Penalty for non-payment or late payment of ESI contributions

Penalty for non-payment or late payment of ESI contributions

An employer who fails to pay the contribution within the limit prescribed under Regulation 31, 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.

The Corporation may levy and recover damages under Regulation 31C 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%

Also, non-payments, delayed or false payments under the ESI Act may attract imprisonment for a period extending up to 2 years and fine up to Rs.5,000.