Statutory Bonus Due Date 2026: Payment Deadline, Diwali Bonus Rules & Penalty

Quick Answer: When Is Statutory Bonus Due in 2026?

Statutory bonus must be paid within 8 months of the close of the accounting year, under Section 19 of the Payment of Bonus Act, 1965. For companies following an April–March financial year, that means the deadline is 30 November 2026 for FY 2025–26.

This is a hard legal deadline, not a festive-season custom. Diwali bonus — which many companies pay in October/November as ex-gratia — is a separate, voluntary practice that happens to fall near the same window, and the two get confused constantly.

---

Statutory Bonus vs Diwali Bonus: They Are Not the Same Thing

	Statutory Bonus	Diwali Bonus
Legal basis	Payment of Bonus Act, 1965	None — voluntary/ex-gratia
Who must pay it	Mandatory for eligible establishments	Entirely at employer's discretion
Amount	8.33%–20% of salary/wages, based on "available surplus"	Any amount, often a flat sum
Deadline	Within 8 months of financial year close (typically 30 Nov)	No legal deadline — usually paid before Diwali for goodwill
Who's eligible	Employees earning up to ₹21,000/month (wage ceiling) who worked 30+ days in the year	Employer's choice — can include everyone

A company can legally pay its statutory bonus in November and still call its October payment "Diwali bonus" as a separate ex-gratia gesture — but if the October payment is being counted as the statutory bonus, make sure it meets the statutory minimum (8.33% of eligible wages) and is documented as such, not just as a goodwill gift.

---

The 8-Month Rule, Explained

Section 19 of the Act states bonus must be paid within 8 months from the close of the accounting year. For most Indian companies (April–March fiscal year):

• Financial year ends: 31 March 2026
• Statutory deadline: 30 November 2026

If your company follows a different accounting year (calendar year, for instance), count 8 months from your actual year-end — the deadline isn't fixed to a calendar date, it's fixed relative to your financial year close.

Extension: The appropriate government can extend this period by up to 2 more months (to 10 months total) on application, but this is not automatic — it requires a formal request with valid reason, not a default grace period employers can assume they have.

---

Who Is Eligible for Statutory Bonus

• Employees drawing wages (basic + DA) up to ₹21,000 per month
• Worked at least 30 working days in the accounting year
• Applies to establishments employing 20 or more persons (or notified establishments with fewer)

Bonus calculation base: Even if an employee earns between ₹7,000 and ₹21,000, the bonus is calculated as if their wage were ₹7,000 (or the current notified minimum wage, whichever is higher) — not their actual drawn salary. This is the single most common bonus calculation mistake: calculating 8.33% of actual salary instead of the capped calculation wage.

---

Penalty for Late Payment of Statutory Bonus

Missing the 30 November deadline (or your equivalent 8-month mark) isn't a minor administrative lapse:

1. It's a criminal offense under Section 28 of the Act — willful failure to pay bonus within the statutory period can attract imprisonment up to 6 months, a fine, or both, for the person responsible for the company's compliance.

2. Interest and recovery proceedings. Employees (or labour authorities) can initiate recovery proceedings for unpaid bonus, and once a complaint is filed, the company is dealing with an inspection, not just a late payment.

3. Reputational cost. Late or missed bonus payments are one of the fastest ways to damage trust with your workforce right before a festive season — the timing makes the failure visible in a way a delayed routine payment isn't.

---

A Pre-Deadline Compliance Checklist

Run through this before your statutory bonus deadline, not after:

• Confirm your accounting year-end and calculate the exact 8-month deadline from it
• Identify every employee earning ≤₹21,000/month who worked 30+ days this year
• Calculate each eligible employee's bonus on the capped wage (₹7,000 or notified minimum, whichever is higher), not actual salary
• Confirm your "available surplus" calculation if paying above the 8.33% minimum (up to 20% cap)
• Separate statutory bonus from any discretionary Diwali/festival bonus in your payroll records — don't let one informally stand in for the other without documentation
• Process payment and retain proof (bank transfer records, payslips showing bonus line item) before the deadline
• File Form D (Annual Return) as required under the Act, typically within 30 days of the bonus payment deadline

---

Worked Example: Calculating the Deadline and the Amount

Company: 45 employees, April–March financial year, FY 2025–26 ending 31 March 2026.

Step 1 — Deadline: 31 March 2026 + 8 months = 30 November 2026.

Step 2 — Eligible employees: Everyone earning ≤₹21,000/month who worked 30+ days this year. Say 38 of the 45 qualify (7 are above the ceiling).

Step 3 — Calculation wage per employee: Capped at ₹7,000/month (or the notified minimum wage if higher in your state) — regardless of whether the employee's actual basic+DA is ₹12,000 or ₹20,000.

Step 4 — Minimum bonus (8.33%): ₹7,000 × 8.33% = ₹583/month → ₹6,996 for the year, per eligible employee.

Step 5 — Maximum bonus (20%, if available surplus allows): ₹7,000 × 20% = ₹1,400/month → ₹16,800 for the year.

Most companies pay the statutory minimum (8.33%) unless their "available surplus" calculation under the Act's Schedule formulas justifies a higher percentage — that surplus calculation is based on gross profits, depreciation, and tax provisions, and is typically done by your finance/compliance team or auditor, not derived from payroll data alone.

---

Bonus Act Amendments and State Notifications: Why "2026 Rules" Searches Are Confusing

Every year, search volume spikes around "new bonus rules 2026" and similar — but the Payment of Bonus Act's core structure (8.33%–20%, ₹21,000 eligibility ceiling, ₹7,000 calculation wage) hasn't changed in recent amendments. What actually varies year to year:

• State-specific minimum wage notifications, which can affect the calculation wage floor if your state's notified minimum wage exceeds ₹7,000
• Industry-specific government circulars advising early or on-time bonus disbursal ahead of festivals, which are advisories, not changes to the legal deadline
• Sector-specific ex-gratia announcements (e.g., for central or state government employees) that are separate schemes, not Payment of Bonus Act amendments, and don't apply to private-sector establishments by default

If you see a headline about "new bonus rules," check whether it's a Payment of Bonus Act amendment (rare, and would apply nationally) or a state minimum wage notification or sector-specific announcement (common, and only applies if it matches your establishment type and state) before changing your calculation.

---

Why This Deadline Gets Missed So Often

In practice, the deadline rarely gets missed because nobody knew the rule — it gets missed because:

1. Eligibility lists get built manually each year, re-identifying which employees fall under ₹21,000, and someone inevitably gets missed or double-counted as salaries change mid-year.
2. The calculation wage cap (₹7,000) gets confused with actual salary, especially when it's recalculated by hand in a spreadsheet separate from regular payroll.
3. Diwali bonus and statutory bonus get paid as one lump sum without clear documentation of which portion satisfies the statutory requirement — which becomes a problem the moment anyone needs to prove compliance.
4. The 8-month deadline isn't on anyone's calendar the way the monthly PF/ESI due dates are, because it only comes around once a year.

Payroll software that tracks bonus eligibility automatically — flagging who crossed or fell under the ₹21,000 ceiling as salaries changed through the year — removes the manual list-building step that causes most of these misses.

See how PeopleVio tracks bonus eligibility and payroll compliance deadlines automatically → or book a 20-minute demo before your next bonus cycle.

---

Set-On and Set-Off: What "Available Surplus" Actually Means

If you're paying above the statutory minimum (8.33%) and want to justify a higher percentage up to the 20% cap, the Act's "set-on and set-off" mechanism is what governs it — and it's the part most payroll teams outsource to their finance/audit function rather than calculate themselves:

• Set-on: If a year's available surplus exceeds what's needed to pay the maximum 20% bonus, the excess (up to a limit) is carried forward and can be used to fund bonus payments in a future low-surplus year.
• Set-off: If a year's available surplus is insufficient to pay even the 8.33% minimum, any carried-forward set-on amount from previous years can be used to cover the shortfall, up to the minimum requirement.

In practice, this means your statutory bonus percentage can vary year to year even with a stable workforce, because it's tied to company profitability and prior years' surplus — not a fixed HR policy number. HR and payroll teams calculate eligibility and the per-employee amount once finance confirms the applicable percentage; they don't set the percentage independently.

---

Frequently Asked Questions

What is the last date to pay statutory bonus in 2026? Within 8 months of your accounting year's close — for an April–March financial year ending 31 March 2026, that's 30 November 2026.

Is Diwali bonus the same as statutory bonus? No. Diwali bonus is a voluntary, discretionary payment with no legal deadline. Statutory bonus is a legal obligation under the Payment of Bonus Act with a hard 8-month deadline. A company can pay both, or label its statutory bonus payment as "Diwali bonus" if it meets the legal minimum and is properly documented.

What happens if a company misses the statutory bonus deadline? It becomes a punishable offense under Section 28 of the Payment of Bonus Act — potential imprisonment up to 6 months, a fine, or both for the responsible person, plus exposure to recovery proceedings from affected employees.

Who is eligible for statutory bonus in India? Employees earning up to ₹21,000/month (basic + DA) who have worked at least 30 days in the accounting year, in establishments with 20 or more employees.

Is statutory bonus calculated on actual salary or a capped amount? On a capped calculation wage — ₹7,000/month or the notified minimum wage, whichever is higher — not the employee's actual drawn salary, even if it's higher than ₹7,000.

Can the 8-month bonus payment deadline be extended? Yes, the appropriate government can extend it by up to 2 additional months on formal application, but this isn't automatic and shouldn't be assumed as a default grace period.

Does every company have to pay statutory bonus? Establishments employing 20 or more persons are generally covered, along with certain notified establishments with fewer employees. Startups and very small companies below the threshold may be exempt, but should confirm applicability rather than assume it.

Can an employer pay bonus before the financial year even closes, like ahead of Diwali? Yes — there's no rule against paying early. Many employers pay in October/November, before the financial year closes in March, as long as the amount meets or exceeds the statutory minimum once the full year's "available surplus" is eventually calculated. If a shortfall is found after year-end reconciliation, the difference should be paid to stay compliant.

Is statutory bonus taxable for the employee? Yes, statutory bonus is treated as part of taxable salary income in the employee's hands under the Income Tax Act, and should be reflected in their Form 16 and payslip for the relevant period, separate from any tax-free reimbursements.

What records should a company keep to prove bonus compliance? Payslips showing the bonus line item, the eligibility list used for that year, the available-surplus calculation if paying above 8.33%, proof of payment (bank transfer records), and the Form D annual return filed with the labour department — all retained in case of an audit or employee dispute.

---

Managing statutory bonus, PF, ESI and payroll compliance deadlines across a growing team? See PeopleVio's compliance calendar or talk to our team about automating eligibility tracking before your next bonus cycle.