All you need to know about the penalty for late filing of an ESI return

Introduction

Employer State Insurance is denoted as ESI. It provides protection to health-related employees and also includes medical and disability benefits. The companies that are registered with ESI are responsible for collecting ESI every month, which must be paid by the employer on the 15th of the subsequent month. The employers are also responsible to file ESI return in every 6 months (twice a year), the due dates are 11th May for the period of October to March, and 11th November for the period of April to September. In this blog, we will discuss the penalty for late filing of an ESI return but in short, we will also learn the process of filing ESI returns.

What is ESI return?

Employer State Insurance (ESI) is an independent organization managed by the Ministry of Labor and Employment. It is a self-financing social security and health insurance program for Indian workers. ESI is a social security program provided by the Indian government according to the Employees’ State Insurance Act, 1948. This program is self-financing, with regular monthly contributions from both employees and employers equal to a certain percentage of their salaries. Employee State Insurance Corporation (ESIC) and its rules and regulations are in charge of managing this ESI fund.

Process of filing ESI return

The following is the process of filing an ESI return:

• A 17-digit code, user ID, and password will be given to the employer while registering for ESI.
• Log in to the official website of Employer State Insurance.
• Fill in the correct information of the employee and click on “Filing monthly return”.
• Fill in the bank information to submit the monthly ESI contribution.
• Go to the “list of action” page and click on “Generate Challan”.
• Accept the declaration in the checkbox and click on “self-certification”. In case there are more than 40 employees, then upload Chartered Accounts Certificate.

Due date of filing ESI return

What is the penalty for late filing of an ESI return?

The following is the penalty for late filing of an ESI return:

1. Penalty for delay in payment of contribution

When employers do not pay contributions within the specific time limit prescribed in the regulation. They are liable to pay simple interest at the rate of 12% per year for each day to contribute to a penalty of late filing of an ESI return.

2. Penalty for late/ non-payment of employees’ contribution deducted but not paid

The sum deducted from an employee’s paycheck as an employee contribution is considered to have been entrusted to the employer. As a result, it is the employer’s responsibility to file the contribution with Employer State Insurance.

Non-payment or delayed payment of the Employee’s contribution deducted from the employee’s earnings is constituted as a “Criminal Breach of Trust” and is chargeable under section 406, 409 of the Indian Penal Code, along with an offence under section 85 (b-g) of ESI Act. Under the Act, the penalty for late filing of an ESI return, delayed payments, or forged payments is punishable with up to two years in prison and a fine of Rs.5, 000.

3. Penal provision for non-payment or delay in payment of contribution

Any employer that violates an ESIC requirement may face the following penalties mentioned in section 45 of the ESI Act. However, according to Regulation 31C ESIC may levy and recover damages at the following rates, to the amount of contribution payable in the event of default or delay in the payment of such contribution, but not exceeding such amount of contribution.

Bottom line

Employer State Insurance (ESI) is administered by Employee State Insurance Corporation (ESIC) which is a government organization. The program primarily offers financial and medical support to the workers and their families. Employers should prioritize the timely filing of ESI returns to avoid any financial burden and legal complications related to the penalty for late filing of ESI returns.