Applicability

• Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.
• Any other establishment employing 20 or more persons whom Central Government may, by notification, specify in this behalf.
• Any establishment employing even less than 20 persons can be covered voluntarily u/s 1(4) of the Act.

Eligibility

Every employee including part time worker and those employed by or through contractor is entitled to become member of the scheme from the date of joining the establishment.

With effect from 01/09/1997 an employee is eligible for membership from the very first date of joining the establishment.

Employee Definition

As defined in Section 2(f) of the Act, means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

Excluded Employee

Exempted employee means an employee to whom a Scheme or the Insurance Scheme, as the case may be, would, but for the exemption granted under section 17, have applied. However, if the wage of an employee as covered under the Act, exceeds the prescribed ceiling he will be continue to remain covered up to prescribed ceiling. Similarly, if a new employee is drawing more than the prescribed wages but he will not be coverable but if he has never been member of Fund, he will be covered up to the prescribe wage ceiling.Now present wage ceiling of Rs.15000/ basic.

The Employees pension scheme membership will cease from the member attains 58 years of age.However he will continue to be member of Employees provident fund till he leave the services and withdraws the PF accumulations.

Basic Wages

“Basic Wages” means emoluments which are earned by employee while on duty or on leave or holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include:

a. The cash value of any food concession;

b. Any cash payment, by whatever named called, paid to an employee on account of a rise in the cost of living, House rent Allowance, Overtime Allowance, Bonus, Commission or any other allowance payable to the employee in respect of employment or of work done in such employment.

Applicability

• The Act is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments including educational institutions employing 10 or more person.

• It has also been extended upon shop, hotels, restaurants, roads motor transport undertakings, etc.

Eligibility

Effective 01/01/2017 ,employee receiving wage of Rs.21000/ pm to enroll under ESIC.

However,there is no wage ceiling for coverage of an employee with ‘disability’ 01.04.2016.

Contribution Period

• 1st April to 30th September, and
• 1st October to 31st March

Benefit Period

If the person joined insurable employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December i.e after 9 months.

Membership

If an insured person’s wages/salary becomes more than 21,000/- per month, even then he/she remains covered till the end of a Contribution Period which is either April to September & October to March.

RATE OF CONTRIBUTION

Employer’s Share: 4.75% of wages/salary.

Employee’s Share: 1.75% of wages/salary.

Wages/Salary

• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment of weekly off/holiday
• Production incentive-if it is paid every month
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)

Not As Wages/Salary

• Contribution paid by the employer to any pension/provident fund or under ESI Act
• Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour.
• Gratuity payable on discharge
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment
• Washing allowance for livery
• Conveyance (Actual):
• – Amount towards reimbursement for duty related journey.
• – Reimbursement of journey on production of ticket.
• – Maintenance of vehicle subject to production of record.
• – Fixed when paid at an interval exceeding 2 months.

Manner And Time Limit for making payment of contribution

The total amount of contribution (employee’s share and employer’s share) is to be deposited with the authorized bank through a challan in the prescribed form in quadruplicate on or before 15th of month following the calendar month in which the wages fall due.

Benefits

• ESI Scheme takes care of following needs of the member:
• Medical sickness, extended sickness for certain diseases, enhanced sickness, dependants maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse.
• Direct admission for super specialty benefits

Applicability:

Object of the Act

To regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.

Applicability

Every establishment in which 10 or more workmen are employed or were employed on any of the preceding 12 months as contract labour – Gujarat state rule

Every contractor who employs or who employed on any day of the preceding twelve months 10 or more workmen.

Registration

Principal employer employing 10 or more workers through the contractor or the contractor(s), needs to register its establishment under the Act, on deposit of required fee in Form1.

License

• Any Contractor engaging 10 or more workers needs to procure a License to operate, on deposit of required fee in Form IV.
• Valid for specified period.

Prohibition of Employment of Contract Labour

The Appropriate Government through issue of notification after consultation with the Board (and not Courts) can order the prohibition of employment of contract labour.

Welfare facilities to be provided by the Contractor

Contractor shall provide Canteens if applicable,First Aid facilities,Drinking water,Latrines,Washing facilities

Registration of Trade Unions The application for registration along with copies of bye-laws and particular of office bearers should be made in Form – A. The fee payable for registration is Rs. 50/- if the members are less than 1000 and Rs.100/- if the members are more than 1000. Minimum number of members required to register a union is ‘7’. The application is to be made to the Register under the Act. The application is to be made to the concerned Deputy Registrar of Trade Union.

Gujarat Trade Unions Regulations,1963 applies to the whole State of Gujarat.

Short title, extent and commencement.—

(h) “Trade Union” means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions:

4. Mode of registration.—1[

(1) ] Any seven or more members of a Trade Union may, by subscribing their names to the rules of the Trade Union and by otherwise complying with the provisions of this Act with respect to registration, apply for registration of the Trade Union under this Act: 2[Provided that no Trade Union of workmen shall be registered unless at least ten per cent. or one hundred of the workmen, whichever is less, engaged or employed in the establishment or industry with which it is connected are the members of such Trade Union on the date of making of application for registration: Provided further that no Trade Union of workmen shall be registered unless it has on the date of making application not less than seven persons as its members, who are workmen engaged or employed in the establishment or industry with which it is connected.] 3[(2) Where an application has been made under sub-section (1) for the registration of a Trade Union, such application shall not be deemed to have become invalid merely by reason of the fact that, at any time after the date of the application, but before the registration of the Trade Union, some of the applicants, but not exceeding half of the total number of persons who made the application, have ceased to be members of the Trade Union or have given notice in writing to the Registrar dissociating themselves from the applications.]

5 Application for registration. —

(1) Every application for registration of a Trade Union shall be made to the Registrar, and shall be accompanied by a copy of the rules of the Trade Union and a statement of the following particulars, namely:—

(a) the names, occupations and addresses of the members making the application;

[(aa) in the case of a Trade Union of workmen, the names, occupations and addresses of the place of work of the members of the Trade Union making the application;]

(b) the name of the Trade Union and the address of its head office; and

(c) the titles, names, ages, addresses and occupations of the 4 [office-bearers] of the Trade Union.

(2) Where a Trade Union has been in existence for more than one year before the making of an application for its registration, there shall be delivered to the Registrar, together with the application, a general statement of the assets and liabilities of the Trade Union prepared in such form and containing such particulars as may be prescribed.

6 Provisions to be contained in the rules of a Trade Union. —A Trade Union shall not be entitled to registration under this Act, unless the executive thereof is constituted in accordance with the provisions of this Act, and the rules thereof provide for the following matters, namely:—

(a) the name of the Trade Union;

(b) the whole of the objects for which the Trade Union has been established;

(c) the whole of the purposes for which the general funds of the Trade Union shall be applicable, all of which purposes shall be purposes to which such funds are lawfully applicable under this Act;

(d) the maintenance of a list of the members of the Trade Union and adequate facilities for the inspection thereof by the 11 [office-bearers] and members of Trade Union;

(e) the admission of ordinary members who shall be persons actually engaged or employed in an industry with which the Trade Union is connected, and also the admission of the number of honorary or temporary members as 11 [office-bearers] required under section 22 to form the executive of the Trade Union;

[(ee) the payment of a minimum subscription by members of the Trade Union which shall not be less than—

(i) one rupee per annum for rural workers;

(ii) three rupees per annum for workers in other unorganised sectors; and

(iii) twelve rupees per annum for workers in any other case;]

(f) the conditions under which any member shall be entitled to any benefit assured by the rules and under which any fine or forfeiture may be imposed on the members;

(g) the manner in which the rules shall be amended, varied or rescinded;

(h) the manner in which the members of the executive and the other 11 [office-bearers] of the Trade Union shall be 13 [elected] and removed;

[(hh) the duration of period being not more than three years, for which the members of the executive and other office-bearers of the Trade Union shall be elected;]

(i) the safe custody of the funds of the Trade Union, an annual audit, in such manner as may be prescribed, of the accounts thereof, and adequate facilities for the inspection of the account books by the 11 [office-bearers] and members of the Trade Union; and

(j) the manner in which the Trade Union may be dissolved.

8. Registration.—The Registrar, on being satisfied that the Trade Union has complied with all the requirements of this Act in regard to registration, shall register the Trade Union by entering in a register, to be maintained in such form as may be prescribed, the particulars relating to the Trade Union contained in the statement accompanying the application for registration.

9. Certificate of registration.—The Registrar, on registering a Trade Union under section 8, shall issue a certificate of registration in the prescribed form which shall be conclusive evidence that the Trade Union has been duly registered under this Act.

[9A. Minimum requirement about membership of a Trade Union.—A registered Trade Union of workmen shall at all times continue to have not less than ten per cent. or one hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or employed in an establishment or industry with which it is connected, as its members.]

10 Cancellation of registration. —A certificate of registration of a Trade Union may be withdrawn or cancelled by the Registrar—

(a) on the application of the Trade Union to be verified in such manner as may be prescribed;

(b) if the Registrar is satisfied that the certificate has been obtained by fraud or mistake, or that the Trade Union has ceased to exist or has wilfully and after notice from the Registrar contravened any provision of this Act or allowed any rule to continue in force which is inconsistent with any such provision, or has rescinded any rule providing for any matter provision for which is required by section 6;

[(c) if the Registrar is satisfied that a registered Trade Union of workmen ceases to have the requisite number of members:]

Provided that not less than two months’ previous notice in writing specifying the ground on which it is proposed to withdraw or cancel the certificate shall be given by the Registrar to the Trade Union before the certificate is withdrawn or cancelled otherwise than on the application of the Trade Union. State Amendment Section 10A

12. Registered office.—All communications and notices to a registered Trade Union may be addressed to its registered office. Notice of any change in the address of the head office shall be given within fourteen days of such change to the Registrar in writing, and the changed address shall be recorded in the register referred to in section 8.

13 Incorporation of registered Trade Unions. —Every registered Trade Union shall be a body corporate by the name under which it is registered, and shall have perpetual succession and a common seal with power to acquire and hold both movable and immovable property and to contract, and shall by the said name sue and be sued.

31 [ 21A Disqualifications of office-bearers of Trade Unions. —

(1) A person shall be disqualified for being chosen as, and for being, a member of the executive or any other office-bearer of a registered Trade Union if—

(i) he has not attained the age of eighteen years;

(ii) he has been convicted by a Court in India of any offence involving moral turpitude and sentenced to imprisonment, unless a period of five years has elapsed since his release.

(2) Any member of the executive or other office-bearer of a registered Trade Union who, before the commencement of the Indian Trade Unions (Amendment) Act, 1964, has been convicted of any offence involving moral turpitude and sentenced to imprisonment, shall on the date of such commencement cease to be such member or office-bearer unless a period of five years has elapsed since his release before that date.]

[(3) In its application to the State of Jammu and Kashmir, reference in sub-section (2) to the commencement of the Indian Trade Unions (Amendment) Act, 1964 (38 of 1964), shall be construed as reference to the commencement of this Act in the said State.]

[22. Proportion of office-bearers to be connected with the industry.—

(1) Not less than one-half of the total number of the office-bearers of every registered Trade Union in an unrecognised sector shall be persons actually engaged or employed in an industry with which the Trade Union is connected: Provided that the appropriate Government may, by special or general order, declare that the provisions of this section shall not apply to any Trade Union or class of Trade Unions specified in the order. Explanation.—For the purposes of this section, “unorganised sector” means any sector which the appropriate Government may, by notification in the Official Gazette, specify.

(2) Save as otherwise provided in sub-section (1), all office-bearers of a registered Trade Union, except not more than one-third of the total number of the office-bearers or five, whichever is less, shall be persons acutally engaged or employed in the establishment or industry with which the Trade Union is connected. Explanation.—For the purposes of this sub-section, an employee who has retired or has been retrenched shall not be construed as outsider for the purpose of holding an office in a Trade Union.

(3) No member of the Council of Ministers or a person holding an office of profit (not being an engagement or employment in an establishment or industry with which the Trade Union is connected), in the Union or a State, shall be a member of the executive or other office-bearer of a registered Trade Union.]

23 Change of name. —Any registered Trade Union may, with the consent of not less than two-thirds of the total number of its members and subject to the provisions of section 25, change its name.

24. Amalgamation of Trade Unions.—Any two or more registered Trade Unions may become amalgamated together as one Trade Union with or without dissolution or division of the funds of such Trade Unions or either or any of them, provided that the votes of at least one-half of the members of each or every such Trade Union entitled to vote are recorded, and that at least sixty per cent. of the votes recorded are in favour of the proposal.

25. Notice of change of name or amalgamation.—

(1) Notice in writing of every change of name and of every amalgamation signed, in the case of a change of name, by the Secretary and by seven members of the Trade Union changing its name, and in the case of an amalgamation, by the Secretary and by seven members of each and every Trade Union which is a party thereto, shall be sent to the Registrar and where the head office of the amalgamated Trade Union is situated in a different State, to the Registrar of such State.

(2) If the proposed name is identical with that by which any other existing Trade Union has been registered or, in the opinion of the Registrar, so nearly resembles such name as to be likely to deceive the public or the members of either Trade Union, the Registrar shall refuse to register the change of name.

(3) Save as provided in sub-section (2), the Registrar shall, if he is satisfied that the provisions of this Act in respect of change of name have been complied with, register the change of name in the register referred to in section 8, and the change of name shall have effect from the date of such registration.

(4) The Registrar of the State in which the head office of the amalgamated Trade Union is situated shall, if he is satisfied that the provisions of this Act in respect of amalgamation have been complied with and that the Trade Union formed thereby is entitled to registration under section 6, register the Trade Union in the manner provided in section 8, and the amalgamation shall have effect from the date of such registration.

26. Effects of change of name and of amalgamation.—

(1) The change in the name of a registered Trade Union shall not affect any rights or obligations of the Trade Union or render defective any legal proceeding by or against the Trade Union, and any legal proceeding which might have been continued or commenced by or against it by its former name may be continued or commenced by or against it by its new name.

(2) An amalgamation of two or more registered Trade Unions shall not prejudice any right of any of such Trade Unions or any right of a creditor of any of them.

27. Dissolution.—

(1) When a registered Trade Union is dissolved, notice of the dissolution signed by seven members and by the Secretary of the Trade Union shall, within fourteen days of the dissolution be sent to the Registrar, and shall be registered by him if he is satisfied that the dissolution has been effected in accordance with the rules of the Trade Union, and the dissolution shall have effect from the date of such registration.

(2) Where the dissolution of a registered Trade Union has been registered and the rules of the Trade Union do not provide for the distribution of funds of the Trade Union on dissolution, the Registrar shall divide the funds amongst the members in such manner as may be prescribed.

28 Returns. —

(1) There shall be sent annually to the Registrar, on or before such date as may be prescribed, a general statement, audited in the prescribed manner, of all receipts and expenditure of every registered Trade Union during the year ending on the 31st day of 34 [December] next preceding such prescribed date, and of the assets and liabilities of the Trade Union existing on such 31st day of 34 [December]. The statement shall be prepared in such form and shall comprise such particulars as may be prescribed.

(2) Together with the general statement there shall be sent to the Registrar a statement showing changes of 35 [office-bearers] made by the Trade Union during the year to which the general statement refers, together also with a copy of the rules of the Trade Union corrected up to the date of the despatch thereof to the Registrar.

(3) A copy of every alteration made in the rules of a registered Trade Union shall be sent to the Registrar within fifteen days of the making of the alteration.

(3) A copy of every alteration made in the rules of a registered Trade Union shall be sent to the Registrar within fifteen days of the making of the alteration.

Maharashtra —After section 28, insert the following section, namely:— “28-1A. Power of Industrial Court to decide certain disputes. —(1) Where there is a dispute as respects whether or not any person is an office-bearer or a member of a registered Trade Union (including any dispute relating to wrongful expulsion of any such office-bearer or member), or where there is any dispute relating to the property (including the account books) of any registered Trade Union, any member of such registered Trade Union for a period of not less than six months may, with the consent of the Registrar, and in such manner as may be prescribed, refer the dispute to the Industrial Court constituted under the Bombay Industrial Relations Act, 1946, for decision.

(2) The Industrial Court shall, after hearing the parties to the dispute, decide the dispute; and may require an office-bearer or member of the Registered Trade Union to be appointed whether by election or otherwise under the supervision of such person as the Industrial Court may appoint in this behalf or removed, in accordance with the rules of the Trade Union: Provided that the Industrial Court may, pending the decision of the dispute, make an interim order specifying or appointing any person or appointing a Committee of Administration for any purpose under the Act including the purpose of taking possession or control of the property in dispute and managing it for the purposes of the Union pending the decision.

(3) The decision of the Industrial Court shall be final and binding on the parties and shall not be called in question in any Civil Court.

(4) No Civil Court shall entertain any suit or other proceedings in relation to the dispute referred to the Industrial Court as aforesaid, and if any suit or proceeding is pending in any such Court, the Civil Court shall, on receipt of an intimation from the Industrial Court that it is seized of the question, cease to exercise jurisdiction in respect thereof.

(5) Save as aforesaid, the Industrial Court may, in deciding disputes under this section, exercise the same powers and follow the same procedure as it exercises or follows for the purpose of deciding industrial disputes under the Bombay Industrial Relations Act, 1946.” [ Vide Maharashtra Act 3 of 1968, sec. 3 (w.e.f. 1-10-1968 ).] Chapter IIIA Madhya Pradesh. —After Chapter III, insert the following new Chapter, namely:— “Chapter IIIA Approved Unions

28A. Maintenance of list of approved unions .—It shall be the duty of the Registrar to maintain in such form as may be prescribed a list of approved unions.

The Employees’ Compensation Act, 1923 is a kind of social security scheme for the employees of this country. It enables an employee, and in case of death of an employee, his dependents, to get, at the cost of his employer compensation for employment injury.

Objectives

The Object of the Act is to provide for the payment of compensation by employers to their employees for injury caused to them by accident while in employment. If an employee contracts an occupational disease while in employment, it is also treated under the Act as injury caused by accident.

Applicability

It applies all employees irrespective of categories of employees

Every Employer is liable to pay compensation under the Act.

Under the Act injuries are broadly classified into four groups as those resulting in:-

Death,

Permanent Total Disablement,

Permanent partial disablement &

Temporary disablement whether total or partial

Contracted occupational diseases.

The Act provides for different scales of compensation for different kinds of injuries.

Conditions for Receiving Compensation

An employee to whom personal injury is caused by accident is entitled to receive compensation under the Act if the accident arise out of and in the course of his employment. That means the accident must occur while the employee is in employment and it must also be connected with his employment.

The employer is not liable to pay compensation for injury to an employee on following circumstances:-

If the injury does not result in total or partial disablement of the employee for a period exceeding three days;

If the injury does not result in death of the employee and is caused by an accident which is directly attributable to:-

If an employee have been at the time thereof under the influence of drink or drugs

The disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workman, or

The willful removal or disregard by the employee of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of employee.

Age is the completed years of age, of the workman or employee on the last birthday. The last birthday is the latest birthday of the workman which is immediately preceding the due date of compensation liability.

Maternity Leave in India: The 2017 Reform

As per the Maternity Benefit Amendment Bill, 2017, female employees are now entitled to 26 weeks of paid maternity leave, which is an increase from the 12-week leave earlier. This landmark reform aims to support working mothers both physically and emotionally after childbirth. It enables them to fulfil their responsibilities towards their child’s early developmental needs while maintaining job security.

By providing an extended maternity leave period, organisations can foster a progressive work culture with family- friendly policies. This also improves employee retention in the long run. In this article, let’s examine the maternity leave provisions in India in detail and their importance along with benefits.

Understanding Maternity Leave Rules in India

Maternity Leave is a provision made by the Indian Government under the Maternity Benefit Act, of 2017. It safeguards the health and well-being of both pregnant female employees and their newborn babies. The Act defines maternity leave as a period of fully paid leave that expectant and nursing mothers are entitled to take from their employers.

It provides support to working women during and after pregnancy by enabling them to temporarily cease employment duties to care for themselves and their children. Maternity leave rules in India for private companies and public sectors are the same. The leave can be availed by women employees in both types of organisations with 10 or more workers.

The amendment in 2017 significantly improved upon the previous Maternity Act of 1961. It specifies the entitlement of women to different categories of maternity leave and benefits. To be eligible for the benefit, certain criteria regarding employment must be fulfilled.

Eligibility Criteria for Maternity Leave in India

To be eligible for maternity leave in India, certain criteria of maternity leave rules in India must be met. Those include:

1. The employee should have worked for at least 80 days in the 12 months preceding the expected delivery date. This is the foremost norm of maternity leave eligibility in India.

2. Pregnant women, those opting for adoption or experiencing miscarriage, are eligible. Even miscarriage leave for government employees is allowed.

3. Medical Termination of Pregnancy or miscarriage is payable for 6 weeks, or 42 days, from the date of miscarriage.

4. Surrogate/commissioning mothers get 26 weeks’ leave from the date the newborn is handed to adoptive parents.

5. 26 weeks leave for the first two deliveries and 12 weeks for the subsequent deliveries are provided.

6. Full salary is paid during the entire leave duration.

7. Childcare leave and a guarantee to return to the same or equivalent post are provided.

8. The Act applies to all organisations. Maternity leave in private sector is similar to that in the public sector.

9. Additional leaves on medical grounds are also provided for recovery under the maternity leave eligibility conditions.

10. Amenities like hygienic washrooms, comfortable seating, and safe drinking water must be available at the workplace.

Applicability

i. (a) Every factory (as def. in factories Act). & (b) Every other establishment in which 20 or more persons (less than 20 but 10 or more it appropriate govt. notifies) are employed on any day subject to certain exemptions.

ii. Employees’ drawing remuneration of र 21,000/ or more and those who have worked for less than 30 days are not eligible to receive bonus under the Act. (Salary limit of र 3,500/- enhanced to र 10,000/- w.e.f. 1-4 2006 & further enhanced to र 21,000/- w.e.f. 1-4-2015)

iii. Bonus to be paid within eight months from the expiry of the accounting year

Eligibility

i. Every person (other than an apprentice) drawing salary up to र 21,000/- per month.

ii. Every person drawing salary not exceeding र 7,000/or minimum wage per month. He is entitled to get bonus on his entire salary or wage.

iii. Every person drawing salary or wage exceeding र 7,000/ or minimum wage whichever is higher, the bonus payable to him is to be calculated as if his salary or wage were र 7,000/- or minimum wage whichever is higher.

Components of Bonus

Salary or wages includes dearness allowance but no other allowances e.g. over time, house rent, incentive or commission

Benefit

i. Subject to other provisions.-Minimum bonus shall be 8.33% of salary/wages earned or र 100 whichever is higher

ii. If allocable surplus exceeds the amount of minimum bonus, then bonus shall be payable at higher rate subject to a maximum 20% of Salary/Wages.

iii. Computation of bonus is to be worked out as per Schedule I to IV of the Act

iv. Payment of Bonus exceeding र 3,000/to be paid by cheque only in Maharashtra State

Method of Bonus Calculation

1. Calculate Gross Profit in the manner specified in: a. First Schedule, in case of a banking company, or b. Second Schedule, in any other case.

2. Calculate the Available Surplus:- Available Surplus = A + B, where: A = Gross Profit (-) Depreciation admissible u/s 32 of the Income Tax Act (-) Development rebate or investment allowance or development allowance (-) Direct Taxes Payable for the accounting year (calculated as per Sec. 7) (-) Sums specified in the Third schedule. B = Direct Taxes (Calculated as per Sec. 7) in respect of gross profits for the immediately preceding account year (-) Direct Taxes in respect of such gross profits as reduced by the amount of Bonus for the immediately preceding accounting year.

3. Calculate the Allocable Surplus: Allocable Surplus = 60%* of Available Surplus (67% in case of foreign companies).

4. Make adjustment for Set On and Set Off: For calculating the amount of bonus in respect of an accounting year, Allocable Surplus is computed after considering the amount of Set On and Set Off from the previous year. as illustrated in the Fourth Schedule

5. The Allocable Surplus so computed is distributed amongst the employees in proportion to salary or wages

Penal Provision

Imprisonment up to 6 month and or fine up to र 1000/-