REGISTERED No. D-(D)-72 The Gazette of India EXTRAORDINARY
PART II—Section 1 PUBLISHED BY AUTHORITY No. 49] NEW DELHI, SATURDAY, SEPTEMBER 3, 1977/BHADRA 12, 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 3rd September, 1977/Bhadra 12, 1899 (Saka) THE PAYMENT OF BONUS (AMENDMENT) ORDINANCE, 1977 No. 9 OF 1977 Promulgated by the President in the Twenty-eighth Year of the Republic of India. An Ordinance further to amend the Payment of Bonus Act, 1965. WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action, Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:— 1 (I) This Ordinance may be called the Payment of Bonus (Amendment) Ordinance, 1977.
(2) It shall come into force at once
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 Ordinance; and Short title and commencement Act 21 of 1965 to have modified effect for a particular period.
(323) 324 T H E GAZETTE OF INDIA EXTRAORDINARY [PART II-
(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 Ordinance, 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 19 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 3 In the principal Act, for the long title, the following long title shall be substituted, namely : — "An Act to provide {oi 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 "being a company", the brackets and word,s "(other than a banking company)" shall be inserted. 5j. For section 4 of the principal Act, the following sectjon shall be substituted, namely ; — - "4. The gross profits derived by an employer from an establishment in respect of the accounting year shall—
(o) in the case of a banking company, be 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 words "development rebate or investment allowance or development allowance" shall be substituted;
(b) in clause (d), for the words "Second Schedule", the words "Third Schedule" shall be substituted
7. 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), 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 in 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 words "Third Schedule", the words "Fourth Schedule" shall be substituted. Substitution of long title. Amendment cif •ection 2. Substitution of new sec. tion far section 4. Computation of gross pro • flti. Amendment of section 6. Amendment of section 10. SEC. i] TH£ GAZETTE OF INDIA EXTRAORDINARY 3^5 10 of 1949. 10 of 1949.
8. In section 15 of the principal Act, for the words "Third Schedule" wherever they occur, the words "Fourth Schedule" shall be substituted.
9. 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.
10. In section 21 of the principal Act, in the Explanation, for the w.ords and figures "sections 22, 23 and 25", the words and figures "sections 22, 23, 24 and 25" shall be substituted
11. 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. 12 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.".
13. 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 be compelled to furnish, disclose, produce or give inspection of, under the provisions of section 34A of the Banking Regulation Act, 1949.". 14 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".
15. In section 32 of the principal Act,—
(a) clause (vii) shall be omitted ;
(b) in clause (ix),—
(x) sub-clause (ff) shall be omitted ; Amendment of section 1R Amendment of section 18 Amendment ol section 21. Amendment of section 23. Insertion of new section 24. Audited accounts of bank- Ing companies not to be questioned Amendment of section 27. Amendment of section
31A. Amendment of section 32. &6 *HE GAZETTE OF iNUlA SXtftAOlflDINAfeY [ K H T it- Substitution of new section for section 31. Employees and employers not to be precluded from enten ing into agreements for grant of bonus under a different formula. Effect of laws and agreements inconsistent with the Act. Amendment of the First Schedule.
(u) in sub-clause (g), after the words "financial institution", the brackets and words "(other than a banking company)" shall be inserted.
16. 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 m 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 has no allocable 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
(6) twenty per cent, of the salary or wage earned 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 anythmg inconsistent therewith contained in any other law for the time being in force or m the terms of any award, agreement, settlement or contract of service.". XI In the principal Act, the First Schedule shall be renumbered aa the Second Schedule and,—
(a) in that Schedule as so renumbered—
(t) for the brackets, words and figure "(See section 4)", the brackets, words, figure and letter "[See section 4(b)]" shall be substituted ;
(h) 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 ; SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY $±f
(b) before that Schedule as so renumbered, the following Schedule shall be inserted, namely :— 'THE FIRST SCHEDULE [See section 4(a)] COMPUTATION OF GROSS PROFITS Accounting Year ending Item Particulars No. * 1. Net Profit as shown in the Profit and Loss Account after making usual and necessary provisions.
2. Add back provision for :
(a) Bonus to employees.
(6) Depreciation.
(c) Development Rebate Reserve.
(d)'Any other reserves. Total of Item No. 2
3. Add back also :
(a) Bonus paid to employees, in respect of previous accounting years.
(fe) The amount debited in respect of gratuity paid or payable to employees in excess of the aggregate of—
(1) the amount, if any, paid to, or provided for payment to, an approved gratuity fund; and
(n) 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 income-tax). Amount of sub-items Rs. Rs. Amount of main-items Rs. Remarks See footnote (1) See footnote (1) See footnote (1) See footnote (1) ' W U H I . me i>iiuii OUUJE^L w Luiuuuji 10 nnowu ID inc front ana JJJSO nccuum. ana uic provision made for texts on Income is shown, the actual provision for taxes on income shall be deducted from the profit. 328 THE GAZETTE OF INDIA EXTRAORDINARY [PART U- Item Particulars No.
(e) Any amount certified by the Reserve Bank of India in terms of sub-section (a) 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 4, Add also income, profits or gains (if any) credited directly to published or disclosed reserves, other than—
(j) capital receipts and capital profits (including profits on the sale of capital assets on which depreciation has not been allowed for incometax);
(it) profits of, and receipts relating to, any business situated outside India;
(iii) income of foreign banking companies from investments outside India. Net total of Item No. 4
5. Total of Item Nos. 1, 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— (0 capital expenditure and capital losses (other than losses on sale of capital assets on which depreciation has not fbeen allowed for income-tax); 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 329 Item Particulars No,
(it) 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. (/) 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 rabate, If written back,
(g) 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 budgetary grants, whether given directly or through any agency for specified purposes and the proceeds of which are reserved for such purposes. Total of Item No. 6
7. Gross profits for purposes of bonus (Item No. 5 minus Item No. 6) Amount of sub-items Rs. Rs. Rs. Amount of Remarks main-items Rs. See footnote (3) See footnote (3) See footnote (2)
Explanation,—In sub-item (b) of item 3, "approved gratuitv fund" has the same meaning assigned to it in clause (5) of Section 2 of the Incometax Act. Foot-notes—
(1) If, and to the extent, charged to Profit and Loss Account.
(2) If, and to the extent, credited to Profit and Loss Account
(3) In the proportion of Indian Gross Profit (Item No 7) to Total World Gross Profit (as per consolidated Profit and Loss Account, adjusted as in Item No 2 above only)'. 18 In the principal Act, the Second Schedule shall be renumbered as the Third Schedule and m that Schedule ap so renumbered,—
(o) in column (2), against Item No 1, for the word "company,", the words "company, other than a banking company'' shall be substituted ; 1 oflW, Amendment of the Second Schedule. 330 THE GAZETTE OF INDIA EXTRAORDINARY [PART Iltb) after Item No. 1 and the entries relating thereto, the following item, and entries shall bo inseited, namely — (I) 00 "2. Banking company
(3) (0 /The dividends payable on its preference share capital for the accounting year calculated at the rate at which such dividends are payable;
(it) 7.5 per cent, of its paid up equity share capital as at the commencement of the accounting year; (Hi) 5 per cent, of its reserves shown in its balar -e-sheet as at the commencement of th i accounting year, including any profli • carried forward1 from the previous accounting yearĵ J (ity) any s m which, in respect of the 9QCQU iting year, is transferred by It—
(ci) to a reserve fund under subsection (1) of section 17 of the Banking Regulation Act, 1949; oj
(fi) to any reserves In India in pursuance of any direction or advice given by the Reserve Bank^of Indla^ 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 j Item shall be'the aggregate of— (0 the dividends payable to its preference shareholders for the accounting year at the rate at which such dividends are payable'on such^amount as'bears the same proportion to'its'total preference share capital*as its'totalTworking funds in India'bear^to its total^world working funds; j
(it) 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; (iit) 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; 10 of 1948. 48 of 1956. SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 331 10 of 1040. ( I ) (2 ) (3)
(iv) any sum which, In respect of the accounting year, is deposited by it with the Reserve Bank of India under subclause (it) of clause (b) of sub-section (a) of section 11 of the Banking Regulation Act, 1949, not exceeding the amount renuircd under the aforesaid provision to be so deposited.";
(c) in the Explanation, for the figures, brackets and word "l(iii) and 3(li)" the figures, brackets and word "l(iii), 2(iii) and 3(ii)" Bhall be substituted.
19. In the principal Act, the Third Schedule shall be renumbered as the Fourth Schedule. N. SANJIVA REDDY, President. K. K SUNDAHAM, Secv to the Govt. of India. PMNTBB BY TITO OENE1AI, ItfANAOU. QOVMINMENT OF INMA PRESS, MINTO KOAD, N^W DELHI AN** pUBUSHKD My THp CONTIOLtEE Of FUBLJCATIONS, OTLMlh 1977 Amendment of the Third Schedule