 8.33 per cent, for the accounting year commencing on any day in the year 1976 irrespective of whether there was any allocable surplus. Banking companies and the Industrial Reconstruction Corporation of India were also bound to pay bonus under the Payment of Bonus (Amendment) Act, 1977. Investment allowance was allowed to be deducted as a prior charge, from the gross profits, in the computation of allocable surplus. Provision for payment of bonus under an agreement on a formula different from that outlined in the Act was restored, subject to certain safeguards.
3. Subsequently, requests were received from various quarters for amendment of the Payment of Bonus Act, 1965 in certain other respects. Pending consideration of these proposals, it was decided to maintain the status quo for the accounting year commencing on any day in the year 1977. The intention was to study these proposals and to have consultations with the interests concerned before introducing permanent changes in the Act. This process could not however, be completed and after the change of Government in July 1979, it was decided to maintain the status quo for the accounting year commencing on any day in the year 1978 also. Accordingly, the President promulgated the Payment of Bonus (Amendment) Ordinance, 1979, on the 30th August, 1979.
4. The present Bill seeks to replace the aforesaid Ordinance.
statement of objects and reasons of amending act 66 of 1980
Subsequent to the amendments which were made to the Payment of Bonus Act, 1965 in 1975, there were several suggestions for further amendments. Some of these were incorporated in the Payment of Bonus (Amendment) Act, 1977, which was made applicable for the accounting year commencing on any day in 1976. The amended provisions were extended from year to year.
The trade union organisations as also the employers organisations had been urging that the policy with regard to the payment of bonus should be settled and there must be stability in matters of minimum bonus, maximum bonus and the formula for calculation of bonus.
The various suggestions, both of workers and of employers, were considered and it was decided to amend the Act, inter alia, to give effect to the following proposals, namely
(i) A provision for payment of a minimum bonus at 8.33 per cent, or Rs 100, whichever is higher, should be made in the Act.
(ii) Banking companies should again be brought within the purview of the Act.
(iii) The appropriate Government should be enabled to delegate the power to institute prosecution for offences under the Act to an officer not below the rank of a Regional Labour Commissioner or a State Labour Commissioner, as the case may be.
As Parliament was not in session and payment of bonus for the accounting year commencing on any day in 1979 had become due, the Payment of Bonus (Amendment) Ordinance, 1980, was promulgated by the President on the 21st August, 1980.
The Bill seeks to replace the aforesaid Ordinance. Opportunity is being availed of to amend Section 20 of the Act to clarify the position regarding the extent of applicability of the Act to employees in establishments in the public sector.
Notes Bonus Meaning. Bonus is not defined under the Act, nor there exists any definition of Bonus under any other enactment. One of the terms of reference to Bonus Commission was to define the concept of bonus. The Commission in its report said: It is difficult to define in rigid terms the concept of bonus but it is possible to urge that once profits exceed a certain base, labour should legitimately have a share in them. In other words, we think it proper to construe the concept of bonus as sharing by the workers in the prosperity of the concern in which they are employed. This has also the advantage that in the case of low-paid workers such sharing in prosperity augments their earnings and so helps to bridge the gap between the actual wage and need-based wage. If it is not feasible to better the standard of living of all the industrial and agricultural workers as aimed at in Article 43 of the Constitution, there is nothing wrong in endeavouring to do so in respect of at least those workers whose efforts have contributed to the profits of the concern in which they have worked. The validity of such a conception of bonus is not affected by the difficulty of determining or qualifying precisely the living wage or even the need-based wage at any given time and place.
Section 1. Short title, extent and application
(1) This Act may be called the Payment of Bonus Act, 1965.
(2) It extends to the whole of India [* * *]2.
(3) Save as otherwise provided in this Act, it shall apply to
(a) every factory; and
(b) every other establishment in which twenty or more persons are employed on any day during an accounting year:
3[Provided that the appropriate Government may, after giving not less than two months' notice of its intention to do so, by notification in the Official Gazette, apply the provisions of this Act with effect from such accounting year as may be specified in the notification, to any establishment or class of establishments [including an establishment being a factory within the meaning of sub-clause (ii) of clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948)] employing such number of persons less than twenty as may be specified in the notification; so, however, that the number of persons so specified shall in no case be less than ten.]
(4) Save as otherwise provided in this Act, the provisions of this Act shall, in relation to a factory or other establishment to which this Act applies, have effect in respect of the accounting year commencing on any day in the year 1964 and in respect of every subsequent accounting year:
4[Provided that in relation to the State of Jammu and Kashmir, the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year shall be construed as reference to the accounting year commencing on any day in the year 1968 and every subsequent accounting year:]
5[Provided further that when the provisions of this Act have been made applicable to any establishment or class of establishments by the issue of a notification under the proviso to sub-section (3), the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year or, as the case may be, the reference to the accounting year commencing on any day in the year 1968 and every subsequent 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 subsequent accounting year.]
(5) An establishment to which this Act applies [* * *]6 shall continue to be governed by this Act notwithstanding that the number of persons employed therein falls below twenty 7[or, as the case may be, the number specified in the notification issued under the proviso to sub-section (3)].
Notes Application of the Act. The Act came into force on May 29, 1965 through an Ordinance. The Ordinance has been replaced by this Act, which has come into force on 25th Sept., 1965.
It applies,
1. To every factory. Factory has not been defined under the Act. The definition of the word factory as under the Factories Act, 1948, has been made applicable. Section 2(m) of the Factories Act defines Factory as follows
(m) factory means any premises including the precinct thereof
(i) wherein ten or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) wherein twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed; .
2. To every other establishment in which twenty or more persons are employed. The employment of twenty persons may be on any day in the accounting year which may commence on any day in the year 1964. Subsequent reduction of strength in the number of employees would not make the Act inapplicable.
Section 2. Definitions
In this Act, unless the context otherwise requires,
(1) accounting year means
(i) 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 not;
(iii) in any other case
(a) the year commencing on the 1st day of April; or
(b) if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced:
Provided that an option once exercised by the employer under paragraph (b) of this sub-clause 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 fit;
(2) agricultural income shall have the same meaning as in the Income Tax Act;
(3) agricultural income tax law means any law for the time being in force relating to the levy of tax on agricultural income;
(4) allocable surplus means
(a) in relation to an employer, being a company 8[(other than banking company)] which has not made the arrangements prescribed under the Income Tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of Section 194 of that Act, sixty-seven per cent of the available surplus in an accounting year;
(b) in any other case, sixty per cent of such available surplus, 9[* * *];
(5) appropriate Government means
(i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the Central Government, the Central Government;
(ii) in relation to any other establishment, the Government of the State in which that other establishment is situate;
(6) available surplus means the available surplus under Section 5;
(7) award means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947), or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a State and includes an arbitration award made under Section 10-A of that Act or under that law;
(8) banking company means a banking company as defined in Section 5 of the Banking Companies Act, 1949 (10 of 1949), and includes the State Bank of India, any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), 10[any corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), 11[any corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)], any co-operative bank as defined in clause (i) of Section 2 of the Reserve Bank of India Act, 1934 (2 of 1934),] and any other banking institution which may be notified in this behalf by the Central Government;
(9) company means any company as defined in Section 3 of the Companies Act, 1956 (1 of 1956), and includes a foreign company within the meaning of Section 591 of that Act;
(10) co-operative society means a society registered or deemed to be registered under the Co-operative Societies Act, 1912 (2 of 1912), or any other law for the time being in force in any Sate relating to co-operative societies;
(11) corporation means any body corporate established by or under any Central, Provincial or State Act but does not include a company or a co-operative society;
(12) direct tax means
(a) any tax chargeable under
(i) the Income Tax Act;
(ii) the Super Profits Tax Act, 1963 (14 of 1963);
(iii) the Companies (Profits) Surtax Act, 1964 (7 of 1964);
(iv) the agricultural income tax law; and
(b) any other tax which, having regard to its nature or incidence may be declared by the Central Government, by notification in the Official Gazette, to be a direct tax for the purposes of this Act;
(13) employee means any person (other than an apprentice) employed on a salary or wage not exceeding 12[twenty-one thousand rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work of hire or reward, whether the terms of employment be express or implied;
(14) employer includes
(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 sub-section (1) of Section 7 of the Factories Act, 1948 (63 of 1948), the person so named; 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 agent;
(15) establishment in private sector means any establishment other than an establishment in public sector;
(16) establishment in public sector means an establishment owned, controlled or managed by
(a) a Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956);
(b) a corporation in which not less than forty per cent of its capital is held (whether singly or taken together) by
(i) the Government; or
(ii) the Reserve Bank of India; or
(iii) a corporation owned by the Government or the Reserve Bank of India;
(17) factory shall have the same meaning as in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948);
(18) gross profits means the gross profits calculated under Section 4;
(19) Income Tax Act means the Income Tax Act, 1961 (43 of 1961);
(20) prescribed means prescribed by rules made under this Act;
(21) salary or wage means all remuneration (other than remuneration in respect of over-time 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 include
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(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 force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee;
Explanation. 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 form part of the salary or wage of such employee;
(22) words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.
Section 3. Establishments to include departments, undertakings and branches
Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act:
Provided that where for any accounting year a separate balance-sheet 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 branches shall be treated as a separate establishment for the purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of establishment for the purpose of computation of bonus.
Section 4. Computation of gross profits
13[The gross profits derived by an employer from an establishment in respect of any accounting year shall
(a) in the case of a banking company, be calculated in the manner specified in the First Schedule;
(b) in any other case, be calculated in the manner specified in the Second Schedule.]
Section 5. Computation of available surplus
The 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 6:
14[Provided that the available surplus in respect of the accounting year commencing on any day in the year 1968 and in respect of every subsequent accounting year shall be the aggregate of
(a) the gross profits for that accounting year after deducting therefrom the sums referred to in Section 6; and
(b) an amount equal to the difference between
(i) the direct tax, calculated in accordance with the provisions of Section 7, in respect of an amount equal to the gross profits of the employer for the immediately preceding accounting year; and
(ii) the direct tax, calculated in accordance with the provisions of Section 7, in respect of an amount equal 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 Act for that year.]
Notes Once gross profits are calculated as under Section 4 of the Act, the figure for available surplus out of which bonus is to be paid, is to be calculated after deducting certain amounts under items known as prior charges, detailed under Section 6.
Section 6. Sums deductible from gross profits
The following sums shall be deducted from the gross profits as prior charges, namely:
(a) any amount by way of depreciation admissible in accordance with the provisions of sub-section (1) of Section 32 of the Income Tax Act or in accordance with the provisions of the Agricultural Income Tax Law, as the case may be:
Provided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 29th May, 1965, 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 that date) continue to be such notional normal depreciation;
(b) any amount by way of 15[development rebate or investment allowance or development allowance] which the employer is entitled to deduct from his income under the Income Tax Act;
(c) subject to the provisions of Section 7, any direct tax which the employer is liable to pay for the accounting year in respect of his income, profits and gains during the year;
(d) such further sums as are specified in respect of the employer in the 16[Third Schedule].
Section 7. Calculation of direct tax payable by the employer
17[Any direct tax payable by the employer] for any accounting year shall, subject to the following provisions, be calculated at the rates applicable to the income of the employer for that year, namely:
(a) in calculating such tax no account shall be taken of
(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 taxes;
(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 sub-section (2) of Section 32 of the Income Tax Act;
(iii) any exemption conferred on the employer under Section 84 of the Income Tax Act or of any deduction to which he is entitled under sub-section (1) of Section 101 of that Act, as in force immediately before the commencement of the Finance Act, 1965 (10 of 1965);
(b) where the employer is a religious or a charitable institution to which the provisions of Section 32 do not apply and the whole or any part of its income is exempt from tax under the Income Tax Act, 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 Act;
(c) where the employer is an individual or a Hindu undivided family, the tax payable by such employer under the Income Tax Act shall be calculated on the basis that the income derived by him from the establishment is his only income;
(d) 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 is allowed under any law for the time being in force relating to direct taxes, then, no account shall be taken of such rebate;
(e) no account shall be taken of any rebate 18[(other than development rebate or investment allowance or development allowance)] or credit or relief or deduction (not hereinbefore 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 Act, for the development of any industry.
Section 8. Eligibility for bonus
Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.
Section 9. Disqualification for bonus
Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.
Section 10. Payment of minimum bonus
19[Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 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 year:
Provided 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 effect in relation to such employee as if for the words one hundred rupees , the words sixty rupees were substituted.
Section 11. Payment of maximum bonus
(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 accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of Section 15 shall be taken into account in accordance with the provisions of that section.]
Maharashtra. (1) In its application to the State of Maharashtra, after Section 11, the following section shall be inserted, namely
11-A. Mode of Payment of Bonus. All amounts payable to an employee by way of bonus under this Act shall be paid either by an account payee cheque drawn in favour of the employee or by crediting the same in the bank account of an employee .
(2) In Section 19, the words, in cash shall be deleted. [Vide Maharashtra Act No. 3 of 2011, dated 12-3-2011].
Section 12. Calculation of bonus with respect to certain employees
20[Where the salary or wage of an employee exceeds 21[seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] 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 22[seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] per mensem.]
23[Explanation. For the purposes of this section, the expression scheduled employment shall have the same meaning as assigned to it in clause (g) of Section 2 of the Minimum Wages Act, 1948 (11 of 1948).]
Section 13. Proportionate reduction in bonus in certain cases
24[Where 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 8.33 per cent of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.]
Section 14. Computation of number of working days
For the purposes of Section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which
(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(d) the employee has been on maternity leave with salary or wage, during the accounting year.
Section 15. Set on and set off of allocable surplus
25[(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, subject 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 utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
(2) 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 or sufficient amount carried forward and set on under sub-section (1) which could be utilised 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 Schedule.
(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this Act.
(4) 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.]
Section 16. Special provisions with respect to certain establishments
26[(1) Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of sub-sections (1-A), (1-B) and (1-C).
(1-A) In the first five accounting years 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 without applying the provisions of Section 15.
(1-B) For the sixth and seventh accounting years 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 15 shall apply subject to the following modifications, namely
(i) for the sixth accounting year
set on or set off, as the case may be, shall be made in the manner illustrated in the 27[Fourth Schedule] 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 years;
(ii) for the seventh accounting year
set on or set off, as the case may be, shall be made in the manner illustrated in the 28[Fourth Schedule] 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 years.
(1-C) 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 15 shall apply in relation to such establishment as they apply in relation to any other establishment.
Explanation I. For the purpose of sub-section (1), an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management, name or ownership.
Explanation II. For the purpose of sub-section (1-A), an employer shall not be deemed to have derived profit in any accounting year unless
(a) he has made provision for that year's depreciation to which he is entitled under the Income Tax Act or, as the case may be, under the agricultural Income tax law; 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 purposes of sub-sections (1-A), (1-B) and (1-C), 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 question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall not be called in question by any court or other authority.]
(2) The provisions of 29[sub-sections (1), (1-A), (1-B) and (1-C)] shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments:
Provided that if an employer in relation to an existing establishment consisting of different departments or undertakings or branches (whether or not in the same industry) set up at different periods has, before the 29th May, 1965, been paying bonus to the employees of all 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 undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employees of all such departments or undertakings or branches (whether set up before or after that date) on the basis of the consolidated profits computed as aforesaid.
Section 17. Adjustment of customary or interim bonus against bonus payable under the Act
Where in any accounting year
(a) an employer has paid any Puja bonus or other customary bonus to an employee; or
(b) an employer has paid a part of the bonus payable under this Act 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 Act in respect of that accounting year and the employee shall be entitled to receive only the balance.
Section 18. Deduction of certain amounts from bonus payable under the Act
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 Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.
Notes This section permits deduction of the financial loss caused to the employer through the misconduct of the workman.
This misconduct and financial loss must be duly proved before it can be deducted. The employer must have proper notice of the misconduct and of financial loss caused and there should be a finding after proper enquiry. This deduction would be in addition to any punishment imposed on account of misconduct duly proved.
Section 19. Time-limit for payment of bonus
30[All amounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer
(a) where there is a dispute regarding payment of bonus pending before any authority under Section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
(b) in any other case, within a period of eight months from the close of the accounting year:
Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years.
31[* * *]
32[* * *]
Section 20. Application of Act to establishments in public sector in certain cases
34[(1)] 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 is not less than twenty per cent of the gross income of the establishment in public sector for that year, then, the provisions of this Act shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector.
35[(2) Save as otherwise provided in sub-section (1), nothing in this Act shall apply to the employees employed by any establishment in public sector.]
Section 21. Recovery of bonus due from an employer
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 prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue:
Provided 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:
Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate Government is satisfied that the applicant had sufficient cause for not making the application within the said period.
Explanation. In this section and in Sections 22, 23, [24]36 and 25, employee includes a person who is entitled to the payment of bonus under this Act but who is no longer in employment.
Section 22. Reference of disputes under the Act
Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly.
Section 23. Presumption about accuracy of balance-sheet and profit and loss account of corporations and companies
(1) Where, during the course of proceedings before any arbitrator or Tribunal under the Industrial Disputes Act, 1947 (14 of 1947), or under any corresponding law relating to investigation and settlement of industrial disputes in force in a State (hereinafter in this section and in 37[Sections 24 and 25] referred to as the said authority ) to which any dispute of the nature specified in Section 22 has been referred, the balance-sheet 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 Auditor-General of India or by auditors duly qualified to act as auditors of companies under sub-section (1) of Section 226 of the Companies Act, 1956 (1 of 1956), are produced before it, then, the said authority may presume the statements and particulars contained in such balance-sheet 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:
Provided that where the said authority is satisfied that the statements and particulars contained in the balance-sheet 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 out the accuracy of such statements and particulars.
(2) 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, requiring any clarification relating to any item in the balance-sheet 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.
Section 24. Audited accounts of banking companies not to be questioned
38[(1) Where any dispute of the nature specified in Section 22 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 are produced before it, the said authority shall not permit any trade union or employees to question the correctness of such accounts, but the trade union or the employees may be permitted to obtain from the banking company such information as is necessary for verifying the amount of bonus due under this Act.
(2) Nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any information which the banking company is not compelled to furnish under the provisions of Section 34-A of the Banking Regulation Act, 1949 (10 of 1949).]
Section 25. Audit of accounts of employers, not being corporations or companies
(1) Where any dispute of the nature specified in Section 22 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 qualified to act as auditor of companies under sub-section (1) of Section 226 of the Companies Act, 1956 (1 of 1956), are produced before the said authority, the provisions of Section 23, shall, so far as may be, apply to the accounts so audited.
(2) When the said authority finds that the accounts 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 question 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.
(3) Where an employer fails to get the accounts audited under sub-section (2) the said authority may, without prejudice to the provisions of Section 28, get the accounts audited by such auditor or auditors as it thinks fit.
(4) When the accounts are audited under sub-section (2) or sub-section (3) the provisions of Section 23 shall, so far as may be, apply to the accounts so audited.
(5) The expenses of, and incidental to, any audit under sub-section (3) (including the remuneration 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 of such payment shall be recoverable from the employer in the manner provided in Section 21.
Section 26. Maintenance of registers, records, etc
Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may be prescribed.
SECTION 26-A
Gujarat. In its application to the State of Gujarat, after Section 26, the following section shall be inserted, namely:
26-A. Obligation of Employer. (1) Every employer in such class of establishments as may be notified by the State Government, taking into consideration the number of employees employed by him, shall get himself enrolled under the Self Certification cum Consolidated Annual Return Scheme as may be prescribed.
(2) The State Government shall prescribe the audit and assessment norms, for compliance of labour laws and labour standards.
(3) The incentives to the employer for compliance of labour laws and labour standards shall be, subject to the outcome of audit and assessment, as may be prescribed.
(4) Any employer who complies with the provision of sub-section (2) shall be eligible for exemption from the inspections as provided under the Act. . [vide Guj. Act 29 of 2015, S. 17 (w.e.f. 1-1-2016)]
Madhya Pradesh. M.P. Act 21 of 2015, Part X, Part XI and Sections 17 and 18 in this regard provides w.e.f. 27-11-2015:
Part X
EXEMPTION FROM MAINTAINING MULTIPLE REGISTERS SUBMISSION OF MULTIPLE RETURNS
17. Exemption from maintaining multiple registers and submission of multiple returns under certain Labour Laws in the State of Madhya Pradesh. Notwithstanding anything contained in the provisions of the following Acts, namely
(i) Contract Labour (Regulation and Abolition) Act, 1970 (No. 37 of 1970);
(ii) Equal Remuneration Act, 1976 (No. 25 of 1976);
(iii) Factories Act, 1948 (No. 63 of 1948);
(iv) Industrial Disputes Act, 1947 (No. 14 of 1947);
(v) Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 (No. 30 of 1979);
(vi) Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988 (No. 51 of 1988);
(vii) Maternity Benefit Act, 1961 (No. 53 of 1961);
(viii) Minimum Wages Act, 1948 (No. 11 of 1948);
(ix) Motor Transport Workers Act, 1961 (No. 27 of 1961);
(x) Payment of Bonus Act, 1965 (No. 21 of 1965);
(xi) Payment of Gratuity Act, 1972 (No. 39 of 1972);
(xii) Payment of Wages Act, 1936 (No. 4 of 1936);
(xiii) Sales Promotion Employees (Conditions of Service) Act, 1976 (No. 11 of 1976);
the State Government by order may devise or notify forms for maintaining registers and records and furnishing returns by an employer or establishment in lieu of the forms prescribed under the said Acts and the rules made thereunder:
Provided that the State Government may allow the registers and records to be maintained in computerised or digital formats.
Part XI
MISCELLANEOUS PROVISIONS
18. Power to make rules. (1) The State Government, subject to the condition of previous publication, may make rules for the purpose of giving effect to the provisions of this Act.
(2) All rules made under this Act shall, as soon as after they are made, be laid on the table of the Legislative Assembly.
Notes Maintenance of register and records is an obligation and a duty imposed on employers for the due discharge of duties regarding payment of bonus.
The employer is legally bound to produce these registers and accounts when called upon by an Inspector so to do. Non-production of register, etc. is an offence, so also their non-maintenance.
Section 27. Inspectors
(1) The appropriate Government may, by notification in the Official Gazette, appoint such persons as it thinks fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.
(2) An Inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this Act has been complied with
(a) require an employer to furnish such information as he may consider necessary;
(b) at any reasonable time and with such assistance, if any, as he thinks fit, enter any establishment or any premises connected therewith and require any one found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment;
(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 establishment;
(d) make copies of, or take extracts from, any book, register or other document maintained in relation to the establishment;
(e) exercise such other powers as may be prescribed.
(3) Every Inspector shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 of 1860).
(4) Any person required to produce any accounts, book, register or other document or to give information by an Inspector under sub-section (1) shall be legally bound to do so.
39[(5) Nothing contained in this section shall enable an Inspector to require a banking company to furnish or disclose any statement or information or to produce, or give inspection of, any of its books of account or other documents, which a banking company cannot be compelled to furnish, disclose, produce or give inspection of, under the provisions of Section 34-A of the Banking Regulation Act, 1949 (10 of 1949).]
Section 28. Penalty
If any person
(a) contravenes any of the provisions of this Act or any rule made thereunder; or
(b) to whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition,
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.
Section 29. Offences by companies
(1) If the person committing an offence under this Act 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 accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act 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 deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation. For the purposes of this section,
(a) company means any body corporate and includes a firm or other association of individuals; and
(b) director , in relation to a firm, means a partner in the firm.
SECTION 29-A
Gujarat. In its application to the State of Gujarat, after Section 29, the following section shall be inserted, namely:
29-A. Compounding of offences. (1) Any offence punishable under this Act or the rules made thereunder may, either before or after the institution of the prosecution, on an application by the alleged offender, be compounded by such officer or authority as the State Government may, by notification in the Official Gazette, specify in this behalf for such amount as specified in the Table below:
TABLE
| Compounding amount |
|||
| 2 |
|||
| Number of employees employed in the establishment |
For first offence |
For second offence |
For third offence |
| 1 to 50 |
` 1500 |
` 3000 |
` 6000 |
| 51 to 100 |
` 3000 |
` 6000 |
` 10,000 |
| 101 to 500 |
` 4000 |
` 8000 |
` 15,000 |
| more than 500 |
` 5000 |
` 10,000 |
` 20,000 |
Provided that the State Government may, by notification in the Official Gazette, amend the compounding amount specified in the table above:
Provided further that the offence committed of the same nature shall be compoundable only for the first three offences:
Provided also that such offences shall be compounded only after the alleged offender has acted to the satisfaction of such officer or authority that such offence is not continued any further:
Provided also that when an offence is compounded on an application by the employer, then seventy-five per cent of the compounding amount received from him, shall be paid to the concerned employee or equally amongst the employees and if any employees are not identifiable, then the remaining amount shall be deposited in the Gujarat State Social Security Board constituted under the Unorganised Workers' Social Security Act, 2008 (33 of 2008).
(2) Where an offence has been compounded under sub-section (1), no further proceedings shall be taken against the offender in respect of such offence and the offender, if in custody, shall be discharged. . [Vide Guj. Act 29 of 2015, S. 18 (w.e.f. 1-1-2016)]
Section 30. Cognizance of offences
(1) No court shall take cognizance of any offence punishable under this Act, save on complaint made by or under the authority of the appropriate Government 40[or an officer of that Government (not below the rank of Regional Labour Commissioner in the case of an officer of the Central Government, and not below the rank of a Labour Commissioner in the case of an officer of the State Government) specially authorised in this behalf by that Government.]
(2) No court inferior to that of a presidency magistrate or a magistrate of the first class shall try any offence punishable under this Act.
Section 31. Protection of action taken under the Act
No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government for anything which is in good faith done or intended to be done in pursuance of this Act or any rule made thereunder.
Notes This section provides immunity to all persons, against legal proceedings in court of law whether by way of suit or prosecution or otherwise, for all acts done in good faith or intended to be done in good faith provided the act is done under this Act.
41[31-A. Special provision with respect to payment of bonus linked with production or productivity. Notwithstanding anything contained in this Act,
(i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), 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 Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be:
42[Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under Section 10 shall be null and void insofar as it purports to deprive them of such right:]
43[Provided further that] 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.]
Section 32. Act not to apply to certain classes of employees
Nothing in this Act shall apply to
(i) 44[employees employed by any insurer carrying on general insurance business and the] employees employed by the Life Insurance Corporation of India;
(ii) seamen as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958 (44 of 1958);
(iii) employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers;
(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority;
(v) employees employed by
(a) the Indian Red Cross Society or any other institution of a like nature (including its branches);
(b) universities and other educational institutions;
(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;
(vi) 45[* * *]
(vii) 46[* * *]
(viii) employees employed by the Reserve Bank of India;
(ix) employees employed by
(a) the Industrial Finance Corporation of India;
(b) any Financial Corporation established under Section 3, or any Joint Financial Corporation established under Section 3-A, of the State Financial Corporations Act, 1951 (63 of 1951);
(c) the Deposit Insurance Corporation;
47[(d) The National Bank for Agricultural and Rural Development;]
(e) the Unit Trust of India;
(f) the Industrial Development Bank of India;
48[(fa) the Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989].
49[(ff) the National Housing Bank;]
(g) any other financial institution 50[(other than a banking company)] being an establishment in public sector, which the Central Government may, by notification in the Official Gazette, specify, having regard to
(i) its capital structure;
(ii) its objectives and the nature of its activities;
(iii) the nature and extent of financial assistance or any concession given to it by the Government; and
(iv) any other relevant factor;
(x) 51[* * *]
(xi) employees employed by inland water transport establishments operating on routes passing through any other country.
Section 33. Act to apply to certain pending disputes regarding payment of bonus
[* * *]52
Section 34. Effect of laws and agreements inconsistent with the Act
53[Subject to the provisions of Section 31-A, the provisions of this Act, shall have effect notwithstanding anything consistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service.]
Section 35. Saving
Nothing contained in this Act shall be deemed to affect the provisions of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (46 of 1948), or of any scheme made thereunder.
Notes Coal Mines Provident Fund and Bonus Schemes Act, 1948 is self-contained and provides for the payment of bonus.
Section 36. Power of exemption
If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act.
Section 37. Power to remove difficulties
54[* * *]
Section 38. Power to make rules
55[(1) The Central Government may, subject to the condition of previous publication, by notification in the Official Gazette, make rules to carry out the provisions of this Act.]
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for
(a) the authority for granting permission under the proviso to sub-clause (iii) of clause (1) of Section 2;
(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 26;
(c) the powers which may be exercised by an Inspector under clause (e) of sub-section (2) of Section 27;
(d) any other matter which is to be, or may be, prescribed.
(3) Every rule made under this section shall be laid as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days, which may be comprised in one session 56[or in two or more successive sessions] and if before the expiry of the session 57[immediately following the session or the successive sessions aforesaid] both Houses agree in making any modification on the rule or both Houses 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 be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
Madhya Pradesh. See below S. 26, above.
Section 39. Application of certain laws not barred
Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947 (14 of 1947), or any corresponding law relating to investigation and settlement of Industrial Disputes in force in a State.
Section 40. Repeal and saving
(1) The Payment of Bonus Ordinance, 1965 (3 of 1965), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th May, 1965.
Schedule 1
[See Section 4(a)]
Accounting year ending
| Item No. |
Particulars |
Amount of sub-items |
Amount of main items |
Remarks |
| *1. |
Net-profit as shown in the Profit and Loss Account after making usual and necessary provisions. |
Rs |
Rs |
|
| 2. |
Add back provision for: |
|||
| (a) Bonus to employees. |
||||
| (b) Depreciation. |
||||
| (c) Development Rebate Reserve. |
See footnote (1) |
|||
| (d) Any other reserves. |
____________ |
|||
| Total of Item No. 2 |
Rs____________ |
See footnote (1) |
*Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on income is shown, the actual provision for taxes on income shall be deducted from the profit.
| Item No. |
Particulars |
Amount of sub-items |
Amount of main items |
Remarks |
|---|---|---|---|---|
| 3. |
Add back also: |
Rs |
Rs |
|
| (a) Bonus paid to employees in respect of previous accounting years. |
See footnote (1) |
|||
| (b) The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of |
||||
| (i) the amount, if any, paid to, or provided for payment to, an approved gratuity fund; and |
||||
| (ii) the amount actually paid to employees on their retirement or on termination of their employment for any reason. |
||||
| (c) Donations in excess of the amount admissible for income tax. |
||||
| (d) Capital 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 income tax). |
See footnote (1) |
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| (e) Any amount certified by the Reserve Bank of India in terms of sub-section (2) of Section 34-A of the Banking Regulation Act, 1949 (10 of 1949). |
||||
| (f) Losses of, or expenditure relating to, any business situated outside India. |
____________ |
|||
| Total of Item No. 3 |
Rs____________ |
|||
| 4. |
Add also income, profits or gains (if any) credited directly to published or disclosed reserves, other than |
|||
| (i) capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for income tax); |
||||
| (ii) profits of, and receipts relating to, any business situated outside India; |
||||
| (iii) income of foreign banking companies from investments outside India. |
____________ |
|||
| Net total of Item No. 4 |
Rs____________ |
|||
| ____________ |
||||
| 5. |
Total Item Nos. 1, 2, 3 and 4. |
Rs____________ |
||
| 6. |
Deduct: |
|||
| (a) Capital receipts and capital profits (other than profits on the sale of assets on which depreciation has been allowed for income tax). |
See footnote (2) |
|||
| (b) Profits of, and receipts relating to, any business situated outside India. |
See footnote (2) |
|||
| (c) Income of foreign banking companies from investments outside India. |
See footnote (2) |
|||
| (d) Expenditure or losses (if any) debited directly to published or disclosed reserves, other than |
||||
| (i) capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not been allowed for income tax); |
||||
| (ii) losses of any business situated outside India. |
||||
| (e) In the case of foreign banking companies proportionate administrative (overhead) expenses of Head Office allocable to Indian business. |
See footnote (3) |
|||
| (f) Refund of any excess direct tax paid for previous accounting years and excess provision, if any, of previous accounting years, relating to bonus, depreciation, or development rebate, if written back. |
See footnote (2) |
|||
| (g) Cash subsidy, if any, given by the Government 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 through any agency for specified purposes and the proceeds of which are reserved for such purposes. |
See footnote (2) |
|||
| ____________ |
||||
| Total of Item No. 6 |
Rs____________ |
|||
| ____________ |
||||
| 7. |
Gross profits for purposes of bonus (Item no. 5 minus Item No. 6) |
Rs____________ |
Explanation. In sub-item (b) of Item 3, approved gratuity fund has the same meaning assigned to it in clause (5) of Section 2 of the Income Tax Act.