Understanding EPF and ESI Dues: What Are the Penalties and Interest Rates?

I need some information. One of our clients has EPF and ESI dues for 8 months, and they want to clear it. My questions are:

1. What is the penal interest and damages they need to pay in the case of PF?
2. What is the interest rate and damages for ESI?

I am waiting for responses from professionals.

Thanks,
Rao

Penal Interest Under Section 7Q:
• Number of days delayed in making payment × 12% p.a.

Penal Damages Under Section 14B:
• Number of days delayed in making payment × 5% p.a. (Less than 2 months)
• Number of days delayed in making payment × 10% p.a. (2 months and above but less than 4 months)
• Number of days delayed in making payment × 15% p.a. (4 months and above but less than 6 months)
• Number of days delayed in making payment × 25% p.a. (6 months and above)

I have attached a worksheet for the above.

Regards

Is the EPF penal interest calculation the same as the ESI penal interest calculation, or are they different? If they are different, please update me with the calculation details.

Thank you very much. It is very useful to calculate the damages and interest. I have calculated and given it to management, as I was under pressure.

Ravi

ESI Interest and Damage for Late Payment as PF

EMPLOYEES' STATE INSURANCE CORPORATION

PANCHDEEP BHAWAN CIG ROAD NEW DELHI

No. T-11/13/8/2001 Rev. I Dated: 8.2005

MEMORANDUM

Sub: Reduction in the Rate of Interest Payable for Delayed Payment of Contribution – Amendment of Reg. 31-A of ESI (Genl.) Regulations, 1950

Sub-Section (5) of Section 39 of the ESI Act 1948 provides that if any contribution payable under this Act is not paid by the Principal Employer on the date on which such contribution has become due, he shall be liable to pay simple interest at 12% per annum or at such a higher rate as may be specified in the Regulations until the date of its actual payment.

Provided that the higher interest specified in the Regulations shall not exceed the lending rate of interest charged by any scheduled bank.

The interest rate on commercial advances is fluctuating. The rate of interest being charged by the ESI Corporation on delayed payment of contribution is, therefore, more than the rate of interest being charged for commercial advances as well as the lending rate of interest charged by scheduled banks.

Now it has been decided by the Corporation that an employer who fails to pay the contribution within the periods specified in Regulation-31 shall be liable to pay simple interest at 12% per annum for each day of default or delay in payment of contribution. In this connection, a proviso to Reg. 31 of the ESI (Genl.) Reg. 1950 has been added and notified in the Gazette of India, Part III, Section 4 vide letter No. N-12/13/1/2005 P&D dated 6.7.2005 effective from 1.10.2005.

In Regulation 31-A of the ESI (General) Reg. 1950, the words "15%" shall be substituted by the words "12%".

The above notification was circulated vide Hqrs. letter No. N-12/13/1/2005 P&D dated 12.8.2005.

It is, therefore, requested that on all delayed payments of contribution, the interest may be charged at 12% per annum effective from 1.10.2005.

This issue has the approval of the Insurance Commissioner. Please acknowledge receipt. The Hindi version will follow.

(V.V.S.P. Ramachandra Rao) JOINT DIRECTOR (Rev.)

To The Regional Director/Director/Joint Director I/c Regional Office/Sub-Regional Office ESI Corporation

Copy to: All Joint Director (F)/Dy. Director (F), RO/SRO Joint Director (Vig.) NZ/SZ/WZ/EZ All Officers at Hqrs. office. All Branches at Hqrs. office. Guard File.

JOINT DIRECTOR (Rev.)

DAMAGE:

- Number of days delayed in making payment x 5% p.a (Less than 2 months)
- Number of days delayed in making payment x 10% p.a (2 months and above but less than 4 months)
- Number of days delayed in making payment x 15% p.a (4 months and above but less than 6 months)
- Number of days delayed in making payment x 25% p.a (6 months and above)

I have made a late payment of EPF for many members of my small firm. This was due to an accounting glitch as many new members were not onboarded in our internal EPF tracker, and hence we forgot to pay EPF for them for several months. It has been corrected now, and PFs for old months have been paid. Do I need to pay both interest (7Q) and damages (14B)? Or can I just pay the interest component (12% under 7Q) since we discovered the mistake ourselves and have corrected it now?

Thanks for your help.

Dear Members,

I am looking for the rate slab for PF interest and damage charges prevailing, both currently and before September 2008. It would be more helpful if there is any notification copy available. I kindly request your assistance.

Thank you.

EPF Penal Damages A/c No. 1 Contributions need to include employer and employee contributions, or only employee contributions. Please guide me.

Confusion about Damage Calculation in the EPF Act

I have a small confusion about damage calculation in the EPF Act. Please check the following and let me know which one is the correct method for 190 days.

Method I: If the contribution for a month is Rs. 20,000/-

20000 x 25% / 365 x 190 = 2603.00

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Method 2:

20000 x 5% / 365 x 60 days = 164.00
20000 x 10% / 365 x 60 days = 329.00
20000 x 15% / 365 x 60 days = 493.00
20000 x 25% / 365 x 10 days = 137.00

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total 1123.00

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Could someone please clarify?

Regards,
A. Karthikeyan

To Mr. KPMS,

I am unable to understand the Excel file regarding the calculation of damages under Sec 14b. I would be grateful if you could clarify the factor that is multiplied, i.e., 25.605%, and why the factor is being deducted or added.

Regards,
Chandrani

Dear All,

Please provide us with details regarding the late payment of ESIC contributions and what is the percentage rate.

Regards,
Bibhuti

If ESIC interest for delayed payment is less than Rs. 100, then how can we pay online?