THE PAYMENT OF BONUS ACT, 1965

 ACT NO. 21 OF 1965

 [25th September, 1965.]

 1*[An Act  to provide  for the payment of bonus to persons employed in

 certain establishments  on the  basis of  profits or  on the  basis of

 production or productivity and for matters connected therewith.]

      BE it enacted by Parliament in the Sixteenth Year of the Republic

 of India as follows:--

 1. Short title extent and application.

      1. Short title extent and application.- (1) This Act may be called

 the Payment of Bonus Act, 1965.

      (2) It extends to the whole of India 2***.

      (3) Save as otherwise provided in this Act, it shall 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:

      3*[Provided that the appropriate Government may, after giving not

 less  than   two  months'  notice  of  its  intention  so  to  do,  by

 notification in the Official Gazette, apply the provisions of this Act

 with effect  from such  accounting year  as may  be specified  in  the

 notification,  to   any  establishment   or  class  of  establishments

 [including an establishment being a factory within the meaning of sub-

 clause (ii) of clause (m) of section 2 of the Factories Act, 1948  (63

 of 1948)] employing such number of persons less than twenty as may be

 specified in the notification; so, however, that the number of persons

 so specified shall in no case be less than ten.]

      (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 1964  and  in  respect  of  every

 subsequent accounting year:

      4*[Provided that  in relation  to the State of Jammu and kashmir,

 the reference to the accounting year commencing on any day in the year

 1964 and  every subsequent  accounting  year  shall  be  construed  as

 reference to  the accounting  year commencing  on any  day in the year

 1968 and every subsequent accounting year:]

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 1.   Subs. by  Act 23  of 1976, s. 2, for the long title (w.e.f. 25-9-

      1975).

 2.   The words  "except the State of Jammu and Kashmir" omitted by Act

      51 of 1970, s. 2 and Sch.

 3.   Ins. by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).

 4.   Added by Act 51 of 1970, s. 2 and Sch. (w.e.f. 1-9-1971).

      1*[Provided further  that when  the provisions  of this  Act have

 been made  applicable to  any establishment or class of establishments

 by the  issue of  a notification under the proviso to sub-section (3),

 the reference to the accounting year commencing on any day in the year

 1964 and  every subsequent accounting year or, as the case may be, the

 reference to  the accounting  year commencing  on any  day in the year

 1968 and  every subsequent accounting year, shall, in relation to such

 establishment or  class of establishments, be construed as a reference

 to the  accounting year  specified  in  such  notification  and  every

 subsequent accounting year.]

     (5) An establishment to which this Act applies 2*** shall continue

 to be  governed by this Act notwithstanding that the number of persons

 employed therein  falls below  twenty 1*[or,  as the  case may be, the

 number specified  in the notification issued under the proviso to sub-

 section (3)].

 2. Definitions.

      2.  Definitions.-  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

                corporation are to be closed and balanced;

                     (ii) in  relation to  a  company,  the  period  in

                respect of  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 case--

                               (a) the  year commencing  on the 1st day

                          of April; or

                               (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

                          its accounts are so closed and balanced:

                          Provided that an option once exercised by the

                     employer under  paragraph (b)  of this  sub-clause

                     shall not  again  be  exercised  except  with  the

                     previous permission  in writing  of the prescribed

                     authority  and   upon  such   conditions  as  that

                     authority may think fit;

           (2) "agricultural  income" shall have the same meaning as in

                the Income-tax Act;

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 1.   Ins. by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).

 2.   The words,  brackets, letter and figure "under clause (b) of sub-

      section (3)" omitted by s. 3, ibid. (w.e.f. 25-9-1975).

           (3) "agricultural  income-tax" means  any law  for the  time

                being  in   force  relating  to  the  levy  of  tax  on

                agricultural income;

           (4) "allocable surplus" means--

                     (a) in  relation to  an employer,  being a company

                1*[(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 of its profits in accordance with

                the provisions  of section 194 of that Act, sixty-seven

                per cent.  of the  available surplus  in an  accounting

                year;

                     (b) in  any other  case, sixty  per cent.  of such

                available surplus;

           2*               *              *             *            *

           (5) "appropriate Government" means--

                     (i) in  relation to an establishment in respect of

                which the  appropriate Government  under the Industrial

                Disputes Act,  1947  (14  of  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 dispute  or of any question relating thereto

                by any  Labour Court,  Industrial Tribunal  or National

                Tribunal constituted under the Industrial Disputes Act,

                1947  (14   of  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 10A 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  (10 of

                1949), and  includes  the  State  Bank  of  India,  any

                subsidiary bank  as defined  in the State Bank of India

                (Subsidiary Banks)  Act, 1959  (38  of  1959),   3*[any

                corresponding new  bank specified in the First Schedule

                to the  Banking Companies  (Acquisition and Transfer of

                Undertakings)  Act,   1970    (5   of   1970).   1*[any

                corresponding new  bank constituted  under section 3 of

                the    Banking     Companies      (Acquisition      and

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 1.   Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).

 2.   Certain words omitted by Act 23 of 1976, s. 4 (w.e.f. 25-9-1975).

 3.   Ins. by s. 4, ibid. (w.e.f. 25-9-1975).

                Transfer of Undertakings) Act, 1980 (66 of 1980 ),] any

                co-operative bank as defined in clause (bii) of section

                2 of the Reserve Bank of India Act, 1934 (2 of  1934),]

                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  (1 of  1956),  and includes a

                foreign company  within the  meaning of  section 591 of

                that Act;

           (10) "co-operative  society" means  a society  registered or

                deemed  to   be  registered   under  the   Co-operative

                Societies Act,  1912 (2 of 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,  1963

                          (14 of 1963);

                               (iii)  the  Companies  (Profits)  Surtax

                          Act, 1964 (7 of 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 purposes of this Act;

           (13) "employee"  means any person (other than an apprentice)

                employed on a salary or wage not  exceeding    1*[three

                thousand  and  five   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 of

                employment be express or implied;

           (14) "employer" includes--

                     (i) in  relation to  an establishment  which is  a

                factory,  the   owner  or   occupier  of  the  factory,

                including the  agent of  such owner  or  occupier,  the

                legal representative of a deceased

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 1.   Subs. by Act 34 of 1995, s. 2 (w.e.f. 1-4-1993).

                owner or  occupier and where a person has been named as

                a manager  of the  factory under  clause  (f)  of  sub-

                section (I)  of section  7 of  the Factories Act,  1948

                (63 of 1948), the person so named; and

                     (ii) in  relation to  any other establishment, the

                person who,  or the  authority which,  has the ultimate

                control over the affairs 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)   "establishment   in   private   sector"   means   any

                establishment other  than an  establishment  in  public

                sector;

           (16) "establishment in public sector" means an establishment

                owned, controlled or managed by--

                     (a) a Government company as defined in section 617

                of the Companies Act, 1956 (1 of 1956);

                     (b) a corporation in which not less than forty per

                cent. 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;

           (17) "factory"  shall have the same meaning as in clause (m)

                of section 2 of the Factories Act, 1948 (63 of 1948);

           (18) "gross  profits" means  the  gross  profits  calculated

                under section 4;

           (19) "Income-tax Act" means the Income-tax Act, 1961  (43 of

                1961);

           (20) "prescribed"  means prescribed by rules made under this

                 Act;

           (21) "salary  or wage"  means all  remuneration (other  than

                remuneration in  respect of  overtime work)  capable of

                being expressed  in terms of money, which would, if the

                terms  of   employment,  express   or   implied,   were

                fulfilled, be  payable 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

        &am