When Must Statutory Bonus Be Paid?

The 8-month deadline, and what can extend it

Section 39(1) of the Code on Wages, 2019 states the deadline directly:

"All amounts payable to an employee by way of bonus under this Code shall be paid by crediting it in the bank account of the employee by his employer within a period of eight months from the close of the accounting year..."

Two details worth knowing: the accounting year is defined as starting 1 April (Section 2(a)), so for most employers this means bonus is due by around 30 November. And the appropriate Government can extend the deadline "upon an application made to it by the employer and for sufficient reasons" — but the statute caps the total extension at 2 years, so this isn't an indefinite escape valve. Where a bonus dispute is pending before an authority, a separate 1-month-from-settlement deadline applies instead (Section 39(2)).

Which establishments are covered: 20 or more employees

This threshold sits in Section 41(2), not Section 26 (where you might expect it, alongside eligibility) — worth knowing if you're trying to find it in the Code yourself:

"...the provisions of this Chapter shall apply to such establishment in which twenty or more persons are employed or were employed on any day during an accounting year."

The "were employed on any day during" phrasing matters — an establishment that briefly touched 20 employees at any point in the accounting year, even if headcount dropped below 20 later, is covered for that year. It's not a same-day headcount check applied only at year-end. This is a genuinely separate threshold from the various other headcount-based obligations under the labour codes — see which labour code obligations apply at what headcount for how it sits alongside those.

New establishments: a 3-phase structure, not a blanket exemption

Section 26(6)–(9) sets out a specific, phased approach for a newly set-up establishment (measured from the accounting year it first sells goods, manufactures, or renders services) — not a flat "first 5 years exempt" rule as it's often loosely described:

• Years 1–5: bonus is payable only in an accounting year the employer actually derives profit from the establishment — and even then, calculated under the Code's normal provisions but without the set-on/set-off carry-forward mechanism (Section 36) that applies to established businesses. A loss-making year in this window means no bonus is due at all, not a reduced one.
• Years 6–7: the set-on/set-off mechanism starts to apply, but with modified calculations that account for the excess or deficiency of allocable surplus from the preceding years in this window specifically.
• Year 8 onward: the establishment is treated exactly like any other — full normal rules, no special treatment.

"Profit," for this purpose, has its own definition (Explanation 1 to Section 26): the employer must have made full provision for that year's depreciation under the Income-tax Act, and any arrears of depreciation and losses from earlier years must already be fully set off against profits — a real profit test, not just positive cash flow. These rules also extend to new departments, undertakings, or branches set up by an already-existing establishment (Section 26(9)), not just brand-new companies.

Who's exempt from the whole Chapter, regardless of size or age

Section 41(1) lists specific categories excluded from statutory bonus entirely, independent of the 20-employee threshold: employees of the Life Insurance Corporation of India, seamen, registered dock workers, employees of Government establishments (Central, State, or local authority), the Indian Red Cross Society and similar institutions, universities and educational institutions, not-for-profit hospitals/chambers of commerce/social welfare institutions, Reserve Bank of India employees, certain public sector financial institutions the Central Government specifically notifies, and any other establishment the appropriate Government exempts by notification "having regard to the overall benefits under any other scheme of profit sharing" already available there.

Related reading

• Statutory bonus eligibility & wage ceiling — the wage-based side of eligibility, alongside this page's establishment-based side.
• How much statutory bonus am I entitled to? — the calculation formula once coverage and timing are confirmed.
• Which labour code obligations apply at what headcount — five other size-based thresholds under the labour codes, for comparison.
• Payslip and wage payment rules — the general wage-payment deadlines this 8-month bonus rule sits alongside.