The Payment of Bonus Act, 1965 mandates that employers in certain industries pay a bonus to employees based on the company’s profits and employee earnings. This system ensures that employees receive a share in the business's success. The act also specifies the various forms and reporting requirements to ensure transparency in bonus payments.
In this article, we will cover the important forms under the Payment of Bonus Act, namely Form A, Form B, Form C, and Form D. These forms serve as essential compliance tools for employers, helping them maintain records of surplus calculations, bonus payments, and related returns.
Forms under the Payment of Bonus Act, 1965: Key Overview
Table at a Glance: Forms Under the Payment of Bonus Act, 1965
| Form | Purpose | Key Information Required | Submission Deadline |
|---|---|---|---|
| Form A | Computation of Allocable Surplus | Gross profits, deductions, available surplus, allocable surplus | Within 8 months from the end of the accounting year |
| Form B | Set-on and Set-off of Allocable Surplus | Excess allocable surplus (set-on), deficit in surplus (set-off) | Carried forward up to 4 years |
| Form C | Details of Bonus Paid to Employees | Employee details, salary, bonus payable, deductions, net bonus | Within 8 months from the end of the accounting year |
| Form D | Annual Return of Bonus Payments | Total bonus payable, bonus actually paid, reasons for non-payment, employee details | Within 30 days after the expiry of the bonus payment period |
1. Form A – Computation of Allocable Surplus
Purpose: Form A is used to calculate the allocable surplus of the company for the given accounting year. This is the portion of the profits that is available for the payment of bonuses to employees.
Key Details in Form A:
- Gross Profits: The total profits of the company before deductions.
- Deductions: As per Section 6, deductions may include depreciation, taxes, and other statutory deductions.
- Available Surplus: This is the gross profit minus allowable deductions.
- Allocable Surplus: Based on the available surplus, 67% is allocated for non-banking companies, and 60% is allocated for other companies.
Deadline for Submission: Employers must calculate and report the allocable surplus within 8 months from the end of the accounting year.
2. Form B – Set-on and Set-off of Allocable Surplus
Purpose: Form B tracks the set-on and set-off of the allocable surplus. This is necessary when the available surplus for a year does not meet the required bonus amount.
- Set-on: If the allocable surplus exceeds the maximum bonus payable, the excess can be carried forward (set-on) for future years. The excess can be carried forward for up to 4 years.
- Set-off: If there is a deficiency in the allocable surplus for the current year, the shortfall can be carried forward (set-off) to be utilized in the following years.
Deadline for Submission: Employers must maintain this record for up to 4 years, ensuring the proper carry-forward mechanism is followed.
3. Form C – Details of Bonus Paid to Employees
Purpose: Form C is a detailed report of the bonus payments made to employees for the accounting year. It is used to track individual payments, including deductions and adjustments for pre-paid bonuses.
Key Details in Form C:
- Employee Information: Name, designation, and salary of each employee.
- Bonus Payable: As per Sections 10 and 11, this includes both the minimum bonus and the maximum bonus.
- Deductions: Any pre-paid bonuses, such as Puja bonus or interim bonus, should be deducted from the total bonus payable.
- Net Bonus: The final bonus amount payable after deductions.
- Signature/Thumb Impression: Acknowledgment of payment by the employee.
Deadline for Submission: This form must be submitted within 8 months from the end of the accounting year.
4. Form D – Annual Return of Bonus Payments
Purpose: Form D is the annual return that employers submit to the Inspector of the Payment of Bonus Act. This form summarizes the total bonus paid, the percentage of bonus declared, and any non-payment reasons.
Key Details in Form D:
- Establishment Details: Name of the company, address, and industry.
- Total Employees: Total number of employees who received a bonus.
- Bonus Details: Total bonus payable and actual bonus paid.
- Settlement Details: If any dispute was settled under the Industrial Disputes Act, the form should specify the settlement amount and date.
- Non-payment Reasons: If some employees did not receive their bonus, the employer must mention the reasons for non-payment.
Deadline for Submission: Employers must submit Form D within 30 days after the expiry of the bonus payment period.
Key Compliance and Reporting Deadlines
- Bonus Payment Deadline: The bonus must be paid in cash within 8 months from the close of the accounting year.
- Return Filing: Employers must submit Form D within 30 days after the expiry of the bonus payment period, which could be before the filing of income tax returns or during the Diwali or Durga Puja season, depending on the practice in the establishment.
- Record Keeping: Employers must maintain proper records of Form A, Form B, and Form C for internal compliance and future audits.
Conclusion
The Payment of Bonus Act, 1965 ensures that employees receive their rightful share of profits in the form of a bonus. The correct filing of Form A, Form B, Form C, and Form D helps employers stay compliant with the law, avoiding penalties and disputes. By adhering to the guidelines set forth in these forms and paying bonuses on time, employers can maintain good employee relations and ensure smooth operations within the legal framework.
