Section 36: Set on and set off of allocable surplus
Reviewed by Finin2min Editorial Desk · Last reviewed 30 August 2026
Carries forward excess allocable surplus or deficiency through the statutory set-on/set-off mechanism and period.
Principal remaining provisions commenced on 21 November 2025 under S.O. 5322(E), read with the earlier partial commencement; check section-specific footnotes in the current India Code text.
Provision / India Code ↗ · Official Act PDF ↗ · 2026 Central Rules ↗
Finin2min analysis — what the section actually does
Operative clauses
- (1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and…
- (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 26, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or…
- (3) The principle of set on and set off as may be provided in rules by the Central Government under this Code shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this Code.
- (4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.
Provisos, explanations & qualifications
- No proviso/explanation was separately extracted from this section text.
Thresholds and timelines in the text
- Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting…
- (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 26, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of…
- (4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.
Actors expressly appearing in the text
Employee / worker, Central Government
Full statutory text — Section 36
36. Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable
surplus exceeds the amount of maximum bonus payable to the employees in the establishment under
section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the
employees employed in the establishment in that accounting year, be carried forward for being set on in
the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised
for the purpose of payment of bonus in such manner as may be prescribed by the Central Government.
(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of
that year falls short of the amount of minimum bonus payable to the employees in the establishment under
section 26, and there is no amount or sufficient amount carried forward and set on under sub-section (1)
which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount
or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding
accounting year and so on up to and inclusive of the fourth accounting year in such manner as may be
prescribed by the Central Government.
(3) The principle of set on and set off as may be provided in rules by the Central Government under
this Code shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of
payment of bonus under this Code.
(4) Where in any accounting year any amount has been carried forward and set on or set off under this
section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off
carried forward from the earliest accounting year shall first be taken into account.How to apply this provision
- Primary statutory test — (1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and…
- Additional operative limb — (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 26, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or…
- Numerical or timing control — Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting…
- Central Rule mapping — 27, 28. Read the mapped provision together with this text rather than treating the concordance as a substitute for it.
- Evidence file — retain facts and records proving the role/status of: Employee / worker, Central Government.
Rules, forms and cross-references
Forms mapped
No prescribed form is directly mapped in the current concordance.
Other sections cited in this text
Related Labour Hub resources
A direct concordance is not exhaustive. Central/State jurisdiction, schemes, authority appointments, saved instruments and later notifications may change the practical route without changing the section wording.
Worked example
An employer configuring payroll for set on and set off of allocable surplus should first identify the employee and wage period, then apply the exact provision and any linked rule. The system rule should be tested against a sample payslip and bank/payment record. A text point to test is: “Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary” Read the mapped Central Rule(s) 27, 28.
Illustration only; it is not statutory text or a substitute for applying the actual facts, jurisdiction, current rule/scheme and official instrument.
Q&A — Section 36
What does Section 36 of the Code on Wages cover?
Carries forward excess allocable surplus or deficiency through the statutory set-on/set-off mechanism and period.
What is the main legal requirement or power in Section 36?
The first operative clause identified from the official text is: “(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and…” Read it with the remaining subsections and any proviso below.
Does Section 36 contain a proviso or explanation?
No standalone proviso or explanation was extracted from this section text. Check the full text below for clause-level qualifications.
What time limit, percentage or amount appears in Section 36?
The provision contains this numerical/time expression: “Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting…” Apply it only in the clause and context in which it appears.
Which 2026 Central Rules are linked to Section 36?
The current concordance maps Section 36 to Central Rule(s) 27, 28.
Is Section 36 currently operative?
Principal remaining provisions commenced on 21 November 2025 under S.O. 5322(E), read with the earlier partial commencement; check section-specific footnotes in the current India Code text.
Source & verification trail
Act: Code on Wages, 2019 — official India Code PDF ↗
Central Rules: Code on Wages (Central) Rules, 2026 — G.S.R. 343(E), 8 May 2026 ↗
Official library: Ministry of Labour & Employment — Labour Codes ↗
Source check: 20 August 2026. Individual professional interpretation should be re-reviewed when the section, rules, notification, scheme, State overlay or controlling judgment changes.