Explanation:

The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected there with.

The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act.

The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under the section 31 A of the Act.

The salary limited fixed for eligibility purposes is Rs. 7000 per month and the payment is subject to the stipulation that the bonus payable to employees drawing wages or salary not exceeded to Rs.21000 per month would be calculated as if their salary or wages is Rs.7000 per month.

in calculating bonus, only the Basic Salary and Dearness Allowance are included. Rest HRA, Overtime salary, Travelling Concessions, bonus, Employees Contribution to PF, Gratuity are not considered for Bonus calculation.