Every year, somewhere between mid-October and late November, an HR manager at a mid-size Indian company opens the bonus register and realises the finance team was never told to set money aside. Statutory bonus doesn’t announce itself the way a gazette notification does. It just has a deadline, and the deadline doesn’t move because payroll wasn’t ready.
There’s also a naming trap this year. Most guides still call this the “Payment of Bonus Act.” That Act was repealed and folded into the Code on Wages, 2019 when the four labour codes took effect on 21 November 2025, statutory bonus is now Chapter IV, Sections 26 to 41 of the Code, with the procedure laid out in the Code on Wages (Central) Rules, 2026. The numbers you know largely carried over. A couple of the mechanics didn’t.
If your accounting year runs April to March, statutory bonus for FY 2025-26 is still due by 30 November 2026, eight months after the year closes, same as before, now fixed under the Code rather than the old Act. August is early enough to get the calculation right instead of rushed. Here’s the actual math, not the rounded-off version most guides give you.
Who statutory bonus applies to
The Code covers every factory, and every other establishment employing 20 or more people on any day in the accounting year. Once you’ve crossed 20, you stay covered even if headcount later drops, that catch trips up companies that scaled down after a slow year and assumed the obligation went with it. Within a covered establishment, any employee earning up to Rs 21,000 a month in salary plus dearness allowance, and who has worked at least 30 days in the year, is eligible, the same eligibility ceiling carried forward from the earlier Act.
The Rs 7,000 ceiling nobody explains well
This is where most in-house calculations go wrong. The eligibility ceiling (Rs 21,000) and the calculation ceiling (Rs 7,000) are two different numbers doing two different jobs, and conflating them either overpays or underpays every eligible employee.
If an employee’s salary plus DA is Rs 7,000 or below, bonus is calculated on their actual salary, or the applicable state minimum wage, whichever is higher. If salary plus DA is anywhere between Rs 7,000 and Rs 21,000, the bonus is still calculated as if that employee earned exactly Rs 7,000 a month, not on their real, higher salary. A supervisor drawing Rs 18,000 a month and a machine operator drawing Rs 7,500 a month get their bonus computed on the identical Rs 7,000 base. Only the percentage you apply can differ.
Minimum and maximum, and how to actually pick a number
The Code sets a floor of 8.33% of wages, or Rs 100, whichever is higher, and a ceiling of 20% of that Rs 7,000 (or minimum-wage) base, worked out per employee per year. The Rs 100 floor is a small but real change from the old Act’s plain 8.33%, it exists so an employee near the bottom of the wage band never gets a bonus that rounds down to almost nothing. At the 20% ceiling, that’s roughly Rs 16,800 for the year on the Rs 7,000 base. Where you land inside that band depends on the “available surplus” formula, driven by gross profits, depreciation, direct tax provisions and prior-year set-on or set-off amounts, which is genuinely an accountant’s calculation, not an HR one. What HR controls is getting the eligible headcount and the base salary numbers right before finance runs that formula, because errors at that stage compound.
What counts as “salary” for this calculation, and what doesn’t
Basic pay and dearness allowance go in. Overtime pay, house rent allowance, conveyance allowance, other special allowances, employer PF contribution, retrenchment compensation, gratuity and commission all stay out. Companies that build cost-to-company structures heavy on allowances and light on basic sometimes assume this lowers their bonus bill. It does, legitimately, but it also means the number your payroll software must isolate is specifically basic-plus-DA, not gross salary, and not CTC.
The filing step that gets forgotten after the payment
Paying the bonus isn’t the end of the obligation. Every covered employer must file the annual return, still Form D in payroll practice, with the labour inspector within 30 days of the payment deadline, so by 31 December for an April-March year. It asks for the same data you should already have on hand: number of employees, the surplus computation, the percentage declared, and amounts actually disbursed. One mechanical change under the Code is worth flagging to finance: bonus now has to be credited directly to the employee’s bank account, rather than paid in cash or by cheque as some smaller establishments still did. Employers who pay on time but skip the return still end up on an inspector’s list, for the return, not the bonus.
Three things to check in August, not November
First, confirm your headcount test: did you cross 20 employees on any single day this accounting year, even briefly, through a busy season or a short-term hire. Second, pull the basic-plus-DA figure for every employee under Rs 21,000 and separately flag anyone under Rs 7,000, since their calculation path is different. Third, ask finance now, not in November, whether the available-surplus computation is likely to land near the 8.33% floor or higher, because that changes how much cash the business needs to set aside over the next few months.
Where a payroll system actually earns its cost
Most disputes we see around statutory bonus aren’t about the percentage, they’re about the base salary figure used per employee, and about establishments that genuinely didn’t realise they’d crossed the 20-employee threshold mid-year. IntelloHRM tracks headcount against the coverage threshold automatically and separates basic-plus-DA from the rest of CTC by default, so the bonus base is a number you can pull in minutes rather than reconstruct from a spreadsheet in November. For the compliance work sitting right next to this on most HR calendars, our recent piece on the EPF Scheme 2026 employer checklist covers the other statutory number payroll teams are re-checking this quarter.
Bonus season always feels sudden in November. It isn’t, the deadline has been fixed since April. The only thing that changes between now and then is how much of the math you’ve already done.
Published 6 August 2026. Calculation figures verified against the Code on Wages, 2019 (Chapter IV) and the Code on Wages (Central) Rules, 2026 on that date.
