Annual Bonus for Employees and Income Tax Calculation with Bonus

[Dharam Singh]

#22263

Hello,

Is there a provision in Lenvica HRMS payroll software to calculate annual bonus for all our employees? Our headcount is 1982. As per the rules, the bonus paid to an employee must be considered for income tax calculations. Does Lenvica HRMS payroll software calculate income tax including bonus or not?

[Vineeth Jose]

#22266

Yes, annual bonus can be calculated in Lenvica HRMS. Please refer the video link below to view the bonus processing in Lenvica HRMS payroll software.
How to calculate bonus in Lenvica HRMS Payroll Software??
As shown in the video, you can define bonus periods, create formula for caculating the bonus, rounding off final bonus figures, restricting to a maximum amount, pull bonus reports etc from the payroll software. The salary heads you select in bonus module to create formala returns the cumulative of all the months that are in the bonus period. For e.g. Suppose that your bonus period is from Oct 2018 to Sept 2019 and you have included Basic Pay in the formula. Basic pay here will return the sum of basic pay from Sept 2018 to Oct 2019. Unlike other software, users don’t have to import the a whole year’s data again in software just to calculate bonus. This way, you can easily calculate the annual bonus of your staff.

The bonus calculated through the payroll software will be automatically considered for Income Tax (TDS) calculation in the software. Bonus amount is added to the gross salary figure and reflects in the taxable income that the software applies to the tax slab.

[Prasanth Mahadev]

#22271

Hi. I am an MBA aspirant. I am not familiar with Bonus. What are the reasons bonus is given to employees?

[Sujit Manoharan]

#22276

Hi Prashant. A bonus payment is usually made to employees in addition to their base salary as part of their salary. While the base salary usually is a fixed amount per month, bonus payments more often than not vary depending on known criteria, such as the annual turnover, or the net number of additional customers acquired, or the current value of the stock of a public company. Thus bonus payments can act as incentives for managers attracting their attention and their personal interest towards what is seen as gainful for their companies’ economic success.

[Dwane]

#22278

Dear All,

I need one clarification on bonus payment to resigned employees. We normally declares bonus during Diwali for the previous Financial year. Now in between if employees resigned, is it mandatory to pay the Bonus along with Full & Final settlement or we can hold till we declare the Bonus?

Thanks

[Steve Alex]

#22280

Dear Dwane,

The payment of bonus act is very clear. You are required to pay bonus to all employees within 8 months from the end of the financial year. There isn’t any specific provisions for separated employees. So the same rule applies to them also. Therefore you are free to give it along with all the others within 8 months. Most companies give it along with full and final because otherwise they have to find the employee and give him the money later. If you do not give it to him then it must be noted in the unpaid bonus register and after 3 years deposited in the labour welfare fund.
Another thing to be noted is that you are talking of Diwali bonus not statutory bonus. If you are paying customary bonus (like at Diwali or Dasara) then you can adjust that at the time of annual bonus. It means in effect you paid bonus during the year and not at the end of the year and therefore you don’t need to pay anything more now (there are circumstances you need to verify). However it’s actually unfair because you probably didn’t pay to those who are newly joined

[Abaeze]

#22300

Hi,
A Minimum of how many days an employee has to work in one financial year is to be eligible for a bonus?

[Nisa]

#22302

Hello Abaeze,

Your query relates to section 8 of the Payment of Bonus Act, 1965, which aims to regulate the amount of bonus paid to the persons employed in certain establishments based on their profits and productivity. The act is applicable to the whole of India for all establishments containing twenty or more persons employed on any day during the year.

Eligibility for Bonus – Any employee receiving salary or wages up to RS.21,000 per month and engaged in any work whether skilled, unskilled, managerial, supervisory, etc. is entitled to the bonus for every year if the employees have worked for not less than 30 working days in the same year.

[Author]

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