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There is no mandatory requirement for employers to pay a 13th month salary payment to employees.
This bonus structure is calculated at a rate of between 8.33% to 20% of an employee’s basic salary, given that the employee has a salary of less than 21,000 INR per month. If an employee makes more than this or a company has less than 20 employees, a bonus system is at the employers discretion.
If a 13th month salary payment is given by an employer, it is generally paid at the end of the financial year. If the statutory bonus applies to a given company, this can allocated monthly or as one lump sum around the festival season in October or November.
The extra bonus payment is considered an added cost to employer (CTC).
Any added bonus payments declared by an employer is taxable as part of an employee’s standard income.
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There is no mandated obligation of a 13th month salary payment in India.
No, the standard salary arrangement in India includes only a basic 12 month salary structure. It is possible for an Indian employee to negotiate extra benefits which may include a 13th month salary bonus.
