The deadline is 30 November, and 31 October is a miscount

Bonus must be paid within eight months of the close of the accounting year, under Section 39 of the Code on Wages. For an accounting year that closed on 31 March 2026, eight months lands on 30 November 2026.

The popular "31 October" figure is seven months, not eight. It is only correct for the rare establishment whose accounting year ends on the last day of February. If your books run April to March, your date is 30 November. The appropriate government can extend the eight months on application, but not beyond a total of two years, so treat 30 November as the line.

Bonus is now under the Code on Wages, not the 1965 Act

The Payment of Bonus Act, 1965 was repealed and folded into the Code on Wages, 2019, which took effect on 21 November 2025. Bonus now lives in Chapter IV, Sections 26 to 41. If a template or a blog still cites the 1965 Act as live law, it is out of date.

The two numbers that drive every calculation were set by notification, not by the Code itself. Notification S.O. 4711(E) dated 25 August 2026 fixed the eligibility ceiling at ₹21,000 a month and the calculation ceiling at ₹7,000 a month, both deemed effective from 21 November 2025. Confirm those figures on the official gazette before you file, because they are set by notification and the appropriate government can revise them

Two ceilings, and people keep mixing them up

There are two separate ceilings and conflating them is the most common error in this area. The ₹21,000 ceiling decides who is eligible. An employee whose wages, meaning basic plus dearness allowance, are ₹21,000 a month or less, and who worked at least 30 days in the year, is entitled to a bonus.

The ₹7,000 ceiling decides how much. If an eligible employee earns more than ₹7,000, the bonus is not calculated on the full salary. It is calculated as if the wage were ₹7,000 a month, or the applicable minimum wage for that job, whichever is higher. So an eligible person earning ₹18,000 does not get a bonus figured on ₹18,000. The base is capped. The same new definition of wages that reshapes gratuity and provident fund also governs what counts here.

A worked example

Take an employee earning ₹18,000 a month where the relevant minimum wage is below ₹7,000. They are eligible, because ₹18,000 is under ₹21,000. But the base is capped at ₹7,000, so the annual base is ₹84,000. The minimum bonus at 8.33% is about ₹7,000 for the year, and the maximum at 20% is ₹16,800.

Now take a lower earner on ₹15,000 a month in a state where the minimum wage for that category is ₹12,000. The base is the higher of ₹7,000 and ₹12,000, so it is ₹12,000, and the annual base is ₹144,000. The minimum bonus is about ₹12,000 and the maximum is ₹28,800. The person earning less can carry the higher bonus, because the minimum-wage leg lifts the base. This example is illustrative; run your own minimum-wage figure.

Finally, an employee on ₹25,000 a month is above the ₹21,000 eligibility ceiling, so there is no statutory bonus at all. An employer may still pay a discretionary ex-gratia amount, but that is goodwill, not a statutory bonus, and the two should not be confused on a payslip.

The 8.33% floor applies even in a loss year

The minimum bonus is 8.33% of the annual base, or ₹100, whichever is higher, and it is payable whether or not the business made a profit. A loss-making year does not switch off the minimum bonus. The maximum is 20%, paid out of allocable surplus when there is one.

There is one real exception. A newly set up establishment pays bonus in the first five accounting years only in the years it actually makes a profit, with the set-on and set-off rules held back until later. That relief is for genuinely new establishments, not for an existing business having a bad year.

Who is covered, and who is disqualified

Chapter IV applies to an establishment that employs 20 or more people on any day in the accounting year. Worth noting: the Code does not carry the old rule that once you cross 20 you stay covered forever even if headcount later drops, so do not assume that clause survives.

An employee can be disqualified from bonus if they are dismissed for fraud, for violent behaviour on the premises, for theft or sabotage of the establishment's property, or on a conviction for sexual harassment. Disqualification turns on dismissal, not on a lesser penalty.

Pay it by bank credit, and keep ex-gratia separate

Section 39 requires bonus to be paid by credit to the employee's bank account, so a cash handout no longer satisfies the Code. Bonus is also taxable in the employee's hands as salary, so it runs through payroll with tax deducted at source, not as a tax-free gift.

Keep ex-gratia in its own line. For staff above the ₹21,000 ceiling, or for amounts above the statutory maximum, anything you pay is discretionary and should be labelled ex-gratia, not statutory bonus. Mixing the two on a payslip creates a record that is hard to defend later, and defensibility is the whole point of getting this right before an inspector or an auditor asks.

What it costs to miss it

Paying less than what is due, which includes bonus, is an offence under Section 54 of the Code, with a fine up to ₹50,000 for a first offence and up to ₹1,00,000 with possible imprisonment for a repeat within five years. Separately, the Delhi government has in past years issued an advisory pressing employers to pay bonus before Deepawali; if you operate there, check the current-year advisory. Diwali falls on 8 November 2026, three weeks before the statutory date, which is why most employers aim for the festival, not the deadline.

The short version

Statutory bonus for 2025-26 is due by 30 November 2026 for an April to March year, not 31 October. Bonus now sits in the Code on Wages, Chapter IV, not the repealed 1965 Act. Eligibility ceiling ₹21,000 a month, calculation ceiling ₹7,000 or the minimum wage whichever is higher, set by notification S.O. 4711(E). Minimum 8.33%, maximum 20%, payable even in a loss year. Applies at 20 or more employees. Confirm the ceilings on the gazette.

NineRole builds HRMS and payroll software for Indian companies, so an employer who has to compute and prove bonus correctly is a business we would like to serve. That is our interest, said plainly. The dates and sections above stand on the Code and the notification, not on our pitch. For the wider picture, see our statutory compliance operating guide.

This is general information on Indian payroll compliance, not legal advice. Bonus ceilings are set by notification and can vary by state, and the ₹21,000 and ₹7,000 figures should be confirmed against the official gazette before you file. Law stated as at 2 September 2026.