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THE PAYMENT OF BONUS ACT, 1965
__________
ARRANGEMENT OF SECTIONS
__________
SECTIONS
1. Short title, extent and application.
2. Definitions.
3. Establishments to include departments, undertakings and branches.
4. Computation of gross profits.
5. Computation of available surplus.
6. Sums deductible from gross profits.
7. Calculation of direct tax payable by the employer.
8. Eligibility for bonus.
9. Disqualification for bonus.
10. Payment of minimum bonus.
11. Payment of maximum bonus.
12. Calculation of bonus with respect to certain employees.
13. Proportionate reduction in bonus in certain cases.
14. Computation of number of working days.
15. Set on and set off of allocable surplus.
16. Special provisions with respect to certain establishments.
17. Adjustment of customary or interim bonus against bonus payable under the Act.
18. Deduction of certain amounts from bonus payable under the Act.
19. Time-limit for payment of bonus.
20. Application of Act to establishments in public sector in certain cases.
21. Recovery of bonus due from an employer.
22. Reference of disputes under the Act.
23. Presumption about accuracy of balance-sheet and profit and loss account of corporations and
companies.
24. Audited accounts of banking companies not to be questioned.
25. Audit of accounts of employers, not being corporations or companies.
26. Maintenance of registers, records, etc.
27. Inspectors.
28. Penalty.
29. Offences by companies.
30. Cognizance of offences.
31. Protection of action taken under the Act.
31A. Special provision with respect to payment of bonus linked with production or productivity.
32. Act not to apply to certain classes of employees.
33. [Repealed.]
34. Effect of laws and agreements inconsistent with the Act.
35. Saving.
36. Power of exemption.
37. [Repealed.]
38. Power to make rules.
39. Application of certain law not barred.
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SECTIONS
40. Repeal and saving.
THE FIRST SCHEDULE.
THE SECOND SCHEDULE.
THE THIRD SCHEDULE.
THE FOURTH SCHEDULE.
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THE PAYMENT OF BONUS ACT, 1965
ACT NO. 21 OF 19651
[25th September, 1965.]
2[An Act to provide for the payment of bonus to persons employed in certain establishments
and for matters connected therewith.]
BE it enacted by Parliament in the Sixteenth Year of the Republic of India as follows:—
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 3***.
(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:
4[Provided that the appropriate Government may, after giving not less than two months’ notice of
its intention so to do, 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, th at 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:
5[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 ever y 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:]
6[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 commenc ing 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 7*** shall continue to be governed by this Act
notwithstanding that the number of person employed therein falls below twenty 8[or, as the case may
be, the number specified in the notification issued under the proviso to sub-section (3)].
1. The Act has been extended to Goa, Daman and Diu by Act 6 of 1977, s. 2 and the Schedule.
2. Subs. by Act 43 of 1977, s. 3, for the long title (w.e.f. 3-9-1977).
3. The words “except the State of Jammu and Kashmir” omitted by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
4. The proviso added by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
5. The proviso added by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
6. The proviso inserted by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
7. The words, brackets, letter and figure “under clause (b) of sub-section (3)” omitted by s. 3, ibid. (w.e.f. 25-9-1975).
8. Certain words, brackets and figure added by s. 3, ibid. (w.e.f. 25-9-1975).
*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu
and Kashmir and the Union territory of Ladakh.
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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 clo sed
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 1[(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;
(b) in any other case, sixty per cent. of such available surplus;
2* * * * *
(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 computed 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 Cour t, 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 10A 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 s ubsidiary bank as
defined in the St ate Bank of India (Sub sidiary Banks) Act, 1959 (38 of 1959), 3[any
corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 (5 of 1970), 1[any corresponding new bank constituted
under section 3 of the Banking Companies (Acquisition and Transfer of Undertaking s)
Act, 1980 (40 of 1980),] any co-operative bank as defined in clause ( vii) 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;
1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).
2. The words, brackets and figures “and includes any amount treated as such under sub -section (2) of section 34” omitted by
Act 23 of 1976, s. 4 (w.e.f. 25-9-1975).
3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975).
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(9) “company” means any company as defined is 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
State relating to co-operating 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 lax 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 1[twenty-one thousand 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 factor y 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 affa irs 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 owne d, 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 tha n forty per cent . of its capital is held (wheth er
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);
1. Subs. by Act 6 of 2016, s. 2, for “ten thousand rupees” (w.e.f. 1-4-2014).
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(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 food grains 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 from 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.
3. Establishments to include departments, undertakings and branches .—Where an
establishment consists of different department 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 an y such department or undertaking or branch, then, such
department or undertaking or branch 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 the
establishment for the purpose of computation of bonus.
1[4. Computation of gross profits .—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.]
1. Subs. by Act 66 of 1980, s. 3, for section 4 (w.e.f. 21-8-1980).
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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:
1[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.]
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 emplo yer has been paying bonus to hi s employees under a settleme nt or
an award or agreement made before the 29the 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 emp loyer (such option to be exercised once and within
one year from the date) continue to be such notional normal depreciation;
(b) any amount by way of 2[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 that year;
(d) such further sums as are specified in respect of the employer in the 3[Third Schedule].
7. Calculation of direct tax payable by the employer .—4[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
1. The proviso added by Act 8 of 1969, s. 2 (w.e.f. 26-3-1965).
2. Subs. by Act 66 of 1980, s. 4, for “development rebate or development allowance” (w.e.f. 21-8-1980).
3. Subs. by s. 4, ibid., for “Second Schedule” (w.e.f. 21-8-1980).
4. Subs. by Act 8 of 1969, s. 3, for “For the purpose of clause ( c) of section 6, any direct tax payable by the employer”
(w.e.f. 26-3-1965).
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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 individual or a Hindu undivided family, the tax pa yable 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 go ods or merchandise out of India and any rebate on such income in 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 1[(other than development rebate or investment
allowance or development allowance)] or credit or relief or de duction (not herein
before mentioned in this section) in the payment of any direct tax allowed under any law for the
time being in force relating to direct taxe s or under the relevant annual Finance Act, for the
development of any industry.
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.
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.
2[10. Payment of minimum bonus.—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 of wage earned by the employee during the accoun ting 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 complet ed fifteen years of age at the beginning of the
accounting year, the provisions of this section shall have effect in relation to such employees as if for
the words “one hundred rupees”, the words “sixty rupees” were substituted.
11. Payment of maximum bon us.—(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 amoun t 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.]
3[12. Calculation of bonus with respect to certain employees.—Where the salary or wage of an
employee exceeds 4[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
1. Subs. by Act 66 of 1980, s. 5, for “(other than development rebate or development allowance)” (w.e.f. 21-8-1980).
2. Subs. by s. 6, ibid., for section 10 (w.e.f. 21-8-1980).
3. Ins. by Act 67 of 1985, s. 3 (w.e.f. 7-11-1985).
4. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).
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or wage were 1[seven thousand rupees or the minimum wage for the scheduled employment, as fixed
by the appropriate Government, whichever is higher] per mensem.]
2[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).]
3[13. Proportionate reduction in bonus in certain cases .—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.]
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.
4[15. Set on and set off of allocable surplus.—(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, subjec t 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 employee s in the
establishment under section 10, and there is no amount of 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 t he 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 illustrate d 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.]
16. Special provisions with respect to certain establishments .—5[(1) Where an establishments
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 t he provisions of
sub-sections (1A), (1B) and (1C).
1. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).
2. The Explanation inserted by s. 3, ibid. (w.e.f. 1-4-2014).
3. Subs. by Act 66 of 1980, s. 8, for section 13 (w.e.f. 21-8-1980).
4. Subs. by s. 9, ibid., for section 15 (w.e.f. 21-8-1980).
5. Subs. by Act 23 of 1976, s. 12, for sub-section (1) and the Explanation thereto (w.e.f. 25-9-1975).
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(1A) In the first five accounting years following the accounting year in which the employer s sells
the goods produced or manufactured by hi m or renders services, as the case may be, from such
establishment, bonus shall be payable only in respect of the ac counting 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.
(1B) For the sixth and seventh accounting years following the accounting year in which the
employer sells the goods produced or manufactured by hi m or renders services, as the case may be,
from such establishment, the provisions of section 15 shall apply subject to the f ollowing
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 1[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 1[Fourth
Schedule] taking into account the excess or d eficiency, 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.
(1C) From the eighth accounting year following the accounting year in which the employer sells
the goods produced or manufactured b y hi m 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 (1A), an employer shall not be deemed to be 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 depreci ation and losses i ncurred by hi m in respect of the
establishment for the previous accounting years have been fully set off against his profits.
Explanation III.—For the purpos es of sub -sections ( 1A), ( 1B) and ( 1C), 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 2[sub-sections (1), (1A), (1B) and (1C)] 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 indus try) set up at diffe rent
periods has, before the 29 th 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 u ndertakings
or branches (whether set up before or after that date) on the basis of the consolidated profits computed
as aforesaid.
1. Subs. by Act 66 of 1980, s. 10, for “Third Schedule” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 12, for “sub-section (1)” (w.e.f. 25-9-1975).
11
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.
18. Deduction of cert ain 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.
19. Time-limit for payment of bonus.—1[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 ap propriate 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.
2* * * * *.
3* * * * *.
20. Application of Act to establishments in public sector in certain cases .—4[(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 sec tor 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.
5[(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.]
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 an y other person authorised by hi m in writing in this behalf, or in the case o f the death of the
employee, hi s 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 hi m, 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:
1. Subs. by Act 23 of 1976, s. 13, for “(1) Subject to this provisions of this section, all amounts” (w.e.f. 25-9-1975).
2. Sub-sections (2) to (7) omitted by s. 13, ibid. (w.e.f. 25-9-1975).
3. Sub-section (8) omitted by Act 55 of 1973, s. 2 (w.e.f. 1-9-1973).
4. Section 20 renumbered as sub-section (1) thereof by Act 66 of 1980, s. 11 (w.e.f. 21-8-1980).
5. Ins. by s. 11, ibid. (w.e.f. 21-8-1980).
12
Provided further that any such applicat ion 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 1[sections 22, 23, 24 and 25 ], “employee” includes a person
who is entitled to the payment of bonus under this Act but who is no longer in employment.
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.
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 dispu tes in force in a State (herein after in this
section 2[and in 3[sections 24 and 25 ] referred to as the “said authority”) to which any dispute of the
nature specified in section 22 has been referre d, the balance-sheet and the profit and loss account of
an employer, being a corporation or a company (other than a banking company), du ly 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 statement 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 th e 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.
4[24. Audited accounts of banking companies not to be questioned.—(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 a re 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 on the employees to obtain
any information which the banking company is not compelled to furnish under the provisions of
section 34A of the Banking Regulation Act, 1949 (10 of 1949).]
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 empl oyees has been referred to the said authority under that section and the
1. Subs. by Act 66 of 1980, s. 12, for “sections 22, 23 and 25” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 16, for “and in sections 24 and 25” (w.e.f. 25-9-1975).
3. Subs. by Act 66 of 1980, s. 13, for “section 25” (w.e.f. 21-8-1980).
4. Ins. by s. 14, ibid. (w.e.f. 21-8-1980).
13
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 provis ions 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.
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.
27. Inspectors.—(1) The appropriate Government may, by notification in the Official Gazette,
appoint such person 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 docum ents relating
to the employment of persons or the payment of salary of 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 cha rge 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 doc ument 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 documents or to give
information by an Inspector under sub-section (1) shall be legally bound to do so.
1[(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 oExcerpt shown. Open the full act in Lexace.
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