Two employees can both earn Rs 18,000 a month and still have different statutory bonus calculations. The reason is simple: the bonus base is linked to the applicable minimum wage, while eligibility depends on a separate monthly wage limit, a 30-day test and the establishment’s facts.
This statutory bonus calculator separates those checks. Enter the employee’s wages under the Code on Wages, the relevant minimum wage, time worked and the bonus rate to see the minimum, selected and maximum bonus, permitted adjustments and payment deadline.
Important 2026 update: Chapter IV of the Code on Wages took effect on 21 November 2025, and the final Code on Wages (Central) Rules, 2026 were notified on 8 May 2026.
The calculator uses Rs 21,000 as the editable eligibility default and Rs 7,000 as the editable calculation amount. That treatment follows the savings clause in Section 69 until the appropriate government replaces the earlier amounts. Always check the latest Central or State notification for the establishment.
Accounting and compliance review: ACMA Bhawana Bhandari Gupta
India payroll compliance tool
Statutory Bonus Calculator 2026
Estimate one employee’s bonus under Sections 26 to 41 of the Code on Wages. Defaults were checked on 13 August 2026 and remain editable because the appropriate government can notify replacement amounts.
Advanced legal defaults and adjustments
Optional Code wage helper
Use this when payroll components need the Section 2(y) 50% add-back test. It follows the Ministry’s official Rs 76,000 illustration.
Calculation:
This employee-level tool does not compute gross profit, available surplus, allocable surplus or a four-year set-on and set-off schedule. Those require establishment accounts and the applicable appendices to the Central Rules.
What this statutory bonus calculator checks
A bonus calculation can be numerically correct and legally wrong. The tool therefore runs the questions in the same order a payroll reviewer should use.
| Check | Rule | What the calculator does |
|---|---|---|
| Is the establishment covered? | Section 41(2) | Checks whether 20 or more persons were employed on any day in the accounting year. |
| Is the employee within the wage limit? | Section 26(1) and Section 69(2) | Uses the editable Rs 21,000 monthly default unless you enter a replacement notified amount. |
| Has the employee worked enough? | Sections 26 to 28 | Checks the 30-day test and reminds you which deemed-working days count. |
| What monthly wage is used for bonus? | Section 26(2) | Uses the lower of actual Code wages and the higher of the statutory amount or applicable minimum wage. |
| What bonus range applies? | Section 26(1), 26(3) and 26(5) | Shows the legal minimum of 8 and one-third percent and maximum of 20%. |
| Can earlier payments or loss be adjusted? | Sections 37 and 38 | Applies entered customary or interim bonus first, then the permitted same-year misconduct loss. |
| When is payment ordinarily due? | Section 39 | Shows eight months from 31 March for the selected accounting year. |
Monthly calculation ceiling = higher of the notified calculation amount and applicable minimum wage
Monthly bonus wage = lower of actual Code wages and that ceiling
Annual bonus wage = monthly bonus wage x eligible wage-earning months
Bonus = annual bonus wage x applicable rate, subject to 8.33% minimum and 20% maximum
What changed for statutory bonus in 2025 and 2026?
The legal base is no longer the repealed Payment of Bonus Act for current periods. Notification S.O. 5322(E) brought Sections 1 to 41 of the Code on Wages into force on 21 November 2025. That includes the complete payment-of-bonus chapter.
The Central Government then notified the final Code on Wages (Central) Rules, 2026 through G.S.R. 343(E) on 8 May 2026. Those rules superseded the Payment of Bonus Rules, 1975 for the central sphere and now provide the calculation appendices, set-on and set-off illustrations, claims procedure, registers and related compliance mechanics.
Why does the calculator still show Rs 21,000 and Rs 7,000?
Section 26 now lets the appropriate government notify the monthly employee eligibility amount and the amount used before comparing it with minimum wage. The Ministry's Labour Codes page reviewed on 13 August 2026 did not list a new Section 26 notification replacing either amount.
Section 69(2) says an amount provided under a repealed enactment continues for the corresponding purpose, to the extent it is not contrary to the Code, until it is replaced. The earlier law used Rs 21,000 for employee eligibility and Rs 7,000 or the applicable minimum wage, whichever was higher, for calculation.
ReconScribe's reading of those official materials: the earlier amounts are reasonable transitional defaults, but they should not be presented as permanently fixed nationwide amounts. That is why both fields are editable and every result carries a notification reminder.
Step 1: Check whether the establishment is covered
Section 41(2) applies the bonus chapter to an establishment in which 20 or more persons are employed, or were employed, on any day during the accounting year. The test is not limited to the year-end headcount. A temporary peak can therefore matter.
Count the establishment as the Code requires, not only employees who ultimately receive bonus. Keep a month-by-month headcount reconciliation so the highest day is visible.
Public-sector and listed exclusions
Section 40 generally excludes public-sector establishments unless they sell goods or render services in competition with a private-sector establishment and the relevant income is at least 20% of gross income for that year. Section 41 also lists excluded employee groups and institutions, including employees of LIC, RBI, specified government or local-authority establishments, universities and certain not-for-profit institutions.
The statutory bonus calculator includes an exclusion selector because the correct answer depends on the actual employer, not the payroll software label.
Step 2: Calculate wages under Section 2(y)
The Code wage definition took effect on 21 November 2025. It starts with Basic Pay, Dearness Allowance and retaining allowance, if any. It excludes listed components, but the first proviso adds back part of the Section 2(y)(a) to (i) group when that group exceeds 50% of total remuneration.
This matters twice. The resulting wage amount can decide whether the employee stays within the bonus eligibility limit, and it can affect the amount used in the bonus calculation.
The Ministry's Rs 76,000 illustration
Monthly total remuneration: Rs 76,000
Basic Pay + DA: Rs 20,000
Section 2(y)(a) to (i) allowance group: Rs 40,000
Other excluded components in the illustration: Rs 16,000
50% of total remuneration: Rs 38,000
Excess added back: Rs 2,000
Code wages: Rs 22,000
At the editable Rs 21,000 default, that employee would cross the bonus eligibility amount even though Basic Pay plus DA is only Rs 20,000. This is why using Basic Pay alone can give the wrong conclusion.
Step 3: Apply the monthly employee eligibility limit
Section 26(1) covers an employee drawing wages up to the amount notified by the appropriate government. For many private establishments, the State Government is the appropriate government. The Central Government is the appropriate government for specified central-sphere establishments such as railways, mines, major ports, air transport, banking, insurance, telecom and central public-sector entities.
Use the establishment's actual appropriate-government notification. If wages changed during the year, do not force the entire year into one average without review. Calculate separate periods and retain the wage revision evidence.
Step 4: Complete the 30-day work test
An eligible employee must have put in at least 30 days of work in the accounting year. Section 28 treats the following as worked days for the proportionate-reduction rule:
- Days of lay-off under an applicable agreement, standing orders or law.
- Leave with salary or wages.
- Absence due to temporary disablement caused by an employment accident.
- Maternity leave with salary or wages.
Do not use attendance-present days alone. Reconcile the attendance register, paid leave, maternity records, accident records and lay-off days before concluding that an employee is below 30 days.
Step 5: Find the monthly bonus calculation wage
The employee eligibility limit and calculation ceiling are different. Crossing the calculation ceiling does not automatically make an employee ineligible. It only caps the wage used for the bonus arithmetic.
Using the transitional defaults, compare Rs 7,000 with the applicable monthly minimum wage. Take the higher figure. Then compare that result with the employee's actual monthly Code wages and use the lower figure as the monthly bonus wage.
Example 1: Minimum wage is higher than Rs 7,000
Monthly Code wages are Rs 18,000. Applicable minimum wage is Rs 12,000. The calculation ceiling is Rs 12,000, so a full-year annual bonus wage is Rs 1,44,000. Minimum bonus is Rs 12,000 and maximum bonus is Rs 28,800.
Example 2: Rs 7,000 remains higher
Monthly Code wages are Rs 18,000. Applicable minimum wage is Rs 6,000. The calculation ceiling is Rs 7,000, so a full-year annual bonus wage is Rs 84,000. Minimum bonus is Rs 7,000 and maximum bonus is Rs 16,800.
Example 3: Actual wages are below the ceiling
Monthly Code wages are Rs 6,500 and the applicable minimum wage is Rs 6,000. The statutory amount of Rs 7,000 is higher, but actual wages are lower. The monthly bonus wage remains Rs 6,500.
Step 6: Choose the correct rate from 8.33% to 20%
Section 26(1) provides the annual minimum bonus at eight and one-third percent of wages earned, or Rs 100, whichever is higher, subject to proportionate reduction for part-year work. The calculator uses the exact one-twelfth fraction for the minimum, while displaying 8.33% as the familiar label.
A higher rate is not a free payroll choice. Under Section 26(3), the rate above minimum depends on allocable surplus and cannot exceed 20%. Production or productivity arrangements under Section 26(5) can also operate through an agreement or settlement, but total bonus remains capped at 20%.
This tool therefore lets you enter a rate but does not pretend to derive that rate from company accounts.
Allocable surplus, set-on and set-off
Section 31 treats 60% of available surplus as allocable surplus for a banking company and 67% for another establishment. Gross profit, available surplus and deductions require the statutory appendices and accounts.
Section 36 carries qualifying excess or deficiency forward for up to the fourth succeeding accounting year. The earliest carried amount is used first. Rules 22, 23, 27 and 28 of the Central Rules, together with Appendix A, show how the sequence works.
Because that calculation is establishment-wide, an employee calculator should not guess it from one person's salary. Use an audited employer working to support any rate above the minimum.
Special rule for a new establishment
For the first five accounting years after the establishment begins selling goods or rendering services, Section 26(6) generally makes bonus payable only for an accounting year in which the establishment derives profit. Section 36 does not apply in that period.
The sixth and seventh accounting years use modified set-on and set-off rules. From the eighth accounting year, the normal Section 36 mechanism applies. New departments, undertakings and branches can also fall into these special rules.
The calculator asks for the stage and profit status so a no-profit first-five-year case is not shown as an ordinary minimum-bonus liability.
Adjustments, deductions and disqualification are different
Keep these concepts separate in the payroll working:
- Customary or interim bonus: Section 37 allows an amount already paid for that accounting year to be adjusted against statutory bonus.
- Misconduct loss: Section 38 allows the employer to deduct financial loss caused by employee misconduct from bonus for that accounting year only.
- Disqualification: Section 29 applies when an employee is dismissed for fraud, riotous or violent behaviour on the premises, theft, misappropriation or sabotage of establishment property, or conviction for sexual harassment.
A general disciplinary warning is not the same as a Section 29 disqualification. Record the exact facts and legal basis.
When must statutory bonus be paid?
Section 39 requires bonus to be credited to the employee's bank account within eight months from the close of the accounting year. For an accounting year ending 31 March 2026, the ordinary deadline is 30 November 2026.
The appropriate government or specified authority can extend the period on application and for sufficient reasons, but the total extended period cannot exceed two years. Where a bonus dispute is pending, special timing applies after an award or settlement. If the dispute is only about a higher rate, the minimum 8.33% must still be paid within the ordinary eight-month period.
Contract employees and responsibility for payment
Rule 21 of the Code on Wages (Central) Rules, 2026 addresses a contractor's failure to pay bonus. On written information from employees or their registered trade union, and after confirming the failure, the responsible company, firm, association or other person referred to in the proviso to Section 43 must pay the minimum bonus.
For contract labour, retain the contractor's eligibility list, wage base, calculation, proof of payment and employee-wise bank evidence. A contract clause alone does not replace the statutory responsibility check.
Payroll records to retain
Central-sphere employers should read the final Central Rules with their establishment facts. Rule 51 requires an Employee Register in Form I, a wage and deduction register in Form IV and an Attendance Register-cum-Muster Roll in Form IX, with five-year preservation after the last entry. Rule 52 requires wage slips in Form V on or before payment of wages.
A practical statutory bonus file should also include:
- Highest daily headcount support for the accounting year.
- Employee-wise Code wage computation, including the 50% add-back where relevant.
- Applicable Central or State minimum-wage notification by skill, work and location.
- Working and deemed-working day reconciliation.
- Eligibility-limit and calculation-amount notification check.
- Gross profit, available surplus, allocable surplus and set-on or set-off working where the rate exceeds minimum.
- Customary or interim bonus adjustment and misconduct-loss support.
- Employee-wise bank credit proof and payment date.
- Management approval and payroll-to-ledger reconciliation.
Official government sources and verification portals
Use the links below to verify the law before finalising payroll. ReconScribe checked these sources on 13 August 2026.
- India Code: Code on Wages, 2019, including Sections 2(y), 26 to 41, 45 and 69.
- Gazette notification S.O. 5322(E), bringing the bonus chapter into force from 21 November 2025.
- Code on Wages (Central) Rules, 2026, G.S.R. 343(E) dated 8 May 2026.
- Ministry FAQs on Labour Codes, including the wage definition and 50% rule.
- Additional Ministry FAQs dated 16 March 2026, clarifying wage components and the implementation date.
- Ministry Labour Codes portal, the main page for current Code rules, notifications and FAQs.
- Chief Labour Commissioner: central-sphere minimum wages.
- Ministry directory of State Labour Departments for State notifications and official portals.
Statutory bonus calculator FAQs
Is statutory bonus calculated on gross salary?
Not automatically. Use wages as defined in Section 2(y), including any required 50% allowance add-back, then apply the statutory calculation ceiling under Section 26(2).
Is the employee eligibility limit still Rs 21,000 in 2026?
The calculator uses Rs 21,000 as an editable transitional default under Section 69(2). Check whether the appropriate government has issued a replacement Section 26 notification for your establishment.
Is bonus always calculated on Rs 7,000?
No. Compare the applicable statutory amount with the relevant minimum wage and take the higher figure. If the employee's actual Code wages are lower than that figure, use actual wages.
Does paid leave count toward the 30-day test?
Section 28 treats leave with salary or wages as worked time for this purpose. It also covers specified lay-off, temporary-disablement and paid maternity-leave days.
Can an employer pay only 8.33% even when profits are high?
The final rate depends on allocable surplus and the set-on or set-off position, subject to the 20% ceiling. A full employer working is needed before fixing a rate above the minimum.
Can a company deduct Diwali or puja bonus?
Section 37 allows a customary bonus or part of statutory bonus already paid for the same accounting year to be adjusted against the final statutory amount.
When is bonus for FY 2025-26 due?
The ordinary Section 39 deadline is 30 November 2026, which is eight months after 31 March 2026, unless a valid extension or dispute rule applies.
Does the calculator determine allocable surplus?
No. It is an employee-level calculation. Gross profit, deductions, available surplus, allocable surplus and four-year set-on or set-off require establishment accounts and the statutory appendices.
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This calculator was created by ReconScribe's group of friends. Rajeev leads calculator automation, ACMA Bhawana provides accounting and compliance review, and Ankit contributed testing feedback.
Important: This statutory bonus calculator is an educational working tool, not legal or payroll advice. It does not decide the applicable government's latest notification, establishment exemption, employee disqualification, minimum-wage classification, allocable surplus, set-on or set-off balance, or the validity of a deduction. Verify the official Gazette, employment records and accounts before processing or disputing bonus.