A bonus is an additional payment or reward given by an employer to employees on top of their regular salary. It is typically offered to recognize exceptional performance, achievement of specific targets, company profits, or special occasions like festivals. Bonuses serve as incentives to motivate employees and boost morale.

There are various types of bonuses commonly given in India, including:

• Statutory Bonus: Mandated by the Payment of Bonus Act, 1965, for employees earning up to ₹21,000 per month who have worked at least 30 days in the financial year. It ranges from 8.33% to 20% of the employee’s basic salary plus dearness allowance, usually paid annually.

• Performance Bonus: Paid for meeting or exceeding individual, team, or company performance targets.

• Diwali Bonus: A traditional yearly bonus given during the Diwali festival, often seen as a goodwill gesture from employers.

• Attendance Bonus: Reward given for perfect or excellent attendance, common in service industries.

• Spot Bonus: An immediate reward for exceptional work or achievements.

• Sign-On Bonus: Paid to attract new talent during recruitment, sometimes spread over multiple years.

• Retention Bonus: Offered to key employees to retain them during critical periods.

• Profit-Sharing Bonus: Shared among all employees based on company profits, usually paid annually.

• Non-Cash Bonus: Includes gifts, vouchers, extra time off, or other benefits instead of money.

Bonuses are usually taxable, with statutory bonuses forming part of taxable income. Employers deduct tax at source before disbursing bonuses.

In summary, bonuses are additional financial or non-financial incentives offered to employees to reward and encourage better performance, loyalty, and commitment to the organization.