January

While the deadline for Provident Fund (PF) remittance by employers is the 15th of the following month, the PF department allowed an additional 5 days as grace period until now. Given that the PF remittance was done primarily by way of cheque payment at designated branches of the State Bank of India in the past, the manual system of cheque clearance and payment realization took time. Hence, the grace period of 5 days helped employers make timely PF remittances particularly when they made the remittance towards the 15th or so. As you are aware, the PF department now requires employers to make online remittances by way of internet banking. Online  remittances ensure instant payment and consequently, the PF department no longer sees the need for the grace period for PF remittance.

Effective February 2016 (PF contributions for January 2016 to be remitted in February 2016), there shall be no grace period for PF remittance. Employers need to ensure that the PF remittances are completed by the 15th of the following month in order to avoid penal charges.

You can take a look at the circular notifying the removal of grace period here.

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The Government of India has notified the Payment of Bonus (Amendment) Act, 2015, by way of a notification dated 01-Jan-2016. The notification impacts the Payment of Bonus Act, 1965, and mandates the following changes with regard to statutory bonus calculation.

1. Bonus eligibility:

Until now, employees who are employed on a salary exceeding Rs 10,000 per month were ineligible to receive statutory bonus as per Section 2 (13) of the Payment of Bonus Act. The salary limit has now been increased to Rs 21,000 per month. Hence, from now on, all employees whose monthly salary is Rs 21,000 or less will have to be considered for bonus payment. Given that salary refers only to Basic pay (plus DA and CCA) for all practical purposes, there will be a significant increase in the number of employees getting covered by the Payment of Bonus Act.

2. Bonus ceiling:

Until now, the Payment of Bonus Act limited the maximum salary, on which bonus needed to be calculated, to Rs 3,500 per month, as per Section 12 of the Payment of Bonus Act. In other words, if the monthly salary was greater than Rs 3,500, bonus needed to be calculated assuming a salary of Rs 3,500 per month. From now on, bonus should be calculated at actuals up to a monthly salary of Rs 7,000 per month. For salaries beyond Rs 7,000 up to Rs 21,000 per  month, the bonus calculation should be done on Rs 7,000 per month.

In case the minimum wage is higher than Rs 7,000 per month (for any employee/industrial category), the salary ceiling for the purpose of bonus calculation shall be the minimum wage and not Rs 7,000.

3. Changes are effective retrospectively:

The changes are effective 01-Apr-2014. This means that organizations will have to rework their bonus calculations – as per the changes notified – for the financial year 2014-15.

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