 biu no 49 of i"s the payment of bonus bill, 1965 arrangement of clauses clauses1 short title, extent and application 2 definitions 3 establishments to include departments, undertakings and branches 4 computation of gross profits 5 computation of available surplus 6 sums deductible from gross profits 7 calculation of direct tax payable by th£· employer 8 eligibility for bonus 9 disqualification for bonus 10 payment of minimum bonus 11 payment of maximum bonus 12 calculation of bonus with respect to certain employees 13 proportionate reduction of bonus in certain cases 14 computation of number of working days 15 set on and set off of allocable surplus 16 special provisions with resped to certain establishments 17 adjustment of customary or interim bonus against bonus payable under the act 18 deduction of certain amounts from bonus payable under the act 19 time-limit for payment of bonus 20 application of act to establishments in public sector in eel'-taincases 21 recove·ry of bonus due from an employer 22 reference of disputes' under the act  clauses23 presumption about accuracy of balance sheet and profit and loss account of corporations and companies 24 audited accounts of banking companies not to be questioned 25 audit of accounts of employers, not be1ng corporations or co~anies 26 maintenance of registers, records, etc 27 inspectors 28 penalty 29 offences by companies 30 cognizance of offences 31 protection of action taken under the act 32 act not to apply to certain classes of employees 33 act to apply to certain pending disputes regarding payment of bonus 34 effect of laws and agreements inconsistent with the act 35 saving 36 power of e'xemption 37 power to remove difficulties 38 power to make rules 39 application of certain laws not barred 40 repeal and saving the first schedule the second schedule the thmd schedule the fourth schedule  the payment of bonus bill, 1965 a billto provide for the payment of bonus to perso718 employed in certczin establishments and for" matters connected therewith be it enacted by parliament in the sixteenth year of the repubuc of india as follows:- 1 (1) this act may be called the payment of bonus act, 1965 short tide cztcdt idd (2) it extends to the whole of india: except the state of jammu application 5 and kashmir (3) save as otherwise provic!ed in this act, it shrru apply to-(a) every factory; and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year 10 (4) save as otherwise provided in this act, the provisions of this act shall, in relation to a factory or other establishment to which this act applies, have effect in respect of the accounting year commencing on any day in the year 196~ and in respect' of every sub sequent accounting year (5) an esta'blishment to which this act applies under clause (b) of sub-section (3) shall continue to be governed by this act notwithstanding that the number of persons employed therein falls be'low twenty ,- ; ~- j 2 in this act, unless the context otherwise requires,-(1) "accounting year" means-(i) in relation to a corporation, the year ending on the day on which the books and accounts of the aorporatlon are to be closed and balanced;  (ii) in relation to a company, the period in respect of 10 which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not; (iii) in any other j1se-(a) the year commencing on the 1st day of april; or is (b) if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of march, then, at the option of the employer, the year ending on the day on which itr accounts are so closed and balanced: 20 provided that an option once exercised by the emplojer und~r paragrnph (b) of this sub~lause shall not again be exerci~d except with the previous permission in writing of the prescribed authority and upon such conditions as that· authority may think fit; is (2)· uagricultural income" sballhave the same meaning- as in the income-tax act;   - (3) "agriccltural -income-t"ax la~" means any l~w·· for- the time being in force relating to the levy ot· tax on  agrlcu1tutal ~~; ~ (4) "allocable surplus" means-(a) in relation to an employer, being a company (other than a banking company) which has not made the arrangements prescribed under the income-tax act for the declaration and payment within india of the dividends payable out 3~ of its profits in accordance with the provisions of section 194 of that act, sixty-seven per cent of the avaijable surplus in an accounting year; i (b) in any other case, sixty per  cent of such available \ surplus,  1 and includes any amount treated as such under sub-section (~~ of section 34; -: -- (5) "appropriate goveaunent" means-(i) in relation to an establishment in respect of which 14 at '94'  -----s 10 14 of '941 is 10 of 1949· 20 38 of 19s9 25 i of 19s6 a of 191z 30 35 14 of 1963 7 of 1964 ~e appropriate government under the industrial disputes act, 1947, is the central government, the central government; (ii) in relation to any other establishment, the government of the state in which that other establishment is situate; (6) "available surplus" means the available surplus computed under section 5: (7) "award" means an interim or a final determination of any industrial c:lispute (ft!"-ot'·any question relating tberetcj by any labour court, industrial tribunal or national tribunal constituted under the industrial disputes act, 1947, or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a state and includes an arbitration award made under section loa of that act or under that law; (8) "banking company" means a banking company as defined in section 5 of the banking companies act, 1949, and includes the state bank of india, any subsidiary bank as defined in the state bank of india (subsidiary banks) act, 1959, and any other banking institution which may be notified in this behalf by the central government; ,, (9) "company" means any company as defined in section 3 of the companies act 1956 and includes a foreign company within the meaning of section 59-1 of that act; , c4!1) "co-operaiive society" means a society registered or 'deemed to' be registered under the c(h)perative societies act, 1912, or any other law for the time being in force in any state  relating to co-operative societies; (11) "corporation" means any body corporate established by or under any central, provincial or state act but does not include a company or a co-operative society; (12) "direct tax" means-- (a) any tax chargeable under-(i) the income-tax act; (ii) the super profits tax act, 196:t; (iii) the companies (profits) surtax act, 1964; (iv) the agricultural income-tax law; and (b) any other tax which, having regard to its nature or incidence, may be declared by the central government, by notification in the official gazette, to be a direct tax for the purpos~ qf this act; (13) "employee" mean§'iany person (other than an apprentice) employed on a salary or wage not exceeding one thousand and six hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms s of employment be express or implied; (14) "employer" includes-(i) in relation to an establishment which is a factory, the owner or occupie'r of the factory, including the grant of such owner or occupier, the legal representative of a deceased 10 owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the factories act, 1948, the person so named; and (ii) in relation to any other establishment, the person who, or the 3uthority which, has the ultimate control over 15 the &iffairs of the establishment and where  the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent; (15) ilestablishment in private sector" means any establishment other than an establishment in public sector; 20 e (16) "establishment in public sector" means an establishment owned, controlled or managed by-i of 1",-(a) a government company as defined in section 617 of the companies act, 1956; (b) a corporation in which not less than forty percent 2s of its capital is held (whether singly or taken together) by-(i) the government; or (ii) the reserve bank of india; or (iii) a corporation owned by the government or the reserve bank of india; 30 '  63 of 1'4l (17) "factory" shall have the same meaning as in clause (m) of section 2 of the factories act, 1948; en) "gross profits" means the gross profits c'3lculated under iection 4; (1~) "income-tax art" means the income-tax act, 1961; (20) "prescribed" means prescribed by rules made under this act; 5 10 15 20 25 24 of 1947 (21) "salary or wage" means all remuneration (other than remuneration in respect of over-time work) capable of beini expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payuble to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include-(i) any other allowance which the employee 13 for the time being entitled to; (ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or ather articles; (iii) any travelling concession; (iv) any bonus (including incentive, production and attendance bonus); (v) any contribution paid or payable by the employer to any pension fund of provident fund or for the benefit of the employee:otlnder any law for the time being in force; (vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him; (vii) any commission payable to the employee explanation-where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee; (22) words and expressions used but not defined in this act and defined in the industrial disputes act, 1947, shall have the meanings respectively assigned to them in that act 3s 3 where an establishment consists of different departments or eatabuahundertakings or has branches, whether situated in the same place or :ce;:eto in difterent places, ell such departments or undertakings or branches departshall be treated as parts of the same establishment for the purpose :'ne::'kinp of computation of bonus unde·r this act: b~ea 40 provided that where for any accounting year a separate balancesheet and profit ond loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such depar~~!nt or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus imder this act for that year, unless such department or undertaking or branch was, immediately before the commencement of that account- s ing year treated as part of the establishment for the purpose of computation of bonus  compu tatiod afpot profitt 4 the gross profits derived by an employer from an establishment in respect of any accounting year shall-r;-'_,-' (4) in the case of a banking' company, be calculated in the 10 manner specified in the first schedule; (b) in any other case, 'be calculated in the manner specified in the second schedule computation 5 the available surplus in respect of any accounting year shan af available be the gross profits for that year after deducting therefrom the sums is turpiua referred to in section 6 6 the following sums shall be deducted from the gross profits as prior charges, namely:-i sumt deductible from aro •• profits (4) any amount by way of depreciation admissible in accordance with the provisions of sub-section (1) of section 32 of the 20 income-tax act, or in accordance with the provisions of the agricultural income-tax law, as the case may be: provided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 29th may, 1965, and subsisting on that date 25 after deducting from the gross profits notional normal depreciation, then, the amount of depreciation to be deducted under this clause shall, at the option of such employer (such option to be exercised once and within one year from that date) continue to be such notional normal depreciation; 30 (b) any amount by way of development rebate or development allowance which the employer is entitled to deduct from his income under the income-tax act; (c) subject to the provisions of section 7, any direct tax which the employer is liable to pay for the accounting year in respect of 3s his income, profits and gains during that year; (d) such further sums as are specified in r~spect of the employer in the third schedule 1 for the purpose of clause (c) of section 6, any direct tax payableca1culatiea by the employer for any accounting year shall, subject to the follow-~ dtt;blt sing provisions, be calculated at the rates applicable to the income ofb, ; th 1 e  p  ~ e emp oyer for that year, namely:-(4) in calculating such tax no account shall be taken of-10 (i) any loss incurred by the employer in respect of any previous accounting yejj:ind carried forward under any law for ~he time being in force relating to direct taxes; (ii) any arrears of depreciation which the employer il entitled to add to the amount of the allowance for depreciation for any following accounting year or years under subsection (2) of section 32 of the income-tak act; o f 1965 (iii) any exemption ~onfcrred on the employer under section 84 of the income-tax act or of any deduction to which he is entitled under sub-section (1) of section 101 of that act, as in force immediately before the commencement of the finance act, 1965; ao (b) where the employer is a religious or a charltable institution to which the provisions of section 32 do not apply and the whole or any part of its income is exempt from tax under the income-tax act, then, with respect to the income so exempted, such institution shall be treated as if it were a company in which as the public are substantially interested within the meaning of that act; (c) where the employer is an individual or a hindu undivided family, the tax payable by such employer under the income-tax act shall be calculated on the basis that the income derived by 30 him fro~ the establishment ishis only income; (dt where the income of any employer includes any profits and gains derived from the export of any goods or merchandise out of india and any rebate on such income is allowed under any law for the time being in force relating to direct taxes, then, no 35 account shall be taken of such rebate; (e) no account shall be taken of any rebate (other than development rebate or development allowance) or credit or relief or deduction (not hereinbefore mentioned in this section) in the payment of any direct tax allowed under any law for the fune being in ferce relating to direct taxes or under the relevant a~n~al finbl!~~_~ct,for the development of any industry 8 every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this act, provided he has worked in the establishment for not less s than thirty working days in that year ~qualifica 9 notwithstanding anything contained in this act, an lion for  bonus employee shall be disqualified from rece·iving bonus under this act, if he is dismiued from service ifor-(4) fraud; or 10 (b) riotous or violent behaviour while on the plemises of the establishment; or (c) theft, misappropriation or sabotage of any property of the establishment  | payment    ||------------|| nunimum    || itonus    |10 every employer shall be bound to pay to every employee who is has worked in the establishment for all the working days in an accounting year a minimum bonus which shah be four per cent of the salary or wage or-the employee for the accounting year or forty rupees, whichever is higher, whelher there are profits in the accounting year or not: ao provided that where such employee has not completed fifteen years of age at the bf"ginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words "forty rupees", the words "twenty-five rupees" were substituted payment of 11 (1) where in respect of ~my accounting year the allocable 25 luximum bonus surplus exceeds the amount of minimum bonus payable to the  employees under semion 10, the employer shall, in lieu of such mini· mum bonus, be bound to pay to every employee who has worked in the establishment for all the working days in the accounting year bonus which shall be an amount in proportion to the salary or 30 wage of the employee ,for the accounting year subject to a maximum of twenty per cent of such salary or wage (2) in computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that 35 aediol1 :12 where the salary or wage of an employee exceeds seven hun- cilc:uiatim elred and ~ty rupees per mensem, the ·bonus payable to such employee ~~ under section ~o or, as the case may be, under section 11, shall be =: calculated as if his salary or wage were seven hundred and ftfty employeee s rupees per mensem  13 where ~ employee has not worked for all the working days plopordaa-in any accountmg year, the mnount of bonus to which he shall be~:j: of entitled under section 10 or, as the case may be under section 11 boa1ll ill shall be proportionately reduced ' , = 10 14 in computing for the purposes of sections 10, il and 13 the computldcna number ~days on which an employees has worked in' an establish- 0ee d~~ t '   0 ~~ men in any accountmg year, the days on whichcia,  of 1946 15 of 1947 (a) he has been laid oft under an agreement or as permitted by standing orders under the industrial employment (standing orders) act, 1946, or under the industrial disputes act, 1947, or under any other law applicable to the establishment· , (b) he has been on leave with salary or wage; 20 (c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and (d) tn, employee has been 011 maternity leave with salary or wage, during the accounting year shall be included 15 (1) where for any accounting year the allocable surplus exceeds· set 0; -rs 25 the amount of maximum bonus payable to the employees in the ~b': establishment under section 11, then, the excess shall, subject to a lurplul limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting ye1u' and 80 30 on up to and inclusive of the fourth accounting year to be uwised for the purpose of payment of bonus in the manner illustrated in the fourth s'chedule (2) where for any accounting year, there is no available s1,;rplus or the allocable surplus in respect of that year fells short of the 3s amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be 40 carried forward for being set off in the succeeding ~(!counting year and 10 on u" to ~ i   ana mc uslve of the fourth accounting year in the manner jllu'st11ded in the fourth schedule (3) the principle of set on and set off as illustrated in the fourth schedule shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this s act (4) where in any accounting year any amount has been carried forward and set on or set off under this section, then in calculating bonus for the succeeding accountin~ year, the amount of set on or set off carried f<>r~ard from the earliest accounting year shall first 10 ·be taken into account 16 (1) where an establishment is newly set up whether before or after the comme'ilcement of this act, the employees of such establishment shall be entitled to be paid bonus under this act only-spedal ~ =~e:c' atabliahmenll (a) from the accounting year in which the employer derives is profit from such establishment; or (b) from the i)ixth accounting year followin~ the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, 20 whichever is earlier: provided that in the case of any such establishment the employees thereof shall not, save as otherwise provided in section 33, be entitled to be paid bonus under this act in respect of any accounting year prior to the accounting year comme'ncing on any day in the year 2s 1964 explanation i-for the purpose of this section, an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management, name or ownership  explanation n-for the purpose of clause (a), an employer shall 30 not be deemed to tmve derived profit in any accountin2 year unless-(a) he has made provision for that year's depreciation to which he is entitled under the income-tax act or, as the case may be, under the agricultural income-tax law; and (b) the arrears of such depreciation and losses incurred by 3s him in respect of the establishment for the previous accounting years have been fully set off against his profits explanation i1i-for the purpose of clause (b), sale of the goods produced or manufactured during the course of the trial run of ady factory or of the prospecting stage of any mine or an oil-field shall not be taken into consideration and where any question arises with regard to such production or manufacture, the decision of the appro-  _  priate government, made after giving the parties a reasonable oppor-5 tunity of representing the case, shall be final and shall not be called in question by any court or other authority (2) the provisions of sub-section (1) shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments: 10 provided that if an employer in relation to an existing establishment consisting of different departments or undertakings or branches (whether or not in the same industry) set up at difterent periods has, before the 29th may, 1965, been paying bonus to the employees j of 1965· of all such departments or undertakings or branches irrespective is of the date on which such departments or undertakings or branches were set up, on the basis of the consolidated profits computed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this act to the employees of all such de·partments or 20 undertakings or branches (whether set up before qr after that date) on the basis of the consolidated profits· computed as aforesaid 1'7 where in any accounting year-(a) an employer has paid any puja bonus or other customary ~d=:, 25 bonus to an employee; or ~n~terim (b) an employer has paid a part of the bonus payable under abopidit nus paythis act to an employee before the date on which such able under bonus becomes payable, the act then, the employer shall be entitled to deduct the amount of bonus 30 so paid4rom the amount of \wnus payable by him to the employee under this act in respegt of that accounting year and the employee shall be entitled to receive only the balance 18 where in any accounting year, an employee is found guilty of ~= misconduct causing financial loss to the employer, then, it shall be amounta 35 lawful for the employer to deduct the amount of loss from the =,toaui amount of bonus payable by him to the employee· under this act under ihe in respect of that accounting year only and the employee shall be act entitled to receive the balance, if any 1 ime-limit 19 all amounts payable to an employee by way of bonus' under !,ir :::=~nt this act shall be paid in cash by his employer-(a) where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month of the settlement or award 'in respect of such dispute; 5 (b) in any other case, within a period of eight months from the close of the accounting year: provided that the appropriate government or such authority ,as the appropriate government may specify in this behalf may, upon an application made to ir'-'bythe employer and for suflici8llt reasons, 10 by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years applicati\ln 20 (1) if in any accounting year an establishment in public secof act to establish- tor sells any goods produced or manufactured by it or renders any is menta in services, in competition with an establishment in private sector, and public sector in the income' from such sale or services or both is not less than twenty certain per cent of the gross income of the establishment in public sector cases for that year, then, the provisions of this act shall apply in relation to such establishment in puillic sector as they apply in relation to a 20 like establishme,nt in private sector (2) an establishment in public s'ector to which this act applies shall continue to be governed by this act notwithstanding that in any subsequent accounting year its income from the sale of goods produced or manufactured by it or from services ren- :zs' dered or from both, in competition with an establishm€11t in private sector, falls below twenty per cent of its gross income for that accounting ~ear recovery c:f boaui dllf' from an employer 21 where any money is du~ to an employee by way d bonus from his employer under a settlement or an agreement or award, the 30 emplbyee himself or any dther person authorised by him in writing in this be'half, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate government for the recov£'ry of the money due to him, and if the appropriate 35 government or such authority as the appropriate government may specify in this behalf is satisfied that any' money is so due, it shall issue a certificate for that amount to the collector who shall proceed to recover the same in the same manner as an arrear of land revenue: provided that every such application shall be made within one year from the date on which the money became due to the employee from the employer: 0_ _ _ "  provided further that any such application may be entertained 5 after the expiry of the said period of one year, if the appropriate government is satisfied that the applicant had sufficient cause for not making the application within the said period expzanation-in this section and in sections 22, 23, 24 and 25,  "employee" includes a person who is entitled to the payment of bonus 10 under this act but who is no longer in employment 22 where any dispute arises between an employer and his reference i  h   of dillputn emp oyees wit respect to the bonus payable under this act or with under the respect to the application of this act to an establishment in public act sector, then, such dispute shall be deemed to be an industrial dis-14 ac 1947 15 pute within the meaning of the industrial disputes act, 1947, or of any corresponding law relating to investigation and settlement of industrial disputes in force in a state and the provisions of that act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly 14 of 1947 i of 1956 20 23 (1) where, during the course of proceedings before any arbi- preumpdoll trator or tribunal under the industrial disputes act, 1947, or under :~t :raany corresponding law relating to investigation and settlement of ~~~~ industrial disputes in force in a state (hereinafter in this section f:'1t ad and in sections 24 and 25 referred to as the "said authority") to which of~=t 25 any dispute of the nature specified in section 22 has tionl __ ~ been referred, the balance-sheet and the profit and loss account of an comp~ employer, being a corporation or a company (other than a banking company), duly audit€d by the comptroller and auditor-general of india or by auditors duly qualified to act as auditors of companies 30 under sub-section (1) of section 226 of the companies act, 1956, are produced before it, then, the said authority may presume the statements and particulars contained m such balance-sheet and profit and loss account to be accurate and it shall not be necessary for the corporation or the company to prove the accuracy of such statements 35 and particulars by the filing of an aftldavit or by any other mode: provided that where the said authority is satisfied that the statements and particulars contained in the balance-sheet or the proftt and loss account of the corporation or the company are not accurate, it may take such steps as it thinks necessary to find out the accuracy 40 of such-statements and partioulars (2) when an application is made to the -said authority by any trade union being a party to the dispute or where there is no trade union, by the employees being a  party to the _ dispute, requiring any clarification relating to any item in the balance-sheet or the profit and loss account, it may, after satisfying s itself that such clarification is necessary, by order, direct the corporation or, as the case may be, the company, to furnish to the trade union or the employees such clarification within such time as may be specified in the direction and the corporation or, as the case may be, the company, shall comply with such direction 10 audited accounts of bankinl compames not to be questioned 24 (1) where any dispute of li'"':rthe nature specified in section 22 between an employer, being a banking company, and its employees has been referred to the said authority under that section and during the course of proceedings the accounts of the banking company duly audited are produced before it, the said authority is shall not permit any trade union or employees to question the correctness of such accounts, but the trade union or the employees may be permitted to obtain from the banking company such information as is necessary for verifying the amount of bonus due under this act 20 (2) nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any informition which the banking company is not compelled to furnish under the provisions of section 34a of the banking companies act, 1949 10 of i,, audit of 25 (1) where any dispute of the nature specified in 25 accounts of section 22 between an employer, not being a corporation or a company, ~~p~;, and his employees has been referred to the said authority under that corporations section and the accounts of such employer audited by any auditor or campania duly qualified to act as auditor of companies under sub-section (1) of section 226 of the companies act, 1956, are produced before the 30 i of 19" said authority, the provisions of section 23, shall, so far as may be, apply to the accountsoso audited ' (2) when the said authority finds that the accounts of such employer have not been audited by any such auditor and it is of opinion that an audit of the accounts of such employer is necessary 35 for deciding the question referred to it, then, it may, by order, direct the employer to get his accounts audited within such time as may be specified in the direction or within such further time as it may allow by such auditor or auditors as it thinks fit and thereupon the ~101er sh~l comply with such direction (3) where an employer fails to--get the accounts audited under sub-section (2) the said authority may, without prejudice to the provisions of section 28, get the ac~~~ts audited by such auditor or auditors as it thinks ftt s (4) when the accounts are audited under sub-section (2) or subsection (3) the provisions of section 23 shau, so far as may be, apply to the accounts so audited (5) the expenses of, and incidental to, any audit under sub-section (3) (including the remuneration of the auditor or auditors) shall be 10 determined by the said authority (which determination shall be final) and paid by the employer and iltitefault of such payment shall be recoverable from the employer in the manner provided in section 21 26 every employer shall prepare and maintain such registers, main~ records and other documents in such form and in such manner as ~co~!~~: i s may be prescribed 27 (1) the appropriate government may, by notification in the lnapecton official gazette, appoint such persons as it thinks fit to be inspectors "or the purposes of this act and may define the limits whhin which they shall exercise jurisdiction 20 (2) an inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this act has been complied with-2s 30 3,5 (a) require an employer to furnish such information as he may consider necessary; (b) at any reasonable time and with such assistance, if any, as he thinks fit, enter any establishment or any premises connected therewith and require anyone found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment; (c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer, his agent or servant or any other person found in charge of the establishment or any premises connected therewith or any person whom the inspector has reasonable cause to believe to be or to have been an employee in the establishment; (d) make copies of, or take extracts from, any book, register or other document maintained in relation to the establishment: (e) exercise such other powers as may be prescribed (3) evely idspector shall be deemed to be--a pubue servant within the meaning of the indian penal code (4) any person required to produce any accounts, book, register or other docwnent or to give information by an inspector under sub-section (1) shall be legally bound to do so (5) nothing contained in this section shall enable an inspector to require a banking company to furnish or disclose any statement or information or to produce, or give inspection of, any of its books of account or other documents, which a banking company cannot be compelled to furnish, disclose, produce q~ ~:ve inspection of, under 10 the provisions of section 34a of the banking companies act, 1949 10 of 1'4' 28 if any person-"dllly (4) contravenes any of the provisions of this act or any rule made thereunder; or (b) to whom a directiun is given or a requisition is made is under this act fails to comply with the direction or requisition, he shall be punishabl~ with imprisonment for a term which may extend 10 six months, or with fine which may extend to one thousand rupees, or with both ao i offedces by companies 29 (1) if the person committing an off~!nce under this act is a company every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the compdny, shall be deemed to be guilty of the offence and shall be liable to be proceeded as aaainst and punished accordingly: provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diliience to prevent the commissioa of such offence ,0 (2) notwithstanding anything contained in sub-section (1), where an offence under ,this act has 'been committed by a company and it is proved that· the offence has been committed with the conse~t or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, iuch 3$ director, manager, secretary or other officer shall also be deemed to be guilty of that offence end shall be liable to be proceeded against and punished accordingly e~lanation-for the purposes of this seetion,-(a) "company" means any body corporate and finn or other association of individuals; and ineludel a (b) "director", in relation to a finn, means a partner in the ftnn 30 (1) no court shall take co~izance of any offence ijunishable cosn'uace d th· a  of g«cacea un er is ct save on complaint made by or under the authority of the appropriate government (2) no court inferior to that of a presidency magi!;trate or a magis-10 trrte of the first class shall try any ~e punishable under thi act i  ·~'---r--l 31 no suit, prosecution or other le~al proceeding shall lie against protectioa the government or any officer of the government for anythfnl{ which of ictioa is in good faith done or intended to be done in pursuance of this :: ~d' is act or any rule made thereunder 32 n athing in this act shall apply to-act not to (i) employees employed by any insurer carryin,rz cn general :~a to insurance business and the employees employed by the life ciuicl of insurance corporation of india; employeea 20 44 01 19s8 (ii) seamen as defined in clause (42) of section 3 of the mer· chant shipping act, 1958: 9 or 1941 (iii) employees registered or listed under any scheme made under the dock workers (regulation 01 employment) act, 1948, and employed by registered or listed employers; __ (tv) employees employed by an establishment engaged in any industry carried on by or under the authority nf any department of the central government or a state government or a loeal authority; (v) employees employed by-30 (a) the' indian red cross society or any other institution of a like nature (including its branches); (b) universities and other educational institutions; (e) institutions (inc1udin~ hospitals, chambers of commerce and social welfare institutions) pstablished not for 35 purposes of profit; (vi) employe~s emplo;ved throu~h contractors on building eperattodr (vii) employees-(a) who have e'ntered before the 29th may, 1965, into any agreement_ gr settlement with their employers for pay-3 of 1~6s ment of an annual bonus linked with production or productivity in lieu of bonus based on profits; or s  (b) who hove (·ntered or may enter after that date into any agreement or settlement with their employers for payment of such annual bonus in lieu of the bonus payable under this act for the period for which such agreement or settlement is in 10 operation; (viii) employees employed by the reserve bank of india' (i,x) employees employed by-' (a) the industrial finance corporation of india: (b) any financial corporation established under section is 3, or ally joint financial corpo:ation established under section 3a, of the state financial corporations act, 1951; 63 of 19,51 20 ee) the deposit insurance corporation; (d) the agricultural refinance corporation: (e) the unit trust of india; and (f) the industrial development bank of india; (x) employees employed by any establishment in public sector, save as otherwise provided in this act to to 33 where·, immediately before the 2nd september, 1964, any industrial dispute regarding payment of bonus relating to any 25 accounting year, not be~ng an accounting year earlier than the accounting year ending on any day in the year 1962, was pending be{ore "yj:dent of th~ appropriate government or before any tribunal or other authority under the industrial disputes act, 1947, or under any correos-j4 of 1947 ponding law relating to investigation and settlement of industrial 30 disputes in a state, then, the bonus shall be payable in accordance with the' provisions of this act in relation to tb,eaccounting year to which the dispute relate; and any subsequent accounting year, notwithstanding that in respect of that subsequent accounting year no such dispute was pending 35 explanation-a dispute shall be de-emed to be pending before the appropriate government where no decision of that government on any application made to it under the said act or such corresponding law for reference of that dispute to adjudication has been made or where having received the report of the conciliation officer (by 40 whatever designation known) under the said act or law, the appropriate government has not passed any order refusing to make such reference 34  (1) save "as-otherwiseprovided in this section, the provisions etteet 01 of this act shall have effe-ct notwithstanding anything inconsistent law, and s the~ewith contained in any other law for the time being in force ~!~-:-in or in the terms of any award, agreement, settlement or contract of conlisservice made before the 29th may, 1965 tent with (2) if in resped of any accounting year the total bonus payable to all the emp~oyees in any establishment under this act is less 10 than the total bonus paid or payable to all the employees in that establishment in respe-ct of the base year undejl lmy award, agree--ment, settlement or contract of service, then, the employees in the establishment shall be paid bonus in respect of that accounting year as if the allocable surplus for that accounting' ye-ar were an amount 15 which bears the same ratio to the gross profits of the said accounting year as the total bonus paid or payable in respect of the base year bears to the gross profits of the base year: provided that nothing contained in this sub-section shall entitle any employee- to be paid bonus exceeding twenty per cent of his 20 salary or wage for the accounting year: provided further that if in any accounting year the allocable surplus computed as aforesaid exceeds the amount of'maximum bonus payable to the- employees in the establishment under the first proviso, then, the provisions of section 15 shall, so far as may be, apply 25 to such excess explanation i-for the purpose of this sub-section, the total bonus in respect of any accounting year shall be deemed to be less than the total bonus paid or payable in respect of the base year if the ratio of bonus payable in respect of the accounting year to the 30 gross profits of that year is less than the ratio of bonus paid or payable in respect of the base year to the gross profits of that year  e:p1411ation ii-in thi~ sub-seetion,-(a) "base ye-ar" means--35 \4 of 1947 40 (i) in a case where immediately before the 2nd september, 1964, any dispute of the nature specified in section 33 was pending before the appropriate government ~r before any tribunal or other authority under the industrlal disputes act 1947, or under any corresponding law relating to investigation ~d settlement of industrial disputes in a state, the accounting year immediately preceding the accounting year to which the dispute relates; (ii) in any other case, the period of twelve montha immediately preceding the accounting year in which this act becomes applicable to the establishment ,  (b) "gross profits" in relation to the base year or, as the case may be, to the accounting year, means gross profits as reduced 5 by the direct taxes payable by the employer in respect of that year   (3) nothing contained in this act shall be construed to preclude employees employed in any establishment or class of establishments from entering into agreement with their employer for 10 granting them an amount of bonus under a formula which is diff£~ rent from that under this act saving 35 nothing contained in this act shall be deemed to a1!ect the provisions of the coal mines provident fund and bonu3 schemes act, 1948, or of any scheme made thereunder 1546 of 198 power of exemptiod 36 if the appropriate government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this act thereto, it may, by notification in the official gazette, exempt for such period ao as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of £stablishments from all or any of the provisions of this act pawer to remove difficulties - 37 if any diftlculty or doubt arises in giving effeet to· the provisions of this act, the central government may, by order published 25 in the official gazette, make such provision, not inconsistent with the purposes of this act as appears to it to be necessary or expedient for the removal of the difficulty or doubt; and the order of the central government, in such cases, shall be flnal p 38 (1) the central government may make rules for the purposes 30 ,= : of carrying into effect the provisions of this act f (2) in particular, and without prejudice to the generality of lhf'  oregoldg power, such rules may provide for-(ai the authority for granting permission under the provl8o to sub-clause (iii) 01 clause (1) of section 2; , (b) the preparation of registers, records and other documents and the form and manner in which such registers, records and documents may be maintained under section 26; (c) the powers which may be exercised ~&l inspector under clause (e) of sub-section (2) of section 27; (d) any other matter which is to be, or may be, prescribed io (3) every rule made under this section shall be laid as soon as may be after it is made, before each house of parliament while it is in session for a total period of thirty days, which may be comprised in one session or in two successive sessions, and if before the expiry 15 of the session in which it is so laid or the session immediately following, both houses agree in making any modification in the rule or both houses agree that therule should not be made, the rule shall thereafter heve effect only in such modified form or be of no eftect, es the case may be; so, however, that any such modification or annul-20 ment shall be without prejudice to the validity of anything previously done under that rule 14 of 1947 39 save as otherwise expressly provided, the provisions of this arc~jod act shall be in addition to and dot in derogation of the indus- ~_ certlaa 1a _wioi trial disputes act, 1947, or any corresponding w relatmg to mves- buzed is tigation and setuement of industrial disputes in force in a state 3 of 196" '0 (1) the payment of bonus ordinance, 1965, ta hereby repeal- repeal ad edt saviai (2) notwithstanding such repeal, anything done or any action taken under the said ordinance shall be deemed to have been done or taken under this act as if this act had commenced on the 30 29th may, 1965  the first schedulb [s, section 4 (a)] computation op gross propmaccountiilg year mding ••••••••••• s amount of amount of remarks sub-items main items item no particulars ig rs 10 -i net profit as shown in the profit and loss account after making usual and necessary provisions 2 add back provision for : (a) bonus (b) depreciation f 5 (c) development rebate su foot-note (i) reserve (d) any other reserves s" foot-note (i) total of item no 2 ra 3 add bacia also : ao a $, foot-note (i) (a) bonus paid in l'cipect of previous account-, ina years (b) donations in excess of the amount admis-25 sible for income-tax ,----- --'-' ----------,---where the profit subject to taxation is shown in the proftt and lon account and the provision made for taxes on incom~ is shown, the actual provi,ion for tuel on income ,ball be deducted from the profit -----------__-----item particulars ~ remarks _______________ no _  amount of amount of sub-items main items rs rs $, foot-note (i) 5 jq (c) capital expenditure (other than capital expenditure on scientific research : which is allowed as a deduction under any law for the time being in force relating to direct taxes) and capital losses (other than losses on sale of capital assets on which depreciation has been allowed for income-tax)  20 (d) any amount certified by the reserve bank of india in terms of sub-section (2) of section 3¢ of the banking companies act, 1949· 10 of 1949 25 ( e) losses of, or expenditure re1stmg to, any business situated outside india total of item no·3 rs 30 - 4 add also income, pr<?fitsd or gains (if any) credlte directly to published or disclosed reserves, other than-3' (i) capital receipts -li!'d capital profits (mcluding profits· on the sale of capital -----------------item _no particulars amount of amount of remarks sub-items main items rs ri assets on which depreciation has not been allowed for income-tax) ; (ii) profits of, and receipts relating to, any business situated outside india ; (iii) income of forei~ banking companies from investments outside india | net    | total    | of        ||--------|----------|-----------|| 4      |          |           || rs    |          |           || rs    |          |           || s     |          |           || total  | of       | item nos || i,     | 2,       |           || 3      |          |           || and 4 |          |           |6 deduct: (a) capital receipts and capital profits (other than profits on the sale of assets on which depreciation has been allowed for income-tax) (b) profits of, and receipts relating to, any business situated outside india (c) income of foreign banking companies from investments outside india (d) expenditure or losses (if any) debited directly to published or disclosed reserves, other than-(a') capital expenditure and capit~1 losses (other item ------- no particulars amount of amount of remarks sub-items main items ra ri s 10 see foot-note (3) is 20 s" foot-note (2) 2s 30 see foot-note (2) 3s than losses on sale of capital assets on which depreciation has not been allowed for income-tax) ; (ii) losses of any business situated outside india (e) in the case of foreign banking companies proportionate administrative (overhead) expenses of head office allocable to indian business (j) refund of any excess direct tax paid for previous accounting years and excess provision, if any, of previous accounting years, relating to bonus, depreciation, or development rebate, if written back (g) subsidy, if any, received from gmrernment or from any body corporate established by any law for the time being in force -  , , i total of item no6 rs 40 rs 7 gross profits" for purposes"of bonus (itein no s minus item no6) poo'-""~ (1) if, and to tbe eatent, chalked to profit and loss accoudl (2) if, and to the atcnt, credited to profit and lou acicounl (3) in the proportion of indian gross profit (item nil 7) to tow world grosl projlt (is per codioudatcd profit and lou kount, dfuated is in item no3 above oo1y)  the second schedule [su section 4 (b)] computation of gross profits| a                       |                  | y        ||-------------------------|-------------------|----------|| ccountmg ear en mg      |                   |         || item                    |                   |          || no                     |                   |          || particulars             | amount            |          || of                      | amount            | of       || sub-items               | main items        |          || remarb                  | ,                 |          || rs                     |                   |          || &s                     |                   |          || i                      |                   |          || net profit              |                   |          || as                      |                   |          || per                     |                   |          || profit and              |                   |          || loss                    |                   |          || account                |                   |          || 2                      |                   |          || add                     | back              |          || provision for :         |                   |          || 10                      |                   |          || (a)                     |                   |          || bonus                  |                   |          || (b)                     |                   |          || depreciation           |                   |          || is                      |                   |          || (c)                     |                   |          || direct taxes, includ-   |                   |          || ing                     |                   |          || the provision (if       |                   |          || any)                    | for               | previous || accounting years       |                   |          || see foot-note           |                   |          || (i)                     |                   |          || (d)                     |                   |          || development rebatel     |                   |          || development allow-      |                   |          || ance reserve           |                   |          || (e)                     |                   |          || any                     |                   |          || other reserves         |                   |          || su                      |                   |          || foot-note               |                   |          || (i)                     | 20                |          || total                   | of                | item     || no2                    |                   |          || rs                     |                   |          || su                      |                   |          || foot-note               |                   |          || (i)                     |                   |          || 25                      |                   |          || 3                      | add               | back     || also :                  |                   |          || (a)                     |                   |          || bonus paid in respect   |                   |          || of                      | previous account- |          || ing                     |                   |          || years                  |                   |          || (b)                     |                   |          || donations               |                   |          || in                      |                   |          || excessof               |                   |          || the amount admis-       |                   |          || sible for income-tax   |                   |          || 35                      |                   |          || (c)                     |                   |          || any                     |                   |          || annuity due, or         |                   |          || commuted value          | of                |          || any annuity             | paid,           |          || under the               | provisions        |          || of                      | section           |          || 280d                    |                   |          || of                      | the               |          || income-tax act dur-     |                   |          || ing the                 | accounting        |          || year                   |                   |          || ----------------------- |                   |          || -----------------       |                   |          |remarks item no particulars amount of amount of sub-items main items rs ri su foot-dote (i) s 10 15 (d) capital expenditure (other than capital expenditure on scientific research which is allowed as a deduction under any law for the time being in foree-··· relating to direct taxes) and capital losses (other than losses on sale of capital assets on which depreciation has been allowed for income-tax or agricultural income-tax) 20 (e) losses of, or expenditure relating to, any business situated outside india total of item no3 rs 4 add also income, profits or gains (if any) credited directly to reserves, other than--35 (i) capital receipts and capital profits (including profits on the sale of capital assets "on which depreciation has not been allowed for income-tax t' or agricultural incometax); (ii) profits of, and receipts relating lito, any ;pusiness)i~­ted outside indja; item no particulars amount of amount of remarb 8ub-items main items rs rs (iii) income of foreign concerns from investments outside india net total of item;no 4 rs rs s total of item nos i, 2, 3 and 4 6 deduct: (a) capital receipts and capital profits (other than profits on the sale of assets on which depreciation has been allowed for income-tax or agricultural income-tax) (b) profits of, and receipts s •• foot-note (2) 20 relating to, any business situated outside india (e) income of foreign concerns from investments outside india (d) expenditure or losses (if any) debited directly to reserves, other than-(i) capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not been allowed for  ----- ---------------item no particulars amount of amount of remarb lub-items main items ri ri s or income-tax agricultural income-tax) ; (ii) losses of any business situated outside india ic sit foot-note (3) is (,) in the case of foreign concerns proportionate administrative (overhead) expenses of head office allocable to indian b1,lsiness s, foot-dote (2) 2s (f) refund of any direct tax paid for previous accounting years and excess provision, if any, of previous accounting years relating tf) bonus, depreciation, taxation or development rebate or developnnent allowance, if written back (g) subsidy, if any, received from governnnent or fronn any body corporate established by any law for the tiine being in force 3s total of item no6 rs 7 gross profits for purposes of bonus (item no s rs minus itclil no6) -------------------------poot·notls--(i) if, and to the extent, charged to profit and loss account () if, and to the extent, credited to profit and loss account (3} in the proportion of indian gross profit (item no7) to total world groll profit (as per con~lidated pro"t and loss ac:c:ount, adjusted  ill item no 2 ,bove only)  the third schedule [s" section 6 (d)]item category of employer no further sums to be deducted ----------------------------------------------(i) ----------- ----- ----------i company, other than a banking company (i) the dividends payable on its preference share capital for the accounting year calculated at th e actual rate at which such dividends are payable ; ~ q (ii) 8" per cent of its paid up equity share capital as at the com· mencement of the accounting year; (iii) 6 per cent of its reserves shown in its balance-sheet u at the i, commencement of the accounting year, including any profita carried forward from the previous accounting year : provided that where the employer  20 a foreign company within the meaning-of section s91 of the compania act, 19s6, the total amount to be lor 195'-deducted under this item shall be 8·s per cent on the aggregate of2s the value of the net fixed assets and the current assets of the company in india after deducting the amount of its current liabilitia (other than any amount shown u 30 payable by the company to ita head office whether towards any advance made by the head office or otherwise or any interest paid by the company to its head 35 office) in india banking company - (i) the dividends payable on ita preference share capital for the accounting year calculated at the rate at which such dividends are 40 payable; (ii) 7' 5 per cent of its paid np equity share capital u at the commencement of the accounting year; 4s ------__------------------ further i1ddi to be deducred(iii) s per cent of its reserves mown in its balance-sheet u at the commencement of the accountinl year, including any profits carried forward from the previous accounting year ; (n,) any sum which in respect of the ~unting year, is tradaferred by it-(a) to a reserve fund under 1ubsection (1) of section 17 of the banking companies act 1949 j or (b) to any reserves in india in pursuance of any direction or advice liven by the reserve bank of india, whichever is higher : provided that where the banking c0mpany is a foreign company within the meaning of section 591 of the companies act, 19s6, the amount to be deducted under this item ahall be the agglqate of-() the dividends payable to its preference shareholders for the accounting year at the rate at which such dividends are payable on such amount u beara the l8dle proportion to its total preference share capital u its total workinl funds in india bear to its total world workida funds ; (ia) 7·5 per cent or such amount u bears the i8ide proportion to ita total paid up equity share capital u its total workinl funds in india bear to its total wid working funds ; (iii) 5 per cent of loch ~t , bears the same proportlod to its total discloled reservei u its total working funds in india bear to ita total world workina fundi; purther iuid tg be deducted item --no ----cateaory of employer ---------(i) (itj) any sum which, in respect of the accounting year, ii deposited by s it with the reserve bank of india under sub-clause (ia1 of clause (6) of sub-se,ction (3) of ~on ii of 10 of 19, the banking companies act, 1949, not esci'ecjing the amount 10 -required under the iforesaid provision to be ic deposited ('1 8· s per cent of ki paid up capital as at the c::ommalcc'jdellt 01 is the accounting year ; (n) 6 per cent of ill reserves, it any, shown in ill balance-sheet u at the commencement of the accounting year, including any profits carried forward from the so previous accounting year • co-gperative lociety (i) 8· s per cent of the capital invested by such society in its establishment 81 evidenced £rom its boob of accounts at the commencement 25 of the accounting year ; (n) such sum 81 has been carried forward in respect of the accounting year to a reserve fund under any law relating to c:o-operative locieties 30 for the time beina in forc:e s any other employer not 8· s per cent ot the capital invested falling under any of by him in hjj establishment u the-ccorcsaid categories evidenced from hjj boob of accounll   at the commencement of the 35 accounting year :  ~ provided that where iuch employer ii a ', person to""-whom oulpter xxiia ' of the income-tax  act appues, the annuity depolit payable by him under 40 the proviaiodl of that cbapta"ciurlda i the accountina year ihall alio be deducted :  further iuidi to be deduc:te4item no catqory of employer -(i) (3) 5 10 15 provided further that where iuch employer is a firm, an amount equal to 25 per cent of the ifois profitl derived by it from the establishment in respect of the accounting year after deducting depreciation in accordance with the provisiodi of clause (a) of section 6 by way of remuneration to all the partnera taking part in the conduct ofbuainet of the establishment ihall also be deducted, but where the partnership agreement, whether oral or written, provides for the payment of remuneration to any such partner, and-(i) the total remuneration payable to all such partners is less than the laid 2s per cent, the amount payable, subject to a maximum of forty-cight thousand rupees to each such partner ; or 25 (ii) the total remuneration payable to all iuch partncl'l is higher thad the ibid 25 per cent, such percentage, or a lum calaalated at the rate of forty-cight thousand rupees to each such partncr', whichever is less, ihall be deducted under this proviso : provided also that where such apployer is an individual or a hindu undivided famlly,-3s 'i(itan~amount equal to 25 per cent of :/the gross profia derived by ~ l, employer from the establiah- ment in respect of the acc:ountina r- tear after deducting depredatioa r in accordance with the proviliodi of clause (411) of lediod 6 ; 01' (ii) lorty-cilht thouiidd rupem whichever ii lea, by way of  dlwleration to iuda 1idp1oja ihalj il1o be deduded | item                                                         | no                          ||--------------------------------------------------------------|------------------------------|| category                                                     |                              || of                                                           |                              || employer                                                     |                              || further                                                      |                              || iwdi                                                         |                              || to                                                           |                              || be                                                           |                              || deducted                                                     |                              || (i)                                                          | (2)                          || (3)                                                          |                              || - - -                                                        | 6                           || any                                                          | employer                     || falling                                                      |                              || under                                                        |                              || in                                                           |                              || addition                                                     |                              || to                                                           |                              || the                                                          |                              || iwdi                                                         |                              || deductible                                                   |                              || item                                                         | no                          || i                                                            |                              || or                                                           |                              || item                                                         |                              || under                                                        |                              || in)'                                                         |                              || of                                                           |                              || the                                                          |                              || aforesaid ieems,                                             |                              || no3                                                         | or                           || iuch iuidi u                                                 |                              || are                                                          | required                     || to                                                           |                              || be ,                                                         |                              || item                                                         | no                          || s                                                            |                              || and                                                          |                              || being                                                        |                              || a                                                            | appropriated                 || ,y                                                          |                              || the                                                          |                              || lic:ediee                                                    |                              || in                                                           |                              || rei-                                                         |                              || licensee                                                     |                              || within                                                       |                              || the                                                          |                              || mean-                                                        |                              || pect                                                         |                              || of                                                           |                              || the                                                          |                              || ac:countina                                                  |                              || year                                                         |                              || to                                                           |                              || a                                                            |                              || ing                                                          |                              || of                                                           | the                          || electricity                                                  |                              || reserve                                                      |                              || under                                                        | the                          || to                                                           |                              || supply                                                       | act,                         || 1948                                                        |                              || that                                                         |                              || act                                                          |                              || ahau                                                         |                              || also                                                         |                              || be                                                           |                              || deducted                                                    |                              || 54                                                           | t6                           || ----------------------------------------------------------- |                              || e~lanation-the                                              |                              || expression "reserves" occurring                              |                              || in                                                           |                              || column (3)                                                   |                              || 10                                                           |                              || against                                                      | item                         || 2(iii)                                                       |                              || and                                                          |                              || 3(ii)                                                        |                              || shall                                                        |                              || dot                                                          |                              || include                                                      | any                          || set                                                          | apart                        || t                                                            |                              || i)                                                           |                              || payment of any direct                                        |                              || tax                                                          |                              || which,                                                       |                              || according                                                    |                              || to                                                           |                              || the                                                          |                              || balance-sheet, would                                         |                              || be                                                           |                              || payable;                                                     |                              || (ii)                                                         |                              || meeting any depreciation admissible                          |                              || in                                                           |                              || accordance                                                   |                              || with                                                         |                              || i,                                                           |                              || the provisions of clause                                     |                              || (a)                                                          |                              || of section                                                   |                              || 6;                                                           |                              || liii)                                                        |                              || payment of dividends which have been declared,               |                              || but                                                          |                              || shall                                                        |                              || include-                                                     |                              || (a)                                                          |                              || any amount, over and above the amount referred               |                              || to                                                           |                              || in                                                           |                              || clause                                                       |                              || (i)                                                          |                              || of                                                           |                              || this                                                         |                              || explanation,                                                 |                              || set apart as specific reserve for                            |                              || the                                                          |                              || ao                                                           |                              || purpose of payment of any direct tax;                        |                              || and                                                          |                              || (b)                                                          |                              || any                                                          | amount set apart for meeting || any                                                          |                              || depreciation                                                 |                              || id                                                           |                              || excess of the amount admissible                              |                              || in                                                           |                              || accordance                                                   |                              || with                                                         |                              || the                                                          |                              || provisions                                                   |                              || of clause                                                    |                              || (a)                                                          |                              || of section                                                   |                              || 6                                                           |                              |tim fourth schedulb (su section is) in this schedule, the total amount of bonus equal to four pel' cedt ol t he annual salary or wage payable to all the employees is usumed to be lb so,ooo accordingly, the maximum bonus to which all the employes arc entitled to be paid (twenty per cent of the annual salary or wage at u 30 the employees) would be ri 2,so,ooo year amount equal -----------------------------------amount payable to sixty per as bonus cent or sixty-total set od or let off carried forward is set on or let oft' of year amolldt equal amount payable set on or total set ott to sixty per as bonus aet oft' of or set off cent or sixtythe~ar carried seven per cent, carried forward as the case may be, of forwll'd available 1ul'p1us allocable as bonus (i) (2) (3) (4) (s) ra ra rs ra of (year) 3· 2,30,000 2,so,000· nu seton (mclusive of 2,20,000 (3) is 30,000 from year-2) 4-- 3,75,000 2,50,000 seton set on 1,25,000 2,20,000 (2~ ~1,2s,ooo (4 s· 1,000 - - nil seton 2,so,000 (inclusive of 1,10,000 1,10,000 ~~ 30 from year·2) i,2s,ooo 6' 3,10,000 2,5°,000 seton seton  6opoo nilt (2) i,2s,ooo ~:~ l60,ooo :as 7·j l,ce,ooo - - nil seton (6) 2,so,000 (inclusive of ll5ooo i,2s,ooo from year- and 25,000 from year-6) 30 8 nil  so,ooo  set off sct off (due to loss) (injusivc of 3s,000 is,ooo t i 5,000 (8) from year-6) 9j  10,000 ,so,ooo" set off set off 40000 _isooo ~~ ~,ooo is 10 2,15,000  1,60,000 nil nil (after settldg oft' is,ooo from year-8 and 40,000 from ye&1'-9) notbs-·maximum ttbe balance of ri 1,10,000 act on from yeal'-3 japeel ··minimum  statement of objects and reasonsa tripartite commission was set up by the govemment of india by their resolution no wb-20 (9) /61 dated the 8th december, 1961, to consider, in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the government the commission's report, containing their recommendations, was received by the government on the 24th january, 1964 in their resolution nci wb-20(3) /64 dated the 2nd september, 1964, the government announced acceptance of the commission's recommendations subject to a few modiftcations as were mentioned therein with view to implement the recommendations of the commission as accepted iby the government, the payment of bonus ordinance, 1005, was promulgated on 29th may, 1965 the object of the bill fa to replace the said ordinance the notes on clauses explain the various provisions of the bill d sanjivayya new delhi; the 5th august, 19g5 claute 1-sub-claue (2): the subject-matter of the proposed legislation is relatable to entry 24 in the concwtent list this entry, in so far as it relates to the state of jammu and kashmir is , applicable only with respect to labour employed in the coal-mining industry even with regard to coal-mining industry, if it is carried on by a company, the application of the proposed legislation will raise d11bculties as the companies act, 1956, applies to the state of jammu and kashmir only to the extent to which the provisions of that act relate to the incorporation, regulation and winding up of banking, insurance and financial corporations for this reason, the act does not extend to the state of jammu and kashmir sub-clauses (3) and (4) -the provisions of the aet appjy from the accounting year commencing on any day in the year, 19m, to' every factory; and to every other establishment in which twenty or more persons are employed on any day during an accounting year sub-clcruse (5) -provision has been made in the sub-clause to the e1!ect that an estabhshment to which the act appues shan continue to be governed by the act even if the number of persons employed therein falls below twenty, subsequently ' cl4uae 2-the definition of 'allocable surplus' in sub-clause (4) is based on the recommendation of the bonus commission made in paragraphs 9· 9 and 12· 1 of its report the definition of 'employee' in sub-clause (13) is based on the definition of 'workman' in the industrial disputes act, 1947, except that apprentices have been excluded in accordance with the reeommendation of the commission contained in paragraph 12· 7 of it! report, all persons drawing a salary or wage up to rs 1,800 per menaem will come within the !cop~ of the deftnitiod of 'employee' the term 'salary or wa~' hit! been deftned in su~lause (z1) keeping in view the recommendation made by the commission in paragraph u'-4 of its report that bonus should be related to wages and dearness allowance taken togeth~r and that all other allowanees such as ~ver-time wages and ineentive, produetion and attendance bonus including attendanee bonus under ~tatutory !jonus schemes should be excluded clatim s-the clause provide! for the payment ef bojlu8 unitwiae in certain eues instead of e5tablfahment-wbe the elause is ,, based on the recommendationmade by the commjutod in parap'lph 8'12 of its report    czauae 4-the manner in which gross proftta derived by ad employer from an establishment may be ealculated has been indicated in the clause clause 6-the clause provides for deductions of certain 81ldw from the gross profits as prior charges for the purpose of computing the available surplus the sums so deductible are-(l) any amount by way of depreciation admissible under the income4ax law (tnde paragraphs 9: 2 and g 3 of the report of the commission); (2) any development rebate or development allowance which the employer is entitled to deduct from his income under the wome-tax act; (3) all direct taxes; and (4) the sums specified in the third schedule in respect of the various categories of employers mentioned therein clauae 7-the clause explains how the amount of direct tax payable by the employer shall be calculated the provisions proposed in sub-clauses (a) to (d) are based on the recommendation of the commission made in paragraph 9' 5, 9- 6, g 11 and 17· 20 of its report under sub-clause (e), any reb"ate, credit, relief, ete allowed for the development of an industry shall not be takeh into account in the calculation of the direct tax payable by the employer thjs provision is intended to promote the development of industries clause b-under the clause, an employee should have worked in the establishment at least for thirty working days in an accounting year to be entitled to be paid bonus this provision is based on the recommendation of the commis~ion made in paragraph 19'14 of its report clatj!e 9-the clause provides that an employee who has heed dismissed from service for fraud, riotous or violent behaviour, theft, etc, shall not be entitled to receive bonus from the employer the clause is based on the recommendation of the commiasion made in paragraph 11' 18 of its report clatj!e& 10 and l1-tmse clauses provide for the paymejlt et a minimum and maximum bonus by the employer to his employees every employee who has worked in the establishment for au the working days in an accounting year shan be entitied to be paid bonus which shall not be 1~ than four per cent of his ajulual salary or wage or ~ 40 whichever is higher, or more than 20 per eent of his annual salary or wage in the case of an employee under 15 years of a,e, the minimum bonus payable will be four ~er cent of ~ annual saiary or wage or rs 25 whichever is higher these provisions are based on the recommendation of the commission made in paragraph 125 of its report clause 12-1n the case of an employee drawing more than rs 750 but less than rs 1,600 per mensem, as his salary or wage, the bonus (whether minimwn or maximum) payable to him, shall be calculated as if his salary or wage were rs 750 per mensem the clause is based on the recommendation of the commission made ill paragraph 127 of its report clause 13-the clause provides for a proportionate reduction of bonus in cases where an employee has not worked for all the working days in an accounting year a recommendation to this effect is contained in paragraph 125 of the report of the commission clause 14-the clause provides for the computation of the number of working days for the pu:rpose of calculating the minimum and maximum bonus payuhle to an employee the clause is based on the recommendation of the commission made in paragraph 12' ~ of its report and also on the provisions already existin, in the lndust-!'ial disputes act, 1947 -, clause 15-in certain accounting years, some amount may be left in the allocable surplus after the payment of maxiwum bonua to all the employees to meet ,uch cases, a provision for set on has been made in sub-clause (1) similarly, in certain accounting years, there may not be any allocable surplus at all or the auocable surplus may not be sufficient to pay the minimum bonus to all the employees to meet such contingencies, a provision for set off has been made in sub-clause (2) the amounts set on or set off have to be carried forward in the manner illustrated in the fourth schedule sub-clause (4) provides that where in any accounting year any amount has been carried forward and set on or set off, then, in calculating bonus for the succeeding accounting year, the amount of set on or set oft brought forward from the earliest accoudtidi year shall first be taken into account the provisions relating to set on and set off are based on the recommendation of the commission made in paragraph 1213 of its report clauae 16--sub-clauae (1) of the clause provides for conceu1onal treatment to newly set up establishments in matters relating to payment of bonus in the case of dewly set up establishments bonus is payable only from the accounting year in which the em~ ployer derives profits from the establishment or from the sixth accounting year ifollowing the accounting year in which the employ~ sells the goods produced or manufactured by him or renders sel'vlces, as the case may be, from the establishment whichever is li - ear ere sub-clause (2) makes the provision of sub-clause (1) applicable to new de'partments or undertakings set up by existing establishments the clause seeks to give effect to the recommendation of the commission made in paragraph 12; 9 of its report clause 17-in paragraph 12,4 of its report, the commission recommended that puja bonus and other customary bonus, if paid, should be considered as bonus paid 'on account' and deducted from the amount finally payable as bonus the clause is based on this recommendation provision has also been made in the clause for adjustment of any interim bonus paid in advance clause lb-the clause provides that-where in any accounting year an employee is found guilty of misconduct causing financial loss to the employer, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee a recommendation to this effect has been made by the commission in paragraph 1917 of its report clause 19-the clause provides for the payment of bonus in cash and the time-limit for such payment  in cases where there is a dispute regarding payment of bonus, the bonus has to be paid within a month of the settlement or award in respect of such dispute in other cases, bonus has to be paid within a period of eight months from the_close of the accountidg year power has been taken to extend, for sufficient reasons, the aforesaid period of eight months the clause generally follows the recommendation of the commission made in paragraph 1920 of its report clause 20,-the clause provides for the application of the bonus formula to those public sector undertakings -which fulfu the 20 per cent compe,tition test in accordance with th~ recommendation contained in paragraph 188 of the commission i report it hal also been provided that once the bonus fotlilula fa appued to such estab-1ishments~ it shall continue to apply even if the 20 per cent competition test is notsatisfled in any accounting year clause 21-the clause provides for the recovery from an employ:x- of the amount, due to an employee by way of bonus the provision is on the lines of section 33c of the industrial disputes act, 1947 clause 22-the clause provides that any dispute regarding the bonus payable under the act or with regard to the application of the act to an establishment in public sector shall be deemed td be  an industrial dispute within the meaning of the industrial disput~ act, 1947, or of any corresponding state law and the provisions of the industrial disputes act, 1947, or that state law shan a·pply to such dispute clause 23-the clause provides, in accordance with the recommendations made in paragraphs 196 and 197 of the commission's report, that if audited balance sheets and profit and loss accounts of any corporation or company (other than a banking company) are produced in the course of proceedings before any authority to whom a dispute has been referred, that authority may presume the statements and particulars contained in such balance-sheet and profit and loss account to· be accurate howev&l', where that authority is satisfied that the particulars aforesaid are not correct, it may take necessary steps to find out the accuracy of such statements or particulars the authority may also, if it thinks necessary, require the corporation or the company to furnish to the union or the employees any clarification required by the union or the employees relating to any item in the balance-sheet or the profit and loss account clause 24-this clause is intended to give effect to the recommendations made in paragraph 1910 of the commission's report, namely that a:udited accounts of banking companies should not be questioned, ·but trade unions or employees may be permitted to obtain information for verifying the amount of bonus clause 25-this clause provides for the audit of accounts of ad employer not being a corporation or a company where the accounts 'of such an employer duly audited by qualified auditol'l are produced before any authority to whom a dispute has been referred, that authority shan presume the particulars con tamed in such accounts to be accurate in cases where the accounts produced are not audited by qualified auditors, that authority has beed given power to direct the employer to~et the accounts audited by qua~ed auditors or to get the accounts audited by such auditors _~~ it thm~s fit a recommendation to this effect is contained in paragraph 19' 8 of the commission's report clause 26-the clause provides for the maintenance of registers, records, etc by the employer clause 27-:rhe clause provides for the appointment of inspectors and the powers exercisable by inspectors clause 28-the clause provides for penalty for contravention of any of the provisions of the act otjhel rules made thereunder or for non-compliance with any direction or requisition made under the act clause 32-the clause makes the act inapplicable to the classes of employees specified in sub-clauses (i) to (x) the clause is based on the recommendations of the commission contained in paragraphs 4' 6; 15' 20; 17' 9; 17'16; 17'19 and 17' 22 of its report institutions like the reserve bank of india, industrial finance corporation, etc have also been specifically excluded from the scope of the act clause 33-the clause makes the wovlslons of the act applicable to certain pending disputes relating to bonus with respect to any accq1,ulting year ending on any day in the year 1962 and subsequent accounting years such disputes shall be decided in accordance with the provisions of the act clause 34-ln certain establishments, the employees are getting bonus under an award, agreement, settlement or contract of service which would be higher than that payable under the act the clause seeks to safeguard the interest of such employees by providing that they would get bonus either on the existing basis or on the basis of the formula provided in the act, whichever is higher provision has also been made in the clause enabling the employer and the employees to enter into an agreement with regard to the payment of bonus under a formula whi~h is different from that under the act clause 36-the clause empowers the appropriate government to exempt for a specified period any esta~!ishment a! ~lass of establishments froin all or any of the provl~ions of the act, if, having rellard to the financial position and ot~er relevant circumstancp~ of the establishment or class of establishments, the appropriate gov  ernment is satisfied that such exemption is necessary in pubuc interest the first schedule and the second schedule-the first schedule provides for the manner in which the gross profits of an employer, being a banking company, shall be calculated and the second schedule provides for the manner in which the gross profits of any other employer shall be calculated these schedules generally follow the proforma suggested by the commission in paragraph 810 of its report the third schedule-this idledule has reference to sub-claule (d) of clause 6  the sums deductible as prior charges· under the schedule are generally on the lines suggested by the commission with respect to the various categories of employers (vide paragraphs 11: 7; 11: 8; 11'13; 11'17; 11'18; 15'11 and 17'5 of the report of the commission)  the fourth schedule-this schedule follows the illustration given by the commission in paragraph 1213 of its report under clause 22 of the bill, any pispute arising between an employer and his employees with respect to the payment of bonuj under the act or with respect to the application of the act to an establishment in public sector shall be deemed to be an industrial dispute and the provisions of the industrial disputes act, 1947, or of any corresponding law relating to investigation and settlement of industrial disputes in force in a state shall apply to such dispute clause 27 of the bill provides for thegppointment of inspectors the \ work connected with the handling of disputes and inspectiolll, in so far as it relates to establishments in respect of which the central government is the appropriate government, is proposed to be entrusted to the industrial tribunals already set up under the industrial disputes act, 1947, and the existing staff of chief labour commissioners' organisation it is difficult at present to assess precisely the additional work-load that may be involved the position wui be reviewed in the light of the actual working of the act when a more realistic idea of the additional work-load would be avallable the bill is not likely to involve any appreciable additional expenditure in the near future  memorandum regarding delegated legislationclause 38 of the bill empowers the central government to make rules for carrying into e1fect the provisions of the act the matten in respect of which such rules may be made are specified in that clause they, inter alia, relate to the authority for granting permission for changing the accounting year; the preparation and maintenance of registers: records and other documents; and the powers of inspectors these are matt~~~ administrative procedure and detail the del~gation of legislative power is thus of a normal character a bill to provide for the payment of bonus to pc:r;;o:l1 employed in certain establishments and for mrtters connected therewith (shri d sanjifjayya, minister of labour & employment) 