Statutory bonus is the bonus an employer is required by law to pay eligible employees every year: at least 8.33% and at most 20% of their wages. It applies to employees earning up to ₹21,000 a month in establishments with 20 or more employees, and it must be paid within eight months of the end of the accounting year, which is 30 November for most companies.
Since 21 November 2025, statutory bonus has been governed by the Code on Wages, 2019, which replaced the Payment of Bonus Act, 1965. The eligibility limit and calculation rules were notified on 25 August 2026. This guide reflects those rules as of September 2026.
An employee is eligible for statutory bonus when all of these are true:
An employee can lose the bonus if dismissed for fraud, violent behaviour on the premises, theft, misappropriation or sabotage of property.
If an employee’s monthly wages are above ₹7,000, bonus is calculated as if their wage were ₹7,000 or the minimum wage, whichever is higher. Below that, their actual wages are used. The employer then applies a rate between 8.33% and 20%, depending on its profits (the “allocable surplus”), for the months the employee worked.
Example: an employee earns ₹18,000 a month (basic plus DA) and worked the full year. The applicable minimum wage is ₹12,000 a month, which is higher than ₹7,000.
Work out any case in seconds with our free statutory bonus calculator.
Within eight months of the end of the accounting year, credited to the employee’s bank account. For an April–March year, the deadline is 30 November. Most employers pay before Diwali or Durga Puja; in 2026, Diwali falls on 8 November.
Some employers pay the bonus in monthly instalments instead of once a year. The payslip then shows a line such as “Statutory bonus” or “Advance statutory bonus”, usually 8.33% of wages each month. It is the same legal bonus, just paid in advance, and it counts towards the employer’s yearly obligation. If the final bonus for the year works out higher, the employer pays the difference.
Usually, yes. Most offer letters include statutory bonus within the cost to company, either as a monthly component or as an annual amount. It is an earning, not a deduction: it is added to your salary, not taken out of it.
Yes. It is taxed as salary at the employee’s slab rate, and the employer deducts TDS on it. For most employees who are eligible for statutory bonus, total income is well below the ₹12 lakh rebate limit under the new tax regime, so no tax is actually payable. See the income tax slabs for 2026-27.
| Type | Required by law? | Who gets it |
|---|---|---|
| Statutory bonus | Yes, 8.33%–20% | Eligible employees earning up to ₹21,000 a month |
| Performance bonus | No; set by company policy | Linked to individual or company results |
| Festival bonus | No, unless it is a settled custom | Often paid at Diwali, Durga Puja, Onam or Pongal |
| Joining or retention bonus | No; contractual | As agreed in the offer letter |
Paying bonus through payroll keeps the payslip, TDS and records in one place. In HivePayroll you can add the bonus to a payroll run as a one-time earning or pay it as a monthly component, and it shows on the employee’s payslip with TDS worked out. HivePayroll is free for up to 10 employees.
Employees earning wages up to ₹21,000 a month are eligible. Bonus is calculated on ₹7,000 a month or the minimum wage, whichever is higher, at 8.33% to 20%.
No. It is paid to the employee in addition to salary. Only tax (TDS), if any, is deducted from it.
Within eight months of the end of the accounting year: 30 November for companies with an April–March year.
Statutory bonus applies to establishments with 20 or more employees. Smaller employers may still pay bonus by contract or custom.
8.33% of the wages used for the calculation, for the months worked.
This article reflects the Code on Wages, 2019 and the Ministry of Labour notifications of 25 August 2026, as of 27 September 2026. It is general information, not legal advice.
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