Online ESI Return Filing: Process, Penalty for Late Filing

ESI scheme is a type of social security scheme for employees in the organized sector. The employees registered under the scheme are mainly entitled to medical treatment for themselves and their dependents,  cash benefit for unemployment in certain contingencies, and maternity benefit in the case of women employees.

Employees State Insurance Corporation (ESIC) of India is a significant multifaceted social system designed to provide socio-economic security to workers and their dependents.

 It is ensured by the system that the workers and his family are protected from suffering in case of unseen, unfortunate circumstances.

1. Registration and Filing of Returns

An employer who is eligible to be registered as per the ESI Act1948 must do so by persisting by the following steps:
An employer needs to keep all documents. 

An employer must file Form 1 which is available on the ESIC website for registration.
ESIC will verify all the details

Thereafter issue a 17 digit unique number which is required for all filings.

Every employee will receive an ESI card after submission of the form that contains all the details provided by the employer.

For registration following documents are required :

  • PAN card of the business.
  • Address proof of business.
  • The license issued under Shop and Establishment Act or Factories Act.
  • Basic documents required as per the nature of entity – Articles of Association, Memorandum in case of a company, partnership deed in case of a partnership, and Limited Liability Partnership.
  • Details of all Partners, directors, and shareholders.
  • Details of all employees along with their salary information.
  • Bank details.

On successful registration, returns can be filed online by the employer.
In order to file ESI returns online, the employer must follow the procedure:

  • The login credentials will be available after being registered on the ESI official website That will be while online filing of returns.
  • On login, there is a list of available actions. For example, modify employee details, report an accident, and so on.
  • To file the return, the employer must verify all the details of employees whether they are up to date and then file the return.
  •  The employer must fill the bank details and then submit the returns.
  • After that, the next step of the employer is to visit the option ‘List of Actions’ and ‘Generate Challan’.
  • Download the challan and keep it for future inspections and references.

2. Consequences of Late Payment or Non-Payment of Employees’ Contribution:

Amount deducted from employee’s wages as an employee contribution is deemed to have been entrusted to the employer. Therefore the employer is under obligation to mandatorily deposit the contribution with ESI.

Delayed payment or Non-payment of the Employee’s contribution deducted from the wages of the employee attract to ‘Criminal Breach of trust’ is punishable under an offense u/s 85 (bg) of ESI Act and also IPC Section(s) 406, 409. Delayed payments, Non-payments, or falsifying payments under ESI Act may attract imprisonment for a period extending up to 2 years and fine up to Rs 5,000.

3. Consequences of Delayed Payment

An employer who fails to pay the contribution within the limit specified in the regulation shall be liable to pay simple interest at the rate of 12% per annum in respect of each day of delay or default in payment of contribution.

4. Penal Provisions for Non-Payment or Delayed Payment of Contribution

The Corporation may levy and recover damages as per the Regulations, at the following rates, not exceeding the amount of contribution payable for default or delay in payment of the contribution.

Time Period of delayRate of damages in % p.a
Less than 2 months5%
2 to 4 months10%
4 to 6 months15%
6 months and above 25%

The employer is liable for liability under Section 85(a) for the first time, and if the employer repeats the offense, he will be liable for more punishment for every repetition.

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