Method of calculation of annual bonus is as follows--
1. Calculate the gross profit in the manner specified in--
(a)- First shedule, in case of a banking company
(b)- Second Shedule,in any other cases
2. Calculate the Available Surplus.
Available Surplus = A+B, Where
A= Gross profit-- Depreciation admissible u/s 32 of the Income tax Act-- Development rebatr or investment allowance or development allowance.
B = Direct Taxes(calculated as per sec.7) in respect of gross profits for the immediately preceding accounting year--direct taxes in respect of suchh gross profits as reduced by the amount of Bonus, for the immediately proceeding accounting year.
3. calculate allocable Surplus-
Allocable Surplus= 60% of Available surplus
67% in case of foreign companies
4. Make adjustment of set-On and Set Off. For calculating the amount of Bonus of an accounting year,allocable Surplus is computed agter considering the amount of SET ON and SET OFF from the previous years,as illustraded in Fourth sedule.
5. The Allocable surplus so computed is distributed amongst the employees in propertion to salary or wages received by them durinf the relavent accounting year.
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