Section 16. Special provisions with respect to certain establishments.

[(1) Where an establishments newly set up, whether before or after the commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of sub-sections (1A), (1B) and (1C).

(1A) In the first five accounting years following the accounting year in which the employers sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this Act in relation to that year, but without applying the provisions of section 15.

(1B) For the sixth and seventh accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, the provisions of section 15 shall apply subject to the following modifications, namely:—

(i) for the sixth accounting year—

set on or set off, as the case may be, shall be made in the manner illustrated in the ^1[Fourth Schedule] taking into account the excess or deficiency, if any, as the case may be, of the allocable surplus set on or set off in respect of the fifth and sixth accounting years;

(ii) for the seventh accounting year—

(1C) From the eighth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, the provisions of section 15 shall apply in relation to such establishment as they apply in relation to any other establishment.

Explanation I.—For the purpose of sub-section (1), an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management, name or ownership.

Explanation II.—For the purpose of sub-section (1A), an employer shall not be deemed to be have derived profit in any accounting year unless—

(a) he has made provision for that year’s depreciation to which he is entitled under the Income-tax Act or, as the case may be, under the agricultural income-tax law; and

(b) the arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits.

Explanation III.—For the purposes of sub-sections (1A), (1B) and (1C), sale of the goods produced or manufactured during the course of the trial running of any factory or of the prospecting stage of any mine or an oil field shall not be taken into consideration and where any question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall not be called in question by any court or other authority.]

(2) The provisions of ^2[sub-sections (1), (1A), (1B) and (1C)] shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments:

Provided that if an employer in relation to an existing establishment consisting of different (departments or undertakings or branches (whether or not in the same industry) set up at different periods has, before the 29th May, 1965, been paying bonus to the employees of all such departments or undertakings or branches irrespective of the date on which such departments or undertakings or branches were set up, on the basis of the consolidated profits computed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employees of all such departments or undertakings or branches (whether set up before or after that date) on the basis of the consolidated profits computed as aforesaid.

View Act Footnotes

Note: In the legacy archives, footnotes are grouped by original PDF page numbers rather than by section.

Page 3

1. The Act has been extended to Goa, Daman and Diu by Act 6 of 1977, s. 2 and the Schedule.
2. Subs. by Act 43 of 1977, s. 3, for the long title (w.e.f. 3-9-1977).
3. The words “except the State of Jammu and Kashmir” omitted by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
4. The proviso added by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
5. The proviso added by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
6. The proviso inserted by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
7. The words, brackets, letter and figure “under clause (b) of sub-section (3)” omitted by s. 3, ibid. (w.e.f. 25-9-1975).
8. Certain words, brackets and figure added by s. 3, ibid. (w.e.f. 25-9-1975).*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammuand Kashmir and the Union territory of Ladakh.

Page 4

1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).
2. The words, brackets and figures “and includes any amount treated as such under sub-section (2) of section 34” omitted byAct 23 of 1976, s. 4 (w.e.f. 25-9-1975).
3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975).

Page 5

1. Subs. by Act 6 of 2016, s. 2, for “ten thousand rupees” (w.e.f. 1-4-2014).

Page 6

1. Subs. by Act 66 of 1980, s. 3, for section 4 (w.e.f. 21-8-1980).

Page 7

1. The proviso added by Act 8 of 1969, s. 2 (w.e.f. 26-3-1965).
2. Subs. by Act 66 of 1980, s. 4, for “development rebate or development allowance” (w.e.f. 21-8-1980).
3. Subs. by s. 4, ibid., for “Second Schedule” (w.e.f. 21-8-1980).
4. Subs. by Act 8 of 1969, s. 3, for “For the purpose of clause (c) of section 6, any direct tax payable by the employer”(w.e.f. 26-3-1965).

Page 8

1. Subs. by Act 66 of 1980, s. 5, for “(other than development rebate or development allowance)” (w.e.f. 21-8-1980).
2. Subs. by s. 6, ibid., for section 10 (w.e.f. 21-8-1980).
3. Ins. by Act 67 of 1985, s. 3 (w.e.f. 7-11-1985).
4. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).

Page 9

1. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).
2. The Explanation inserted by s. 3, ibid. (w.e.f. 1-4-2014).
3. Subs. by Act 66 of 1980, s. 8, for section 13 (w.e.f. 21-8-1980).
4. Subs. by s. 9, ibid., for section 15 (w.e.f. 21-8-1980).
5. Subs. by Act 23 of 1976, s. 12, for sub-section (1) and the Explanation thereto (w.e.f. 25-9-1975).

Page 10

1. Subs. by Act 66 of 1980, s. 10, for “Third Schedule” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 12, for “sub-section (1)” (w.e.f. 25-9-1975).

Page 11

1. Subs. by Act 23 of 1976, s. 13, for “(1) Subject to this provisions of this section, all amounts” (w.e.f. 25-9-1975).
2. Sub-sections (2) to (7) omitted by s. 13, ibid. (w.e.f. 25-9-1975).
3. Sub-section (8) omitted by Act 55 of 1973, s. 2 (w.e.f. 1-9-1973).
4. Section 20 renumbered as sub-section (1) thereof by Act 66 of 1980, s. 11 (w.e.f. 21-8-1980).
5. Ins. by s. 11, ibid. (w.e.f. 21-8-1980).

Page 12

1. Subs. by Act 66 of 1980, s. 12, for “sections 22, 23 and 25” (w.e.f. 21-8-1980).
2. Subs. by Act 23 of 1976, s. 16, for “and in sections 24 and 25” (w.e.f. 25-9-1975).
3. Subs. by Act 66 of 1980, s. 13, for “section 25” (w.e.f. 21-8-1980).
4. Ins. by s. 14, ibid. (w.e.f. 21-8-1980).

Page 13

1. Ins. by Act 66 of 1980, s. 15 (w.e.f. 21-8-1980).

Page 14

1. Ins. by Act 66 of 1980, s. 16 (w.e.f. 21-8-1980).
2. Ins. by Act 23 of 1976, s. 19 (w.e.f. 25-9-1975).
3. Ins. by Act 66 of 1980, s. 17 (w.e.f. 21-8-1980).

Page 15

1. Subs. by Act 66 of 1980, s. 17, for “Provided that” (w.e.f. 21-7-1980).
2. The words in brackets shall stand omitted (date to be notified) by Act 62 of 1968, s. 41.
3. Clause (vi) omitted by Act 45 of 2007, s. 4 (w.e.f. 1-4-2006).
4. Clause (vii) omitted by Act 66 of 1980, s. 18 (w.e.f. 21-7-1980).
5. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for sub-clause (d) (w.e.f. 2-7-1982).
6. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).
7. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

Page 16

1. Ins. by Act 66 of 1980, s. 18 (w.e.f. 21-8-1980).
2. Clause (x) omitted by Act 23 of 1976, s. 20 (w.e.f. 25-9-1975).
3. Subs. by s. 22, ibid., for section 34 (w.e.f. 25-9-1975).
4. Subs. by Act 6 of 2016, s. 4, for sub-section (1) (w.e.f. 1-4-2014).
5. Subs. by Act 23 of 1976, s. 24, for “or in two successive sessions” (w.e.f. 25-9-1975).
6. Subs. by s. 24, ibid., for “in which it is so laid or the session immediately following” (w.e.f. 25-9-1975).

Page 18

1. Ins. by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
2. Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on incomeis shown, the actual provision for taxes on income shall be deducted from the profit.

Page 22

1. The First Schedule renumbered as the Second Schedule by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
2. Subs. by s. 19, ibid., for “(See section 4)” (w.e.f. 21-8-1980).
3. Subs. by s. 19, ibid., for entry (d) (w.e.f. 21-8-1980).
4. Ins. by Act 23 of 1976, s. 26 (w.e.f. 25-9-1975).

Page 25

1. Subs. by Act 23 of 1976, s. 26, for sub-item (g) (w.e.f. 25-9-1975).
2. Explanation inserted by s. 26, ibid. (w.e.f. 25-9-1975).

Page 26

1. The Second Schedule renumbered as the Third Schedule by Act 66 of 1980, s. 20 (w.e.f. 21-8-1980).
2. Subs. by s. 20, ibid., for “Company” (w.e.f. 21-8-1980).
3. Ins. by s. 20, ibid. (w.e.f. 21-8-1980).

Page 29

1. Subs. by Act 66 of 1980, s. 20, for “1(iii) and 3(ii)” (w.e.f. 21-8-1980).

Page 30

1. Subs. by Act 66 of 1980, s. 21, for the Third Schedule (w.e.f. 21-8-1980).