Employees earning up to Rs 21,000 per month are covered under the Payment of Bonus Act. The minimum bonus is 8.33% of annual wages (or Rs 100, whichever is higher). The calculation wage is capped at Rs 7,000 per month for bonus purposes even if actual salary is higher. Zoho Payroll can generate the bonus computation report to support statutory compliance.
Bonus payments are added to a pay run as one-time earnings. Go to the pay run, select the employee or group, add a Bonus earning with the relevant amount. The bonus is included in the payslip for that month. TDS is computed on the enhanced gross (regular salary + bonus), which may result in a higher TDS deduction for the bonus month.
All bonus payments are fully taxable as salary income. Zoho Payroll includes the bonus amount in the TDS computation for the month it is paid. For large bonuses, this can significantly increase the monthly TDS. Some companies spread large bonuses across multiple months to avoid a spike in monthly TDS.
Bonus in Zoho Payroll is a supplementary payment processed as a one-time earning in a pay run. It covers both statutory bonus under the Payment of Bonus Act for eligible employees and discretionary performance bonuses. Bonus is fully taxable and Zoho Payroll adjusts TDS computation in the month it is paid.
Statutory bonus under the Payment of Bonus Act is 8.33% of Rs 7,000 per month (the statutory wage ceiling) for employees earning up to Rs 21,000 per month. Zoho Payroll can generate the bonus computation report. The payment is added as a one-time earning in the relevant pay run.
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