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of <h1>Bonus Payments Deductions Clarified u/s 36(1)(ii) of Income-tax Act; Must Align with Payment of Bonus Act Limits.</h1> The circular addresses the allowability of bonus payments under section 36(1)(ii) of the Income-tax Act, 1961. It clarifies that deductions for bonuses or commissions paid to employees for services are limited to amounts specified by the Payment of Bonus Act, 1965, which prescribes a minimum of 8.33% and a maximum of 20% of salary. The deduction is not confined to the minimum percentage and can vary within the specified range, depending on the circumstances, as long as it complies with the Payment of Bonus Act, 1965.
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