Diwali Bonus 2026: Rs 7,000 or 8.33%? Calculator and Rules for Employers

For employers and payroll teams: the calculator above gives the bonus for one wage level and multiplies it by your headcount, and the register download covers the whole staff. JK Tech Hub runs payroll software for factories, shops and offices across Gujarat, so the rules below are written from the employer side: who to pay, how much, by when, and what to keep for inspection.

As of 3 October 2026. This is the first Diwali bonus season under the Code on Wages, 2019, which replaced the Payment of Bonus Act, 1965 from 21 November 2025, and the Ministry of Labour notified the Rs 21,000 eligibility and Rs 7,000 calculation ceilings on 25 August 2026.

Key fact	Detail
Law	Code on Wages, 2019, Chapter IV (bonus), in force from 21 November 2025
Eligibility	Wages up to Rs 21,000 a month and at least 30 working days in the accounting year
Calculation ceiling	Rs 7,000 a month or the applicable minimum wage, whichever is higher
Rate	Minimum 8.33% (or Rs 100, whichever is higher), maximum 20%
Who it applies to	Establishments employing 20 or more persons on any day in the accounting year
Deadline	Within eight months of the accounting year end, credited to the employee's bank account
Official source	Ministry of Labour and Employment (labour.gov.in)

This guide is for factory owners, HR managers and accountants in India, especially in Gujarat's manufacturing belts, who must pay statutory bonus before or around Diwali. After reading it you will be able to check who is eligible, calculate each employee's bonus correctly, and see what your payroll software should do differently now that the Payment of Bonus Act has been replaced.

What changed for Diwali bonus in 2026

The bonus rules now sit in Chapter IV of the Code on Wages, 2019, not in the Payment of Bonus Act, 1965. The core formula is familiar, but the definition of wages, the eligibility ceiling and the payment mode have changed.

Three changes matter for payroll teams. First, the Code uses one definition of "wages" across minimum wage, payment of wages and bonus, including the rule that allowances above 50% of remuneration are added back to wages. Our post on the 50% wage rule explains that in detail. Second, the eligibility ceiling of Rs 21,000 a month and the calculation ceiling of Rs 7,000 or minimum wage were notified on 25 August 2026, deemed effective from 21 November 2025. Third, bonus must be credited to the employee's bank account rather than paid in cash.

The accounting year 2025-26 straddles the switch: about seven and a half months under the old Act and the rest under the Code. The arithmetic is almost the same, but agree the transition treatment with your chartered accountant before you run the final numbers.

Who is eligible for statutory bonus under the Code on Wages

An employee is eligible if their wages are not more than Rs 21,000 a month and they worked at least 30 days in the accounting year. The establishment must employ 20 or more persons on any day of that year for the bonus chapter to apply.

Some practical points from payroll runs:

• Contract workers through a contractor are the contractor's employees for bonus, but the principal employer should check the contractor actually pays, since unpaid dues tend to come back to the site.
• Employees who left during the year are still owed bonus for the days worked if they crossed 30 days.
• Apprentices under the Apprentices Act are generally outside the bonus chapter.
• Disqualification applies where an employee is dismissed for fraud, violent behaviour at the workplace, theft or sexual harassment.
• New establishments have relief in their first five accounting years: bonus is payable only for years in which they make a profit.

How to calculate statutory bonus step by step

Statutory bonus is calculated as the bonus percentage multiplied by the employee's wages for the year, where each month's wages are capped at Rs 7,000 or the applicable minimum wage, whichever is higher. Employees earning below the cap use their actual wages.

1. List eligible employees: wages up to Rs 21,000 a month and 30 or more days worked.
2. Find the calculation base for each month: the lower of actual wages and the cap, where the cap is the higher of Rs 7,000 and the minimum wage for that employee's category and zone.
3. Add the months worked to get annual bonus wages.
4. Choose the rate: at least 8.33%, and up to 20% if your allocable surplus supports it.
5. Multiply, round, and credit the amount to each employee's bank account before the deadline.

In Gujarat the notified minimum wage for most scheduled employments is above Rs 7,000 a month, so in practice the minimum wage usually becomes the cap. Minimum wages differ by skill level and zone, and the state revises the variable allowance twice a year, so check the current figure on the Gujarat labour department notification for the period you are paying.

Worked example: bonus calculation for a Rajkot factory

For a worker whose monthly capped base is Rs 12,000 and who worked all 12 months, the minimum bonus is about Rs 11,995 at 8.33% and the maximum is Rs 28,800 at 20%. The table shows how eligibility and the cap change the result for different employees.

The figures below assume a minimum wage of Rs 12,000 a month for illustration only. Replace it with the notified rate that applies to each employee.

Employee	Monthly wages	Months worked	Eligible	Monthly base used	Bonus at 8.33%	Bonus at 20%
Machine operator	Rs 15,000	12	Yes	Rs 12,000 (cap)	Rs 11,995	Rs 28,800
CNC setter	Rs 19,500	12	Yes	Rs 12,000 (cap)	Rs 11,995	Rs 28,800
Helper (joined in October)	Rs 12,000	6	Yes	Rs 12,000	Rs 5,998	Rs 14,400
Quality supervisor	Rs 23,000	12	No, above Rs 21,000	Not applicable	Rs 0 statutory	Rs 0 statutory
Seasonal packer	Rs 12,000	Less than 1 (25 days)	No, under 30 days	Not applicable	Rs 0 statutory	Rs 0 statutory

Two things trip up payroll teams here. The supervisor at Rs 23,000 is not entitled to statutory bonus, but many Gujarat employers still pay an ex gratia Diwali amount by custom, which should be recorded separately so it is not confused with the statutory figure. And the operator and the setter get the same bonus despite different salaries, because both are capped at the same base.

Allocable surplus, set-on and set-off in plain words

Allocable surplus decides whether you pay more than 8.33%. It is 67% of the available surplus for most companies (60% for banking companies), and any excess or shortfall against the 20% and 8.33% limits is carried forward for up to four accounting years.

The available surplus is worked out from gross profit after prescribed deductions such as depreciation and direct taxes. If the allocable surplus exceeds what you need to pay 20% to everyone, the excess is "set on" and carried forward. If it is not enough to pay the minimum 8.33%, the shortfall is "set off" against future surplus. The earliest carried-forward amount is used first.

This is accounting work, not payroll work. Your CA computes the surplus from audited figures. Payroll software only needs the final percentage to apply, plus a record of which year's set-on or set-off it used.

When must the Diwali bonus 2026 be paid

Statutory bonus must be credited within eight months of the end of the accounting year. For a year ending 31 March 2026, the last date is 30 November 2026, so a bonus paid before Diwali in early November meets the deadline.

Most Gujarat employers pay before Diwali anyway, because workers travel home and the festival is when the money is needed. If there is a dispute about the amount, the undisputed portion should still be paid on time. Keep the bank credit proof per employee, since the payment mode is now part of compliance.

What we have seen running payroll for Gujarat manufacturers

On HRMS and payroll projects for units in Metoda, Shapar-Veraval and Aji GIDC, the bonus calculation itself is rarely wrong. The errors come from attendance data, wage definitions and contract labour.

• A casting unit in Metoda GIDC had 30-day eligibility counted from biometric punches, but half its contract labour punched on a separate device. Merging the two attendance sources was the real project.
• A pump manufacturer near Rajkot paid bonus on basic only, while the Code's wage definition pulled part of a large special allowance back into wages. Correcting that before payout cost less than correcting it after an inspection.
• A kitchenware exporter paid ex gratia to everyone, including staff above Rs 21,000, in one payroll head. Splitting statutory bonus from ex gratia gave the CA clean figures for the return.

What your payroll software should do for bonus under the Code

Payroll software should calculate bonus eligibility and base month by month, using the Code's wage definition and the minimum wage that applied to each employee in each month, and then produce a bank credit file and a register.

Use this checklist when you review your system before the bonus run:

• Wage definition follows the Code, including the 50% add-back of excess allowances.
• Eligibility uses Rs 21,000 a month and 30 days worked, with a date-effective setting so future changes do not need code changes.
• Minimum wage tables by skill, zone and period, so the cap is correct for each month.
• Pro-rata calculation for joiners and leavers.
• Separate heads for statutory bonus and ex gratia.
• Bank transfer file and a bonus register exportable for inspection.

Our payroll compliance checklist for India covers PF, ESI and professional tax alongside bonus.

If your current system cannot do the items above, we can set them up in our HRMS and payroll software before the November payout. Get a fixed quote for bonus-ready payroll, or WhatsApp +91 7265004040 with your headcount and we will reply within one working hour.

How to decide what to do this month

Run a dry calculation this week, compare it with what you paid last Diwali, and investigate any employee whose bonus moved by more than 10%. The differences will show where wage definitions or attendance data need fixing before payout.

If your bonus is calculated in a spreadsheet each year, this is the season to move it into payroll. The rules are now date-effective notifications under one Code, and a system that stores the ceiling, the minimum wage table and the attendance in one place will save the scramble every October.

Related reading and next step

See our HRMS and payroll software for factories and offices, the attendance management system that feeds eligibility, and our explainers on the 50% wage rule and the payroll compliance checklist. For a fixed quote to set up bonus, minimum wage tables and bank files in your payroll, request a quote here or WhatsApp +91 7265004040.