Statutory Bonus Calculator (Code on Wages)

How statutory bonus is calculated

Statutory bonus is a profit linked payment the law requires, not a discretionary performance bonus. The percentage is applied to your bonus wages for the year, but with an important cap in the middle.

Bonus = rate (8.33% to 20%) × min(monthly Basic + DA, calculation ceiling) × months worked

The two ceilings

Eligibility ceiling (21,000): if your monthly wages are above this, you are not entitled to statutory bonus at all.
Calculation ceiling (7,000 or the minimum wage fixed by the Central Government, whichever is higher): if you earn above it, the percentage is applied to the ceiling, not your full wages.

The rate band

Minimum 8.33 percent: payable even if the employer made no profit or a loss.
Maximum 20 percent: the ceiling on statutory bonus.
Where the employer lands between the two depends on its allocable surplus for the year, or on a settlement.

What counts as wages. Bonus wages follow the Code on Wages definition: basic pay, DA and retaining allowance. HRA, overtime, conveyance and other allowances are excluded, but if they add up to more than 50% of total pay the excess is added back. After tax, the amount in hand is lower because statutory bonus is taxed as salary: see the income tax calculator and in-hand salary calculator.

Worked examples

Assuming an April to March accounting year and a 7,000 calculation ceiling unless a higher minimum wage applies.

Situation	Calculation base	Min 8.33%	Max 20%
Basic+DA 5,000 (below ceiling)	60,000	₹4,998	₹12,000
Basic+DA 18,000 (above 7,000)	84,000	₹6,997	₹16,800
Basic+DA 15,000, min wage 9,000	1,08,000	₹8,996	₹21,600
Basic+DA 12,000, worked 6 months	42,000	₹3,499	₹8,400
Basic+DA 25,000 (over 21,000)	Not eligible	Nil	Nil

Eligibility, deadline and tax

Who and where it applies

Covers establishments employing 20 or more persons; the government can extend this to smaller establishments.
You must have worked at least 30 days in the accounting year.
Apprentices are not covered.

Payment and tax

Payable within 8 months of the year end, so by 30 November for an April to March year. Most firms pay around Diwali.
Statutory bonus is fully taxable as salary in the year received under the Income-tax Act, 2025. Employers deduct TDS in the payment month.
Disqualified for the year if dismissed for fraud, riotous or violent behaviour on the premises, theft, misappropriation or sabotage of property, or sexual harassment.

New Code on Wages: from 21 November 2025 statutory bonus is governed by the Code on Wages, 2019, which replaced the Payment of Bonus Act, 1965. The Code on Wages (Central) Rules were notified on 8 May 2026 (G.S.R. 343(E)), and the bonus ceilings on 25 August 2026 (S.O. 4710(E) for eligibility, S.O. 4711(E) for calculation), both deemed effective from 21 November 2025.

Frequently asked questions

Is statutory bonus mandatory?

Yes, for establishments covered by the bonus chapter of the Code on Wages, 2019 (generally those employing 20 or more persons). Eligible employees must get at least 8.33 percent of bonus wages or 100 rupees, whichever is higher, even in a year with no profit.

Who is eligible for statutory bonus?

An employee who worked at least 30 days in the accounting year and whose monthly wages do not exceed 21,000 rupees. The Ministry of Labour notified this ceiling under Section 26(1) of the Code on Wages on 25 August 2026, effective from 21 November 2025.

What is the 8.33 percent rule?

8.33 percent is the minimum statutory bonus, roughly one month of bonus wages over a year. The maximum is 20 percent. Where the employer lands between the two depends on its allocable surplus for the year or on a settlement with employees.

Why is my bonus calculated on 7,000 rupees and not my full salary?

If your monthly wages are above the calculation ceiling, the bonus is worked out as if your wage were 7,000 rupees or the minimum wage fixed by the Central Government, whichever is higher. This ceiling was notified on 25 August 2026 and applies from 21 November 2025.

Is statutory bonus taxable?

Yes. It is taxed as salary in the year you receive it, with no special exemption, under the Income-tax Act, 2025 from 1 April 2026. Employers deduct TDS in the month of payment, so take-home pay that month can dip.

When must statutory bonus be paid?

Within 8 months from the close of the accounting year, so by 30 November for a year ending 31 March. Most Indian employers pay around Diwali.

What changed under the new labour codes?

From 21 November 2025 statutory bonus is governed by the Code on Wages, 2019, which replaced the Payment of Bonus Act, 1965. The 8.33 to 20 percent band carried over. Bonus wages now follow the Code's wage definition, and the 21,000 and 7,000 rupee ceilings were re-notified on 25 August 2026.

Rules checked October 2026 against the Code on Wages and Ministry of Labour notifications. Spotted a wrong value? Tell us at [email protected] and we will fix it.

Sources

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