Khanal Group

Statutory bonus calculator

Bonus for the accounting year under the Code on Wages 2019 (or the Payment of Bonus Act 1965 for earlier years): eligibility, the calculation ceiling, the rate between 8.33% and 20%, and the pro rata cut for days not worked.

Last checked 25 October 2026
Average for the accounting year if it changed
Bonus is worked out on ₹7,000 or this, whichever is higher. Blank = ₹7,000
8.33% minimum, 20% maximum
30 days needed to qualify

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How it is calculated

Statutory bonus is a share of the year's wages, paid to employees below a wage ceiling who worked at least 30 days in the accounting year. From 21 November 2025 the rules are in Chapter IV of the Code on Wages 2019, which replaced the Payment of Bonus Act 1965 when the labour codes came into force.

Eligible if monthly wages ≤ ₹21,000 and days worked ≥ 30 in the accounting year
Wages for bonus = lower of actual monthly wages and the calculation ceiling
Calculation ceiling = higher of ₹7,000 and the minimum wage fixed by the Central Government
Bonus = wages for bonus × 12 × (days worked ÷ working days) × rate
Rate: at least 8.33% (or ₹100, whichever is higher), at most 20%

Where each rule comes from

  • Code on Wages 2019, s.26: minimum bonus of 8.33% of wages or ₹100, whichever is higher, payable whether or not there is an allocable surplus, to an employee who has worked at least 30 days in the year. The Code leaves the eligibility and calculation ceilings to be set by the appropriate Government.
  • ₹21,000 eligibility and ₹7,000 / minimum wage calculation ceiling: two Ministry of Labour and Employment notifications of 25 August 2026 under s.26 (S.O. 4711(E): ₹21,000; S.O. 4710(E): ₹7,000 or the minimum wage fixed by the Central Government), deemed in force from 21 November 2025 (labour.gov.in). They keep the same figures as the 1965 Act after its 2015 amendment.
  • Maximum 20%: where the allocable surplus is more than the minimum bonus, the employer pays more, up to 20% of wages. A rate above 8.33% therefore depends on the year's accounts; the calculator lets you enter it.
  • Pro rata: where an employee has not worked all the working days in the year, the bonus (including the ₹100 minimum) is reduced in proportion.
  • Coverage: the bonus chapter applies to establishments in which twenty or more persons are employed on any day of the year. New establishments: Code on Wages s.26(6) and (7). Payment: within eight months from the close of the accounting year (s.39(1)).
  • Earlier years: for accounting years governed by the Payment of Bonus Act 1965, s.2(13) set the ₹21,000 eligibility ceiling, s.12 the ₹7,000 or minimum wage calculation ceiling, s.10 the minimum and s.11 the maximum.

Worked example

Round illustrative numbers. ABC Infra Private Limited pays an employee ₹18,000 a month in basic + DA. The minimum wage for the employment is taken as ₹12,000 a month for this example. The employee worked all 300 working days, and the company pays the minimum 8.33%.

  • Eligible: ₹18,000 is within the ₹21,000 ceiling and 300 days is more than 30.
  • Calculation ceiling: the higher of ₹7,000 and ₹12,000 = ₹12,000. Wages for bonus: the lower of ₹18,000 and ₹12,000 = ₹12,000.
  • Bonus: ₹12,000 × 12 × 8.33% = ₹11,995.
  • If the employee had worked 150 of the 300 days, the bonus would be half: ₹5,998.

An employee on ₹25,000 a month is above the eligibility ceiling and gets no statutory bonus, though the employer may pay one by contract. K-HR keeps the attendance and leave records that give the days worked.

Common questions

Who is eligible for statutory bonus?

An employee drawing wages of up to ₹21,000 a month who has worked at least 30 working days in the accounting year, in an establishment employing twenty or more persons. The ₹21,000 ceiling under the Code on Wages was notified on 25 August 2026 with effect from 21 November 2025.

Is bonus calculated on full salary?

No. It is calculated on wages (basic + DA) limited to ₹7,000 a month or the minimum wage fixed by the Central Government, whichever is higher. An employee earning ₹18,000 with a ₹12,000 minimum wage gets bonus on ₹12,000.

What are the minimum and maximum bonus rates?

The minimum is 8.33% of wages or ₹100, whichever is higher, payable even in a loss year. The maximum is 20%, where the allocable surplus is large enough.

Is bonus paid pro rata for a part year?

Yes. Where an employee has not worked all the working days in the year, the bonus is reduced in proportion to the days worked, provided at least 30 days were worked.

Did the Code on Wages change the bonus rules?

The Code replaced the Payment of Bonus Act 1965 from 21 November 2025. The 8.33% and 20% rates and the 30-day condition carry over, and the August 2026 notifications kept the ₹21,000 and ₹7,000 figures.

Sources