The Payment of Bonus Act, 1965 mandates that every establishment with 20 or more employees must pay an annual bonus to eligible employees. Statutory bonus is often confused with discretionary performance bonus — they are entirely different. Statutory bonus is a legal entitlement calculated on a specific formula: minimum 8.33% and maximum 20% of the employee's annual wages (capped at ₹7,000/month or the minimum wage of the state, whichever is higher). Employees with salary up to ₹21,000/month are eligible. The Utility Spark Statutory Bonus Calculator applies the correct formula using the capped wage base, computes both the minimum (8.33%) and maximum (20%) amounts, and displays the annual statutory bonus entitlement so employees can verify their employers' calculations.
lightbulb When to use this tool
- check_circle Verifying that the bonus your employer paid matches the statutory minimum under the Payment of Bonus Act.
- check_circle Checking your bonus eligibility — employees with monthly salary above ₹21,000 are not covered by the Act.
- check_circle Estimating your annual take-home by including the statutory bonus component.
- check_circle HR and payroll professionals computing bonus payout for an employee base under the Act.
Why use our tool?
Wage Cap Applied Correctly
For bonus calculation, salary is capped at ₹7,000/month (or the minimum wage of the applicable state, whichever is higher). Even if an employee's salary is ₹15,000/month, the bonus is calculated on the lower of the two caps. This cap is frequently misapplied — this calculator uses the correct statutory wage ceiling.
Minimum and Maximum Both Shown
The Act prescribes 8.33% as minimum and 20% as maximum. The actual rate depends on the establishment's financial allocable surplus. The calculator shows both endpoints so employees know their range of entitlement.
Eligibility Check Included
Employees with monthly salary/wages exceeding ₹21,000/month are not eligible for statutory bonus under the Act. The calculator flags ineligibility before computing.
How it works
Enter your monthly salary (basic + DA — other allowances are excluded from the bonus wage base).
The calculator checks eligibility (salary ≤ ₹21,000/month).
It computes the bonus wage base (minimum of your salary or ₹7,000/month, subject to applicable state minimum wage).
It shows your annual minimum (8.33%) and maximum (20%) bonus entitlement.
Examples
science Employee at ₹15,000/month
Monthly salary: ₹15,000 | Eligible: Yes (below ₹21,000)
Wage cap: ₹7,000/month (statutory cap)
Annual wage base: ₹84,000
Minimum bonus (8.33%): ₹6,997 | Maximum bonus (20%): ₹16,800