REGISTERED No. D-(D)-72 The Gazette of India EXTRAORDINARY
PART II—Section 1 PUBLISHED BY AUTHORITY No. 70] NEW DELHI, SATURDAY, DECEMBER 3, 1977/PAUSA 3, 1899 Separate paging is given to this Part in order that it may be filed as a separate compilation MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department) New Delhi, the 24th December, 1977/Pausa 3, 1899 (Saka) The following Act of Parliament received the assent of the President on the 24th December, 1977, and is hereby published for general information: — THE PAYMENT OF BONUS (AMENDMENT) ACT, 1977 No. 43 OF 1977 [24th December, 1977] An Act further to amend the Payment of Bonus Act, 196. BE it enacted by Parliament in the Twenty-eighth Year of the Republic of India as follows: —
1. (1) This Act may be called the Payment of Bonus (Amendment) Act, 1977.
(2) It shall be deemed to have come into force on the 3rd day of September, 1977.
2. The Payment of Bonus Act, 1965 (hereinafter referred to as the principal Act) shall,—
(a) in relation to a factory or other establishment to which the principal Act applies immediately before the commencement of this Act; and
(b) in relation to a banking company and the Industrial Reconstruction Corporation of India to which the principal Act applies on and from such commencement by virtue of this Act, have effect in respect of the accounting year commencing on any day in the year 1976 as if the amendments specified in sections 3 to 20 had been made in that Act.
Explanation.—In this section, the expressions "banking company" and "accounting year" shall have the meanings respectively assigned to them in clauses (8) and (1) of section 2 of the principal Act.
(479) Short title and commencement. Act 21 of 1965 to have modified effect for a particular period. 48o THE GAZETTE OF INDIA EXTRAORDINARY LPAHT II—
3. In the principal Act, for the long title, the following long title shall be substituted, namely:—• "An Act to provide for the payment of bonus to persons employed in certain establishments and for matters connected therewith "
4. In section 2 of the principal Act, in sub-clause (a) of clause (4), after the words "htnng a company", the brackets and words "(other than a banking company)" shall be inserted
5. For section 4 of the principal Act, the following section shall be substituted, namely: — "4. The gross profits derived by an employer from an establishment in irspect of the accounting year shall —
(rt) In the case of a banking company, he calculated in the manner specified in the First Schedule,
(b) in any other case, be calculated in the manner specified in the Second Schedule.".
6. In section 6 of the principal Act,—
(a) in clause (b), for the words "development rebate or development allowance", the wovds "development rebate or investment allowance or development allowance" shall be substituted;
(b) m clause (d), for the words "Second Schedule", the words "Third Schedule" shall be substituted
7. In section 7 of the principal Act, in clause (e), for the brackets and words "(other than development rebate or development allowance)", the brackets and words "(other than development rebate or investment allowance or development allowance)" shall be substituted.
8. In section 10 of the principal Act,—
(a) after sub-section (2), the following sub-section shall be Inserted, namely: — '(2A) Notwithstanding anything contained in sub-section
(1) regarding the payment of minimum bonus, but subject to the other provisions of this Act, every employer shall be bound to pay to every employee a minimum bonus which shall be 8 33 per cent, of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year'
Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this sub-section shall have effect m relation to such employee as if for the words "one hundred rupees", the words "sixty rupees" were substituted';
(b) in sub-section (3), for the wr.rds "Third Schedule", the words "Fourth Schedule" shall be substituted.
9. In section 15 of the principal Act, for the woids "Third Schedule" wherever they occur, the words "Fourth Schedule" shall be substituted. Substitution of long title. Amendment of section 2 Substitution of new section for section 4 Computation of gross profits. Amendment of section 6. Amendment of section 7 Amendment of section 10. Amendment of section 15 SEC. 1] ( THE GAZETTE OF INDIA EXTRAORDINARY 48l
10. In section 16 of the principal Act, in sub-section (IB), for the words "Third Schedule" at both the places where they occur, the words "Fourth Schedule" shall be {substituted.
11. In section 21 of the principal Act, in the Explanation, for the words and figures "sections 22, 23 and 25", the words and figures "sections 22, 23, 24 and 25" shall be substituted.
12. In section 23 of the principal Act, in sub-section (1), for the word and figures "section 25", the words and figures "sections 24 and 25" shall be substituted.
13. After section 23 of the principal Act, the following section shall be inserted, namely: — "24. (1) Where any dispute of the 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 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.
(2) Nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any information which the banking company is not compelled to furnish under the provisions of section 34A of the Banking Regulation Act, 1949.". 14 In section 27 of the principal Act, after sub-section (4), the following sub-section shall be inserted, namely: — " (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 bo compelled to furnish, disclose, produce or give inspection of, under the provisions of section 34A of the Banking Regulation Act, 1949.". IB, In section 31A of the principal Act, in the proviso, for the words "Provided that", the words "Provided further that" shall be substituted and before the proviso as so amended, the following proviso shall be inserted, namely: — "Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under sub-section (2A) of section 10 shall be null and void in so far as it purports to deprive them of such right".
18. In section 32 of ihe principal Act,—
(a) clause (vii) shall be omitted;
(b) In clause (fx) ,—
(i) sub-clause ($) shall be omitted; Amendment of section
16. Amendment of section
21. Amendment of section
23. Insertion of new section
24. Audited accounts of banking conv paniea not to be questioned. Amendment of section
27. Amendment of section
31A. Amendment of section
32. 10 of 1949. 10 of 1949. 432 THE GAZETTE OF INDIA EXTRAORDINARY [PART II —
(ii) in sub-clause (g), after the words "financial institution", the brackets and words "(other than a banking company)" shall be inserted.
17. For section 34 of the principal Act, the following sections shall be substituted, namely: — "34. 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 granting them an amount of bonus under a formula which is different from that under this Act:
Provided that no such agreement shall have effect unless it is entered into with the previous approval of the appropriate Government:
Provided further that any such agreement whereby the employees relinquish their right to receive the minimum bonus under sub-section (2A) of section 10 shall be null and void in so far as it purports to deprive them of such right:
Provided also that such employees shall not be entitled to be paid bonus in excess of—
(a) 8 33 per cent, of the salary or wage earned by them during the accounting year if the employer ha9 no aliocable surplus In the accounting year or the amount of such allocable surplus Is only so much that, but for the provisions of sub-section (2A) of section 10, it would entitle the employees only to receive an amount of bonus which is less than the aforesaid percentage; or
(b) twenty per cent, of the salary or wage earner! by them during the accounting year.
34A. Subject to the provisions of sections 31A and 34, the provisions of this Act shall have effect notwithstanding anything Inconsistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or con- - tract of service.".
18. In the principal Act, the First Schedule shall be renumbered as the Second Schedule and,—
(a) In that Schedule as so renumbered—
(i) for the brackets, words and figure "(See section 4)", the brackets, words, figure and letter "[See section 4(b)]" shall be substituted;
(ii) in column (2), against Item No. 2, for the entry "(d) Development rebate/Development allowance reserve.", the entry "(d) Development rebate/Investment allowance/Development allowance reserve." shall be substituted; Substitution of new aections for section
34. Employees and employers not to be precluded from entering into agreements for grant of bonus under a different formula. Effect of laws and agreements inconsistent with the Act. Amendment of the First Schedule. SEC. 11 THE GAZETTE OF INDIA EXTRAORDINARY 483
(b) befcne that Schedule as so renumbered, the following Schedule shall be inserted, namely: — 'THE FIRST SCHEDULE [See section 4(a)J COMPUTATION OF GROSS PROFITS Accounting Year ending Item No. * i . 2 , 3 Particulars Net Profit as shown in the Profit and Loss Account after making usual and necessary provisions. Add back provision for :
(a) Bonus to employees.
(b) Depreciation.
(c) Development Rebate Reserve.
(d) Any other reserves. Total of Item No. 2 . Add back also :
(a) Bonus paid to employees, in respect of previous accounting years.
(b) The amount debited in respect of gratuity paid or payable to employees In excess of the aggregate of— (0 the amount, if any, paid to, or provided for payment to, an approved gratuity fund; and
(it) the amount actually paid to employees on their retirement or on termination of their employment for any reason,
(c) Donations in excess of the amount admissible for income-tax.
(d) 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 incometax). Amount of sub-items Rs. Rs. Amount of main, items Rs. 1 Remarks Set footnote (1) See footnote (1) See footnote (1) See footnote (1) •Where the profit subject to taxetlrn is shown In th« Profit and Loss Account and the precision n.adefor taxes on Income i§ shown, th« cctiul provision for tsxet on income tha}lbf deducted from the profit. 484 THE GAZETTE OF INDIA EXTRAORDINARY [PART II— Item No. 4-
6. , Particulars
(e) Any amount certified by the Reserve Bank of India in terms of sub-section (2) of section 34A of the Banking Regulation Act, 1949. (/) Losses of, or expenditure relating to, any business situated outside India. Total of Item No. 3 Add also income, profits or gains (if any) credited directly to published or disclosed reserves, other than—
(1) capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for incometax) ;
(ii) profits of, and receipts relating to, any business situated outside India; (tit) income of foreign banking companies from investments ouiside India. Net total of Item No. 4 Total of Item Nos. 1, 2, q and 4. 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— («') capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not been allowed for income-tax); [tt) losses of any business situated outside India. Amount of sub-items Rs. Rs. Rs. Rs. Amount of main items Rs. Remarks See footnote (2) See footnote (2) See footnote (2) 10 of 1949 SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 485 Item No. to (/) Or) Particulars In the case of foreign banking companies proportionate administrative (overhead) expenses of Head Oilice allocable to Indian business. Refund of any excess direct tax paid for pievious accounting yeais and excess provision, it any, of previous accounting yeai s relating to bonus, depreciation, or development rebate, it written back. Cash subsidy, if any, given by the Government or by any body corporate established by any law for the time being in force or by any other agency through budgetai y grants, whether given directly or through any agency for specified purposes and the pioceeds of which are reserved for such purposes. Total of Item No. 6
7. Gross profits for purposes of bonus i (Item No. 5 minus Item No. 6) Amount of sub-items Rs. Rs. ?Rs. Amount of main -items Rs. Remarks See footnote (3) Sec lootnote (2) See footnote (2)
Explanation.—In sub-item (b) of item 3, "approved gratuity fund" has the same meaning assigned to it in clause (5) of section 2 of the Income-tax Act. Foot-notes—
(1) If, and t ' th extent, charged to Profit and Loss Account.
(2) Ifj und to the exten1, credited f> Profit ,md Loss Account.
(3) In the proportion of TnlUn Gros8 Profit (Ircm N •. 7) 1 ° To!«' World Gross Pioflt (as per Consolidated Profit and Lose Account, adjusted a» in Ittni No. z above only).,.'
19. In the principal Act, the Second Schedule shall be renumbered as the Third Schedule and in that Schedule as so renumbered,—
(a) in column (2), against Item No. 1, for the word "Company", the words "Company, other than a banking company" shall be substituted;
(b) after Item No. 1 and the entries relating thereto, the following item and entries shall be inserted, namely :— Amendment of the Second Schedule (0 " 2 . (*) Banking company
(3)
(i) The dividends payable on its preference share capital for the accounting year calculated at the rate at which such dividends are payable ; 4«6 THE QAZETTE OF INDIA EXTRAORDINARY [PART II — ( I ) (2) (3) («) 7 5 per cent, of its paid up equity share capital as at the commencement of the accounting year; (tit) 5 per cent, of its rcseives shown in its balance-sheet as at the commcnceincm of the accounting year, including any profits carried forward from the pievious accounting year;
(iv) any sum which, in respect of the accounting year, is transferred by it—
(a) to a reserve fund under sub-section
(j) of section 17 of the Banking Regulation Act, 1949; or
(b) to any reserves in India in pursuance of any direction or advice given by the Reserve Bank of India, whichever is higher :
Provided that 'where the banking company is a foreign company within the meaning of section 591 of the Companies Act, 1956, the amount to be deducted under this Item shall be the aggregate of—
(1) "the dividends payable "'to its preference shareholders for the accounting year at the rate at which such dividends arc payable on such amount as bears the same proportion to its total preference share capital as its total working funds in India "' \ bear to its total ^ f world working funds ; ', 10 of 1949, 1 of 1956. SEC 1] THE GAZETTE OF INDIA EXTRAORDINARY 487 ( I ) (3)
(n) 7 5 per cent, of such amount as bears the same proportion to its total paid up equity share capital as its total working funds in India bear to its total world working funds; (t'i'O 5 per cent, of such amount as bears the same proportion to its total disclosed reserves as its total working funds in India bear to its total world working funds;
(iw) any sum which, in respect of the accounting year, is deposited by it with the Reserve Bank of India under sub-clause (*») of clause (£>) of sub-section
(2) of section 11 of the Banking Regulation Act, 1949, not exceeding the amount required under the aforesaid provision to be so deposited." ;
(c) in the Explanation, for the figures, brackets and word "l(iii) and 3(u)", the figures brackets and word "l(ui), 2(ni) and 3(ii)" shall be substituted.
20. In the principal Act, the Third Schedule shall be renumbered as the Fourth Schedule, 21 (1) The Payment of Bonus (Amendment) Ordinance, 1977 is hereby repealed
(2) Notwithstanding such repeal, anything done 01 any action taken under the principal Act, bv virtue of the amendments thereto made by the said Ordinance, shall be deemed to have been done or taken under the principal Act by virtue of the conesponding amendments thereto made by this Act S, HARIHARA IYER, Jt Secy, to the Gout, of India 10 of l»4t. s of 1§77. Amendment of the Third Schedule Repeal and saving. FniNTKD BY THE GINIRAL MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI AND PUBLISHFD LY THE CONTROLLER OF PUBIICATIONS, DELHI 1977