Section 12 - Amendment of section 16

New-establishment bonus entitlement: phased applicability and modified set-off rules govern bonus computation for initial years.

The amendment establishes a phased bonus regime for newly set up establishments: bonus in the first five accounting years is payable only for years in which the employer derives profit, calculated without applying section 15; for the sixth and seventh years section 15 applies with modified set-on/set-off as illustrated in the Third Schedule; from the eighth year section 15 applies fully. Explanations clarify what does not constitute a new establishment, require depreciation provision and prior loss set-off to deem profit, and exclude trial-run or prospecting sales, with the appropriate Government's decision being final.