Section 40: Application of this Chapter to establishments in public sector in certain cases
Reviewed by Finin2min Editorial Desk · Last reviewed 30 August 2026
Applies the bonus chapter to public-sector establishments where they compete in the prescribed manner with private-sector establishments.
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) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Chapter shall apply in relation to…
- (2) Save as otherwise provided in sub-section (1), nothing in this Chapter shall apply to the employees employed by any establishment in public sector.
Provisos, explanations & qualifications
- No proviso/explanation was separately extracted from this section text.
Thresholds and timelines in the text
- Application of this Chapter to establishments in public sector in certain cases.—(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per…
Actors expressly appearing in the text
Employee / worker
Full statutory text — Section 40
40. Application of this Chapter to establishments in public sector in certain cases.—(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Chapter shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector. (2) Save as otherwise provided in sub-section (1), nothing in this Chapter shall apply to the employees employed by any establishment in public sector.
How to apply this provision
- Primary statutory test — (1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Chapter shall apply in relation to…
- Additional operative limb — (2) Save as otherwise provided in sub-section (1), nothing in this Chapter shall apply to the employees employed by any establishment in public sector.
- Numerical or timing control — Application of this Chapter to establishments in public sector in certain cases.—(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per…
- Evidence file — retain facts and records proving the role/status of: Employee / worker.
Rules, forms and cross-references
Direct 2026 Central Rule mapping
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
When an event triggers application of this chapter to establishments in public sector in certain cases, record the trigger date, competent authority, prescribed rule/form, filing or decision step, service/acknowledgement and final outcome. A statutory point to test is: “Application of this Chapter to establishments in public sector in certain cases.—(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the”
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 40
What does Section 40 of the Code on Wages cover?
Applies the bonus chapter to public-sector establishments where they compete in the prescribed manner with private-sector establishments.
What is the main legal requirement or power in Section 40?
The first operative clause identified from the official text is: “(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Chapter shall apply in relation to…” Read it with the remaining subsections and any proviso below.
Does Section 40 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 40?
The provision contains this numerical/time expression: “Application of this Chapter to establishments in public sector in certain cases.—(1) If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per…” Apply it only in the clause and context in which it appears.
Which 2026 Central Rules are linked to Section 40?
No direct Central Rule is recorded in the current concordance. That does not exclude a relevant scheme, notification, State rule or enabling provision.
Is Section 40 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.