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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Bonus between 8.33% and 20% of salary or wage, calculated on the lower of actual wage and the calculation ceiling, for employees within the eligibility threshold.
The Payment of Bonus Act 1965 requires covered establishments to pay an annual bonus of at least 8.33% of the salary or wage earned in the accounting year, up to a maximum of 20%, to employees whose wage is within the eligibility threshold and who have worked at least 30 days in the year.
The eligibility threshold and calculation ceiling are set by the Act and can be changed by amendment, and the minimum wage that may raise the ceiling is notified by the appropriate government. This bonus calculator for India takes all of them as inputs so you can set the values that apply to you.
Enter your figures, then press Calculate
Your 7 inputs become a full breakdown, with every step of the working shown beneath the headline figures.
Two tests and a rate. Is the employee eligible on their wage, what wage is the bonus calculated on, and what percentage between the statutory minimum and maximum applies.
Bonus = Rate (8.33% to 20%) × min(Monthly salary, max(Calculation ceiling, Minimum wage)) × Months earned, if Monthly salary ≤ Eligibility threshold
An employee drawing salary or wage up to the eligibility threshold in s.2(13) is covered, provided they worked at least 30 working days in the accounting year (s.8). Disqualifications under s.9 (such as dismissal for fraud) are not tested here.
Under s.12, where salary exceeds the calculation ceiling or the minimum wage for the scheduled employment, whichever is higher, bonus is calculated as if the salary were that higher figure.
At least 8.33% under s.10, even without profit, and up to 20% under s.11 depending on the allocable surplus for the year.
Bonus is a share of salary earned in the accounting year, so months without salary reduce it.
What this does not include
Asked often enough about this calculation to be worth answering beside it.
At least 8.33% of the salary or wage earned in the accounting year (s.10), and no more than 20% (s.11). Where the allocable surplus is enough, the employer pays above the minimum up to the maximum.
Employees in a covered establishment whose salary or wage is within the eligibility threshold, commonly cited as ₹21,000 a month, and who worked at least 30 working days in the year. Verify the current threshold before relying on it.
Because s.12 calculates bonus as if salary were the calculation ceiling, commonly cited as ₹7,000, or the scheduled-employment minimum wage if higher, whenever actual salary exceeds that figure. Eligibility and calculation use different numbers.
The current minimum wage notified for the employee's scheduled employment and location. Minimum wages are set by states and revised periodically, often with a variable DA component, so check the latest notification.
Within eight months of the close of the accounting year under s.19, unless an extension applies. Check the Act for the exceptions.
Yes, from 21 November 2025 the Code on Wages 2019 replaced the Payment of Bonus Act. The August 2026 notifications kept the ₹21,000 eligibility ceiling and the ₹7,000 (or minimum wage, if higher) calculation ceiling, but bonus is now worked out on the Code's wider definition of wages.
A calculator applies a rule to figures you type in. A payroll run applies it to your actual employee record, your locations and your verified declarations, which is where Professional Tax, LWF and TDS also resolve.
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