Navigating ESI Payments for Labor Charges: How Do You Handle Online System-Generated Challans?

Hi All, ESI has started with an online system-generated challan payment. We are facing one problem. In our company, what we do is hire contractors for carpentry work, call for repair work, etc., on which labor charges are applied. Previously, we used to deduct 6.5% ESIC from labor charges and pay it to ESIC monthly, showing it as others. However, since it has become online and only one challan is to be used, can anyone tell me how we can pay this amount through the system-generated challan?

Thanks & regards, Shivani

You have to register the carpenter first by inputting his details and then getting an insurance number allotted. Failing to do so will prevent you from generating the challan and making the payment. If you delay in registering the carpenter, you may not be able to pay the challan on time (already it is late), resulting in being forced to pay interest and damages. Prosecution may also be involved. Therefore, generate the challan as usual and make the payment. After that, register the carpenter and generate another challan as a supplementary one, making a separate payment for the time being. I am not sure if once a challan is generated, the system will block it for the month. Please try this as I have not handled the clerical side of it.

Regards,
Madhu.T.K

Thank you for the quick reply. My further query is that we hire these small contractors for carpentry, TV repair, etc., who hire 2-3 persons to complete the work. These contractors are hired a number of times in a year. The work may be for 1 or 2 days or more in a month. Every month, we may find new persons hired by them. In such cases, if we register each person under the contractor, the company will end up having so many persons in the system under its head. If so, we would also have to maintain their wage registers even though they work for 1 or more days in a month. Kindly guide me.

Thanks & regards,
Shivani

There are so many practical difficulties associated with the system. However, if you follow the law systematically, you will have to register a number of so-called casual workers. If you want to do it for the sake of compliance only, you can name one or two workers who are expected to come regularly and contribute ESI on their account only. You can also think of bringing these workers under a contractor who has independent ESI/EPF numbers. If so, you need not worry about their statutory obligations and the clerical work involved in it. Just ensure that the contractor is fulfilling the obligations as a contractor.

Regards,
Madhu.T.K

We are also facing the same problem. The online system is a headache for companies that have contractors. Either the contractor has to have the code and maintain it, or the principal employer has to bear it. It's a very time-consuming process too.

Regards,
Rajeev Dixit

Hi all,

In ESIC, is interest and damages applicable on labor charges? If interest and damages are not applicable, please send me the notification.

Thanks.

For all delayed payments towards ESI scheme, interests, and damages will be applicable at the prescribed rates. No notification is required for that; you just have to follow the ESI (General) Regulations. See Regulation 31-A, 31-B, and 31-C.

Regards, Madhu.T.K

Hi,

I have clarifications regarding ESI payment. Kindly advise. Our company has a salary cycle from the 26th to the 25th of every month. Hence, starting from 2017, management decided to change the payment cycle to the 1st to the 31st as a calendar month.

Now, they are asking me to clear the statutory payment from the 25th to the 31st, which is a 6-day payment period. Therefore, I am unable to generate the supplementary challan for ESI.

I kindly request you to guide me through the procedure.