Last Updated on October 9, 2026 by Akshatha
Diwali falls on Sunday, 8 November 2026, and many employees expect a bonus before it. For employers, though, the date that matters is 30 November 2026, the legal deadline for statutory bonus for FY 2025-26. The rules behind it changed this year. Here is who qualifies, how much to pay and how a Diwali payment fits in.
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Diwali bonus 2026 at a glance
| Point | Rule for 2026 |
|---|---|
| Law that applies | Code on Wages, 2019 (in force since 21 November 2025) |
| Which businesses | Factories, and establishments with 20 or more employees on any day of the year |
| Which employees | Wages up to ₹21,000 a month and at least 30 days worked in the year |
| Calculation wage | Actual wage if ₹7,000 or less; otherwise ₹7,000 or the minimum wage, whichever is higher |
| Amount | Minimum 8.33% (or ₹100, if higher), maximum 20% |
| Deadline for FY 2025-26 | 30 November 2026, paid into the employee’s bank account |
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What changed for statutory bonus in 2026?
The Payment of Bonus Act, 1965 was repealed. Bonus now sits under the Code on Wages, 2019, which took effect on 21 November 2025. On 25 August 2026, the Labour Ministry issued two notifications that settle the key numbers, both applying from 21 November 2025:
- Who qualifies (S.O. 4711(E)): employees whose wages are up to ₹21,000 a month.
- How to calculate it (S.O. 4710(E)): for staff earning over ₹7,000 a month, use ₹7,000 or the minimum wage fixed by the Central Government, whichever is higher.
One point is still debated. The Code refers to the minimum wage of the “appropriate Government”, while the notification names the Central Government. Where the state minimum wage is higher, the bonus would be larger. Until this is clarified, agree the figure with your payroll adviser and record the basis you used.
Does it apply to your business?
It applies to factories and to establishments that employ 20 or more people on any day in the accounting year. A 12-person startup is usually outside it; a 25-person team is in. Within a covered business, an employee qualifies if their wages are up to ₹21,000 a month and they worked at least 30 days in the 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. Our Labour Codes guide for SMEs explains the new wage definition.
How much is the bonus, and how do you calculate it?
The minimum is 8.33% of the calculation wage (or ₹100, if higher), payable even in a loss-making year. The maximum is 20%, depending on the year’s profits, which the law calls the allocable surplus. Most small businesses pay the minimum.
For example, take an employee earning ₹15,000 a month. They qualify, and since they earn over ₹7,000, you use ₹7,000 or the minimum wage, whichever is higher. Suppose that minimum wage is ₹12,000 a month:
| Step | Working | Result |
|---|---|---|
| Calculation wage | Higher of ₹7,000 and ₹12,000 | ₹12,000 a month |
| Yearly base | ₹12,000 × 12 months | ₹1,44,000 |
| Minimum bonus at 8.33% | ₹1,44,000 × 8.33% | About ₹11,995 |
| Maximum bonus at 20% | ₹1,44,000 × 20% | ₹28,800 |
This is an illustration only. If an employee earns ₹7,000 or less, use their actual wage. For someone who joined partway through the year, use the wages they actually earned.
When should you pay the Diwali bonus in 2026?
- Dhanteras: Friday, 6 November 2026
- Diwali: Sunday, 8 November 2026
- Legal deadline for FY 2025-26: Monday, 30 November 2026
Paying statutory bonus with October salary meets the deadline and the festival expectation in one step. Whatever you choose, credit it to the employee’s bank account, not in cash. The deadline is eight months from the end of your accounting year, so it moves if your year does not end in March. If you genuinely need more time, you can apply for an extension of up to two years in total.
Paying bonus this year?
Tick off every step with the free HR Compliance Checklist 2026.
Does a Diwali payment count as statutory bonus?
Not always. A Diwali gift or fixed festival amount is often voluntary, while statutory bonus is a legal duty with a formula and a deadline. However, the law generally lets you adjust a customary or festival bonus paid in the same year against the statutory amount. If you pay ₹5,000 at Diwali and the statutory minimum is ₹11,995, you can usually pay the balance of ₹6,995 by 30 November. Record what each payment is for, so you neither pay twice nor fall short.
Employees above the ₹21,000 limit are outside statutory bonus, so any Diwali bonus for them is your own policy. Put it in writing.
Diwali bonus 2026 for central government employees
Central government staff follow separate government orders, not the Code’s formula. Last year, Group C and non-gazetted Group B staff got an ad-hoc bonus of 30 days’ pay on a ₹7,000 ceiling, or ₹6,908 (order of 29 September 2025). Railway staff got a 78-day productivity bonus of up to ₹17,951. As of 5 October 2026, the order for 2025-26 had not been issued, and unions have asked for a higher ceiling. Check the Ministry of Finance or Press Information Bureau for the final figures.
Disqualification and penalties
An employee loses bonus for the year only if dismissed for serious misconduct, such as fraud, violent behaviour, theft, sabotage or sexual harassment. Resigning does not remove it. Late or short payment is a contravention of the Code on Wages, with a fine of up to ₹50,000 for a first offence, and employees can also claim the unpaid amount. Add bonus to your statutory compliance calendar, and read the notifications on the Ministry of Labour and Employment website.
Frequently asked questions
Is Diwali bonus mandatory for private companies in 2026?
A festival gift is not mandatory. Statutory bonus is mandatory for factories and establishments with 20 or more employees, for staff earning up to ₹21,000 a month. Many employers pay it around Diwali, and the deadline for FY 2025-26 is 30 November 2026.
Who is eligible for statutory bonus in 2026?
Employees with wages up to ₹21,000 a month who worked at least 30 days in the accounting year, in factories or establishments with 20 or more employees. Wages mainly means basic pay and dearness allowance, not total CTC.
What is the last date to pay bonus for FY 2025-26?
For an April to March accounting year, the last date is 30 November 2026. The Code on Wages requires payment within eight months of the year end, credited to the employee’s bank account.
Can a Diwali gift be adjusted against statutory bonus?
Generally, yes. A customary or festival bonus paid in the same year can usually be adjusted against the statutory amount. Record what each payment is for and pay any balance by the deadline.
How much is the Diwali bonus for central government employees in 2026?
The 2025-26 order had not been issued as of 3 October 2026. Last year, eligible staff received an ad-hoc bonus of ₹6,908 for 30 days, and railway staff a 78-day productivity bonus of up to ₹17,951.
Take bonus off your plate
HRTailor’s payroll processing service checks eligibility, calculates statutory bonus 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.
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