Applicability of payment of bonus act 1965

Anurag Suresh kulkarni (Tax & Audit Associate) (137 Points)

08 August 2016  

There is a Indian privet limited company engaged in development of softwares for its 100% foreign holding which started its business operations 3 years back in 2013. The same is making payment of bonus to its employees during the year. It has mentioned exact amount of bonus in rupee terms ( in number) eligible to employees in their respective appointment letters. It has made provision for the bonus of the year at 31st March. There are total 18 employees (exclusing MD) during previous year. As per provisions of the act , Is bonus applicable to the co? Also please explain section 16 and that "FIVE" year concept in context of this company. It is quite confusing. Also please guide about any consequences if compnay is making bonus payment even if the act doesn't apply to it.