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CONTRIBUTION

21 What are the penalties for non-payment ?

1. The employer is liable for prosecution under Section 85(a) of the Act.
2. The Corporation may levy and recover damages, at the following rates, not exceeding the amount of contribution payable for default or delay in payment of the contribution.

Period of delay Rate of damages in % p.a.
i) Less than 2 months 5 %
ii) 2 to 4 months: 10%.
iii) 4 to 6 months: 15 %
iv) 6 months and above 25 %.
22 What are the penalties for non-payment ?

1. The employer is liable for prosecution under Section 85(a) of the Act.
2. The Corporation may levy and recover damages, at the following rates, not exceeding the amount of contribution payable for default or delay in payment of the contribution.

Period of delay Rate of damages in % p.a.
i) Less than 2 months 5 %
ii) 2 to 4 months: 10%.
iii) 4 to 6 months: 15 %
iv) 6 months and above 25 %.
23 What are the contribution periods and benefit periods?

The financial year from April to March has been divided in to two six monthly contri bution periods. i.e. 1 st April to 30 th September and 1st October to 31st March of next year. The benefit period for each contribution period commences three months after the end of the relevant contribution period i.e. Jan to June and July to December (The calendar year from January to December has been divided into two six monthly benefit periods).
24 What are the contribution periods and benefit periods?

The financial year from April to March has been divided in to two six monthly contri bution periods. i.e. 1 st April to 30 th September and 1st October to 31st March of next year. The benefit period for each contribution period commences three months after the end of the relevant contribution period i.e. Jan to June and July to December (The calendar year from January to December has been divided into two six monthly benefit periods).
25 If the wages of an employee exceeds Rs.15,000 in a month, can he be treated as not covered and deduction of contribution from his wages be stopped?

If the wages of an employee (excluding remuneration for overtime work) exceeds the wage limit prescribed by the Central Government after April or October for the contribution periods from April to September, and October to March, he continues to be an employee till the end of that contribution period and contribution is to be deducted and paid on the total wages earned by him.
26 If the wages of an employee exceeds Rs.15,000 in a month, can he be treated as not covered and deduction of contribution from his wages be stopped?

If the wages of an employee (excluding remuneration for overtime work) exceeds the wage limit prescribed by the Central Government after April or October for the contribution periods from April to September, and October to March, he continues to be an employee till the end of that contribution period and contribution is to be deducted and paid on the total wages earned by him.
27 What is the effect of increase in wages from a retrospective date?

In case the wages of an employee is increased from a retrospective date resulting in crossing the wage limit prescribed, its effect on coverage of that employee is only after expiry of the Contribution period during the currency of which such increase is announced or declared. The contribution on enhanced wages is also payable from the month in which such increase is announced. There is no need to pay the contribution on the arrears for the period prior to the month of declaration/announcement/agreement.
28 What is the effect of increase in wages from a retrospective date?

In case the wages of an employee is increased from a retrospective date resulting in crossing the wage limit prescribed, its effect on coverage of that employee is only after expiry of the Contribution period during the currency of which such increase is announced or declared. The contribution on enhanced wages is also payable from the month in which such increase is announced. There is no need to pay the contribution on the arrears for the period prior to the month of declaration/announcement/agreement.
29 We pay bonus to employees on a pro-rated monthly basis. Is there an issue with this ?

If the payment is made monthly, there is a risk that the ESI Inspector will insist that ESI contributions include the bonus component, hence it is better to pay bonus as a lump sum. Any allowances paid on quartetly basis would not attract ESI.
30 We pay bonus to employees on a pro-rated monthly basis. Is there an issue with this ?

If the payment is made monthly, there is a risk that the ESI Inspector will insist that ESI contributions include the bonus component, hence it is better to pay bonus as a lump sum. Any allowances paid on quartetly basis would not attract ESI.
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