Calculation of Amount Payable as Bonus

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Calculation Of Amount Payable As Bonus

Under section 6 of The Act has laid down a detailed procedure for the calculation of amount payable as bonus,  to employees. First of all, Gross Profit calculate as per First or Second Schedule. From this Gross Profit, the sums deductible under Section 6 deductions take place. Thus, to this figure, we add the sum equal to the difference between the direct tax calculated on gross profit.

For the previous year and the direct tax calculated on gross profit. Arrived at after deducting the bonus paid or payable to the employees. The figure so arrived will be the available surplus. Of this surplus, 67% in case of a company (other than a banking company) and 60% in other cases. Thus, it shall be the “allocable surplus” which is the amount available for payment of bonus to employees.

Therefore, the details of such calculations are below:

• Computation of gross profits

1. In the case of banking company be calculated in the manner specified in the First Schedule.
2. Also, in any other case, be calculated in the manner specified in the Second Schedule.

• Deductions from gross profits

1. Any amount in accordance with the provisions of Section 32(1) by way of depreciation admissible of the Income-tax Act, Thus in accordance with the provisions of the Agricultural Income-tax Law.

• Calculation of direct tax payable by the employer
• Computation of available surplus

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