The Payment of Bonus Act, 1965, 21 of 1965 (Rep., Act 29 of 2019) section 2: In…

Repealed or not in force · As amended up to 2026-08

(11) "corporation" means any body corporate established by or under any Central, Provincial or State Act but does not include a companv or a co-operative society; - (12) "direct tax" means— - (a) any tax chargeable under— - (i) the Income-tax Act; - 14 of 1963. - (ii) the Super Profits Tax Act, 1963; - (Hi) the Companies (Profits) Surtax Act, 1964; - 7 of 1964. (iv) the agricultural income-tax law; and THE GAZETTE OP INDIA EXTRAORDINARY [PART ll (17) "factory" shall have the same meaning as in clause (m) of section 2 of the Factories Act, 1948; (IX) "gross profits" means the gross profits calculated under section 4; (15) "establishment m private sector" means any establishment other than an establishment in public sector; (8) "banking company" means a banking company as denned 10 iif 1949- in section 5 of the Banking Companies Act, 1949, and includes the State Bank of India, any subsidiary bank as denned in the 38 of 1959. State Bank of India (Subsidiary Banks) Act, 1959, and any other banking institution which may be notified in this behalf by the Central Government; - 1 of 1956. (9) "company" means any company as defined in section 3 oi the Companies Act, 1956, and includes a foreign company within the meaning of section 591 of that Act; (JO) "co-operative society" means a society registered or deemed to be registered under the Co-operative Societies Act, 2 of 1912- 1912, or any other law for the time being in foice in any State relating to co-operative societies; (13) "employee" means any person (other than an apprentice) employed on a salary or wage not exceeding one thousand and six hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or 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 (I) of section 7 of the Factories Act, 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; (6) 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; (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 (other than a 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; SEC. 1] THE GAZEtfTE OF INDIA EXTRAORDINARY (b) in any other case, sixty per cent, of such available surplus, and includes any amount treated as such under sub-section (2) of section 34; (5) "appropriate Government" means— - (i) in relation to an establishment in respect of which - the appropriate Government under the Industrial Disputes Act, 1947, is the Central Government, the Central Government; (ii) in relation to any other establishment, the Govern- - ment of the State in which that other establishment is situate; - (4 uf 1947 - (6) "available surplus" means the available surplus comput- - ed under section 5; (19) "Income-tax Act" means the Income-tax Act, 1961; 63 ol 194B. 1 of 1954, 63 of 1948. 43 of 1961. SEC. 1] THE GA2ETTE OF INDIA EXTRAORDINARY (1) Ifj and to the estent, charged to Profit and Loss Account. (7) "award" means an interim or a final determination of any industrial dispute or of any question relating thereto by any 14 of 1947. Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 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 10A of that Act or under that law; (16) "establishment in public sector" means an establishment owned, controlled or managed by— (a) a Government company as denned in section 017 of the Companies Act, 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 (in) a corporation owned by the Government or the Reserve Bank of India; 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 140! 1947. Act and defined in the Industrial Disputes Act, 1947, shall have the meanings respectively assigned to them in that Act. 510 G, of 1—5, T H E GAZETTE OF INDIA EXTRAORDINARY [PART II 54 of 1948. Item No Category 01 employer Further sums to be deducted ( i ) (2) (3) 2. In this Act, unless the context otherwise requires,— (1) "accounting year" means— (i) in relation to n corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced; (if) 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; (in) 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; THE SECOND SCHEDULE ==> picture [142 x 35] intentionally omitted <== ----- Start of picture text ----- |||| |---|---|---| |[See|section 4|(b)]| |COMPUTATION OF GROSS PROFITS| ----- End of picture text ----- Accounting Year ending ==> picture [342 x 457] intentionally omitted <== ----- Start of picture text ----- |||||| |---|---|---|---|---| |Item|Particulars|Amount of|Amount of|Remarks| |No.|sub-items|main Items| |Rs.|Rs.| |i.|Net Profit|as per Profit and| |Loss Account.| |2,|Add back|provision for :| |(a)|Bonus to employees.| |(b)|Depreciation.| |(c) Direct taxes, includ-| |ing the provision (if| |any)|for|previous| |accounting years.| |(d)|Development rebate/|S,te|foot-note|(1)| |Development allow-| |ance reserve.| |(e)|Any other reserves.|5|ee|foot-note (1)| |Total of Item No. 2|:|Els.| |Add back|also :| |(a)|Bonus paid co emplo|i}ee|foot-note (1)| |yees in respect of pre-| |vious accounting years| |(b)|Donations in excess of| |the amount|admis-| |sible for income-tax.| |(c) Any annuity due, or| |commuted value|of| |any annuity|paid,| |under the provisions| |of section 280D of the| |Income-tax Act dur-| |ing the|accounting| |year.| ----- End of picture text ----- SEC. 1] TttE GAZETTE OF INDIA EXTRAORDINARY Item Particulars No. Amount of Amount of Remarks sub-items main Items (d) Capital expenditure (other than capital expenditure on scientific $•' research whichjis 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 or agricultural income-tax). (e) Losses of, or expenditure relating to, any business situated outside India. Total of Item No. 3 Rs. Rs. Rs. St te foot-noie (1) 4- Add also Income, profits or gains (if any) credited directly to reserves, other than — (*') capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for income-tax or agricultural incometax); - (11) profits of, and receipts relating to, any business situated outside India; 43 8 THE GAZETTE Of INDIA EXTRAORDINARY [PART II |446|THE GAZETTE OF INDIA EXTRAORDINARY [PART llll|THE GAZETTE OF INDIA EXTRAORDINARY [PART llll|THE GAZETTE OF INDIA EXTRAORDINARY [PART llll|| |---|---|---|---|---| ||THE THIRD SCHEDULE|||| |||_[See_section 6|section 6_(d)]_|| |Item|Category of employer||Further sums to be deducted|| |No.||||| |( i )|(*)||(3)|| |i.|Company) other than a baniung company.||(x) The dividends payable on its preference share capital for the accounting year calculated at the|| ||||actual rate at which such dividends|| ||||are payable ;|| ||||(xx) 8-5 per cent, of its paid up equity share capital as at the com- mencement of the accounting year;|| ||||(MI)6 per cent, of its reserves shown|| ||||in its balance-sheet as at the|| ||||commencement of the accounting|| ||||year, including any profits carried|| ||||forward from the previous ac-|| ||||counting year :|| ||||Provided that where the employer is a foreign company within the mean- ing of section 591 of the Companies Actj 1956, the total amount to be deducted under this Item shall be|1 of 1956.| ||||8-5 per cent, on the aggregate of the value of the net fixed assets|| ||||and the current assets of the|| ||||company in India after deducting the amount of its current liabilities|| ||||(other than any amount shown as payable by the company to its Head Office whether towards any advance made by the Head Office or otherwise or any interest paid by the company to its Head Office) in India.|| |2.|Ranking company||(*') The dividends payable on its preference share capital for the|| ||||accounting year calculated at the|| ||||rate at which such dividends are|| ||||payable ;|| ||||(tV) 7-5 per cent, of its paid up|| ||||equity share capital as at the|| ||||commencement of the accounting|| ||||year;|| |Item|Particulars||Amount of|Amount of|Remarks| |---|---|---|---|---|---| |No.|||sub-items|main Items|| ||||Rs.|Rs.|| ||_(tit)_income of ^foreign||||| ||concerns|from|||| ||investments outside|investments outside|||| ||India.||||| ||Net total of Item No. 4|Net total of Item No. 4|Rs.||| |5-'|' Total of Item Nos. 1,|Total of Item Nos. 1, 2,|||| ||3 and 4,|||Rs.|| |6.|Deduct:||||| ||_(a)_Capital receipts|Capital receipts and||* _See_foot-note (2)|| ||capital profits (other|capital profits (other|||| ||than profits|on the|||| ||sale of assets on which i||||| ||depreciation|has|||| ||been allowed|allowed for|||| ||income-tax or agri-||||| ||cultural income-tax).||||| ||_(b)_Profits of, and receipts||||_See_foot-note (2)| ||relating to,|any|||| ||business situated||||| ||outside India.||||| ||(c) Income of|foreign|||_See_foot-nott (2)| ||concerns from invest-|concerns from invest-|||| ||ments outside India.|ments outside India.|||| ||(d) Expenditure|or|||| ||losses ^(if ^any) de-||||| ||bited directly to||||| ||reserves,other than|other than—|||| ||(i) capital expendi-||||| ||ture and ] capital|ture and ] capital|||| ||losses (other,than 1||||| ||losses on lalejof|losses on lalejof|||| ||capital •|assets|||| ||on which ^depre-|on which ^depre-|||| ||ciation;j(has•|aot||||| ||been fallowed jfor||||| SEC, 1] THE GAZETTE OF INDIA EXTRAORDINARY ||SEC1]|THE GAZETTE OF INDIA EXTRAORDINARY 441|THE GAZETTE OF INDIA EXTRAORDINARY 441| |---|---|---|---| ||Item No.|Category of employer|Further sums to be deducted| ||( 1 )|(2)|(3)| ||||(»"«) 5 per cent, of its reserves shown| ||||in its balance-sheet as at the| ||||commencement of the accounting| ||||year, including any profits carried| ||||forward from the previous accoun-| ||||ting year ;| ||||_(iv)_any sum which, in respect of the| ||||accounting year, is transferred by| ||||it—| ||||_(a)_to a reserve fund under sub-| ||||section (1) of section 17 of the| |lO of1949,|||Banking Companies Act, 1949 ; or| ||||_(b)_to any reserves in India in| ||||pursuance of any direction| ||||or advice- given by the| ||||Reserve Bank of India,| ||||whichever is higher :| |I of i9sfl.|||Provided that where the banking com- pany is a foreign company within the meaning of section 591 of the Companies Act, 1956, the amount to be deducted under this Item| ||||shall be the aggregate of—| ||||(1) the dividends payable to its preference shareholders for the accounting year at the rate at which such dividends are payable on such amount as bears the| ||||same proportion to its total pre- ference share capital as its total working funds in India bear to its total world working funds ;| ||||(«) 7"5 Per cent- of such amount as| ||||bears the same proportion to its total paid up equity share capital as its total working funds in India bear to its total world| ||||working funds_;_| ||||_(Hi)_5 per cent, of such amount as bears the same proportion to its total disclosed reserves as its| ||||total working funds in India bear to its total world working funds;| |Item|Particulars|Amount of|Amount of|Remarks| |---|---|---|---|---| |No.||sub-items|main Items|| |||Re.|Rs.|| ||income-tax or|||| ||agricultural in-|||| ||come-tax) ;|||| ||(M)losses of any|||| ||business situated|||| ||outside India.|||| ||(c) In the case of foreign||SV to foot-note (3)|to foot-note (3)| ||concerns proportion-|||| ||ate administrative|||| ||(overhead) expenses|||| ||of Head Office allo-|||| ||cablc to Indian busi-|||| ||ness.|||| ||(/) Refund of any direct tax paid for previous accounting years and excess provision, if any, of previous ac- counting years relat- ing to bonus, depre- ciation, taxation or||St _\e_foot-note (21|foot-note (21| ||development rebate or development al- lowance, if written|||| ||back.|||| ||_(g)_Subsidy, if any, re- ceived from Govern-|||| ||ment or from any body corporate es- tablished by any law for the time being in force.|||| ||Total of Item No.' 6 .|Rs.||| |7-|Gross Profits for purposes of bonus (Item No. 5||Rs.|| ||minus Item No. 6).|||| Foot-notes — THE GAZETTE OF INDIA EXTRAORDINARY [PART II |Item No.|Item No.|Category of employer||Further sums to be deducted|| |---|---|---|---|---|---| |(0||GO||(3)|| |||||_(tv)_any sum which, in respect of the|| |||||accounting year, is deposited by|| |||||it with the Reserve Bank of India|| |||||under sub-clause_(it)of clause(b)_|| |||||of sub-section_(2)_of section 11 of|| |||||the Banking Companies Act, 1949,|10 of1949.| |||||not exceeding the amount|| |||||required under the aforesaid|| |||||provision to be so depositecj.|| |3-||Corporation||(»') 8.^ per cent, of its paid up|| |||||capital as at the commencement of|| |||||the accounting year ;|| |||||_(ft) 6_per cent, of its reserves, if any, shown in its balance-sheet as at the commencement of the|| |||||accounting year, including any profits carried forward from the previous accounting year.|| |4.||Co-operative society||(1) 8-5 per cent, of the capital invested by such society in its establish- ment as evidenced from its books|| |||||of accounts at the commencement|| |||||of the accounting year ;|| |||||(»'i) such sum as has been carried|| |||||forward in respect of the accounting year to a reserve fund under any law relating to co-operative societies for the time being in force.|| ||5-|Any other employer not falling under any of the aforesaid categories.||8»5per cent, of the capital invested by him in his establishment as evidenced from his books of accounts|| |||||at the commencement of the|| |||||accounting year :|| |||||Provided that where such employer is a person to whom Chapter XXIIA of the Income-tax Act applies, the annuity deposit payable by him under the provisions of that Chapter during the accounting year shall also be deducted :|| Sic. 1] THE GAZETTE OF INDIA EXTRAORDINAHY |Item|Category of employer|Category of employer|Category of employer|Further sums to be deducted| |---|---|---|---|---| |No.||||| |(1)||(2)||(3)| |||||Provided further that where such| |||||employer is a firm, an amount equal to 25 per cent, of the gross profits derived by it from the establishment in respect of the accounting year after deducting depredation in accordance with the provisions of clause (a) of section 6 by way of remuneration to all the partners taking part in the conduct of business of thejgestablishment shall also be deducted, but where the partnership agreement, whether oral or written, provides for the payment of re- muneration to any such partner, and—| |||||(») the total remuneration payable to all sucrTpartners is less than the said 25 per cent., the amount payable, subject to a maximum of forty-eightXthousand rupees to each such partner ; or| |||||(if) the total remuneration payable to all such partners" is higher than the said 25~per cent., such per- centage, or a sum calculated at the rate of forty-eight thousand rupees to each such partner, whichever is less,| |||||shall be deducted under this proviso :| |||||Provided also that^where such em-| |||||ployer is an individual or a Hindu undivided family,—| |||||(f) an"amount equal to 25 per cent, of the gross profits derived by such employer from the establish- ment in respect of the accounting year after deducting depreciation in accordance with the provisions of clause (a) of section_6_; or| |||||_(it)_forty-eight thousand rupees,| |||||whichever is less, by way' of re- muneration to such 'employer, shall also be deducted.|

Source: India Code