Statutory Bonus in India 2026: Who Qualifies, How Much and When to Pay

Last Updated on September 16, 2026 by [email protected]

Diwali is coming, and so is a legal deadline many founders miss. Statutory bonus in India is not a gift you choose to give. It is a payment the law requires, and the rules changed this year. This guide explains who qualifies, how much to pay, how to work it out and the date you must pay by.

What changed for statutory bonus in India in 2026?

Bonus used to sit under the Payment of Bonus Act, 1965. Now, however, it sits under the Code on Wages, 2019, which took effect on 21 November 2025.

Then, on 25 August 2026, the Labour Ministry issued two notifications that settle the key numbers:

• Who qualifies: employees whose wages are up to ₹21,000 a month.
• How to calculate it: for eligible staff earning over ₹7,000 a month, use ₹7,000 or the Central Government minimum wage. Pick whichever is higher.

Both notifications apply from 21 November 2025. As a result, they cover the bonus you pay this year.

Does statutory bonus in India apply to your business?

Generally, it applies to factories, and to other establishments that employ 20 or more people on any day in the accounting year. So a 12-person startup is usually outside it. However, a 25-person team is in.

Then, within a covered business, an employee qualifies when both of these are true:

• Their wages are up to ₹21,000 a month.
• They worked for at least 30 days in the accounting year.

Wages here mainly means basic pay and dearness allowance, not full CTC. So someone on a ₹35,000 CTC can still qualify if their basic pay is low. That is also one more reason to check your salary structures. Our Labour Codes guide for SMEs explains how the new wage definition works.

How much do you pay as statutory bonus in India?

First, the law sets a floor and a ceiling:

• Minimum: 8.33% of the calculation wage, or ₹100, whichever is higher.
• Maximum: 20% of the calculation wage.

Importantly, you must pay the minimum even in a loss-making year. Above that, the amount depends on your profits for the year, which the law calls the allocable surplus. In practice, most small businesses pay the 8.33% minimum.

How do you calculate statutory bonus in India?

Take it in three steps. First, confirm the employee earns up to ₹21,000 a month. Next, find the calculation wage. Finally, apply the percentage for the year.

For example, take an employee with wages of ₹15,000 a month. They qualify, because ₹15,000 is under ₹21,000. Since they earn more than ₹7,000, you use ₹7,000 or the Central Government minimum wage, whichever is higher. Suppose that minimum wage works out to ₹12,000 a month. The minimum bonus for a full year is then:

Of course, this is an illustration only. The right minimum wage figure depends on the notification that applies to your employees, so confirm it with your payroll adviser. Also, if an employee earns ₹7,000 or less, you simply use their actual wage.

What is the deadline for statutory bonus in India?

Generally, you must pay bonus within eight months of the end of your accounting year. For the usual April to March year, that means FY 2025-26 bonus is due by 30 November 2026.

Also, the Code says you must pay it into the employee’s bank account, rather than in cash. If you genuinely need more time, you can apply for an extension. Even so, the total extension cannot go beyond two years.

Does a Diwali payment count?

Not always. A Diwali bonus is usually a voluntary festival payment. By contrast, statutory bonus in India is a legal duty with a formula and a deadline.

That said, the law generally lets you adjust a customary or festival bonus you already paid against the statutory amount for the same year. So plan both together, and keep a clear record of what each payment is for. Otherwise, you risk paying twice or falling short.

Who can be disqualified?

However, an employee can lose bonus for the year if you dismiss them for serious misconduct. The Code lists fraud, riotous or violent behaviour, theft, misappropriation or sabotage of property, and sexual harassment. In contrast, ordinary resignations or poor performance do not remove the right to bonus.

What happens if you miss the deadline?

Above all, late or short payment is a contravention of the Code on Wages. A first offence can bring a fine of up to ₹50,000, while repeat offences carry heavier penalties. In addition, employees can claim the unpaid amount.

So add bonus to your statutory compliance calendar, and budget for it well before November. You can read the Code and its notifications on the Ministry of Labour and Employment website.

Frequently asked questions

Who is eligible for statutory bonus in India in 2026?

Employees whose wages are up to ₹21,000 a month and who worked at least 30 days in the accounting year are eligible. The rule covers factories and other establishments with 20 or more employees. Wages mainly means basic pay and dearness allowance, not total CTC.

What is the minimum statutory bonus in India?

The minimum statutory bonus is 8.33% of the calculation wage, or ₹100, whichever is higher. The maximum is 20%. Employers must pay the minimum even in a loss-making year, while anything above it depends on the year’s allocable surplus.

What is the last date to pay bonus for FY 2025-26?

For businesses with an April to March accounting year, employers must pay statutory bonus for FY 2025-26 by 30 November 2026. The Code on Wages requires payment within eight months of the end of the accounting year, credited to the employee’s bank account.

How is bonus calculated under the Code on Wages?

For eligible employees earning more than ₹7,000 a month, you calculate bonus as if their monthly wage were ₹7,000 or the Central Government minimum wage, whichever is higher. The yearly base is that figure times 12, and the bonus is 8.33% to 20% of it.

Take bonus off your plate

HRTailor’s payroll processing service checks eligibility, calculates statutory bonus in India and pays it on time, alongside PF, ESI and the rest of your monthly compliance. So Diwali stays a celebration, not a deadline.

This guide is general information, not legal advice. Please confirm your figures with your payroll or legal adviser.