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Due date of ESI Deposit

14 November 2008

Requested to suggest -

1) legal implectaion of Late Deposit of ESI for Ltd company

2) What is due date of ESI deposit - Is it right practice to deposit ESI Chq in bank on 21st of month which get cleared after 2-3 days and whether it may considered as Timely Deposit

Thanks & Regards,

CA Akalesh S Rawat

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11 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 14 November 2008

Due date is 21st of each month for cheque deposit. 48 hrs grace time for collection. Late payment means interest and penalty.

C.Giridhar Krishna (CA Final Student) (85 Points)
Replied 14 November 2008

ESI LATE PAYMENT

UNDER SECTION 43B OF THE INCOME TAX ACT 1961, IF ESI PAYMENTS (I.E., EMPLOYER AND EMPLOYEE CONTRIBUTIONS) ARE NOT MADE WITHIN THE DUE DATES AS PRESCRIBED IN THE RELEVANT ACT, EMPLOYEE'S CONTRIBUTION SHOULD BE DISALLOWED AND ADDED BACK TO INCOME.

UNDER ESI ACT, IT WILL ATTRACT INTEREST AND PENALTY. THATS ALL.

Akalesh S Rawat (Job) (98 Points)
Replied 15 November 2008

Originally posted by :C.Giridhar Krishna
"	ESI LATE PAYMENT UNDER SECTION 43B OF THE INCOME TAX ACT 1961, IF ESI PAYMENTS (I.E., EMPLOYER AND EMPLOYEE CONTRIBUTIONS) ARE NOT MADE WITHIN THE DUE DATES AS PRESCRIBED IN THE RELEVANT ACT, EMPLOYEE'S CONTRIBUTION SHOULD BE DISALLOWED AND ADDED BACK TO INCOME. UNDER ESI ACT, IT WILL ATTRACT INTEREST AND PENALTY. THATS ALL.	"

Thanks for timely reply. But original question is still opened. I want to know what should be due date of deposit. The practice running in company to deposit ESI Payment on 21st of the month and get stam on challan by bank after 2-3 days will considered as timely payment. Please put your remark.

Thanks,

Akalesh S Rawat (Job) (98 Points)
Replied 17 January 2009

But original question is still opened. I want to know what should be due date of deposit. The practice running in company to deposit ESI Payment on 21st of the month and get stamp on challan by bank after 2-3 days will considered as timely payment. Please put your remark.

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 21 December 2009

Circular 261 ,8 August ,1979

939. Recording date of tender of cheque and date of its realisation on challans for payment of direct taxes is to be done by branch of authorised public sector bank where it is tendered for payment

Clarification 1

1. In terms of rule 80 of the Compilation of the Treasury Rules, if a cheque or draft tendered in payment of Government dues and accepted under the provisions of rule 79 is honoured on presentation, the payment is deemed to have been made on the date on which it was handed over to the Government bankers. The need to indicate on the challan the date of tender of the cheque/draft with the authorised public sector bank, was duly taken notice of by the Central Board of Direct Taxes and at the request of the Board, the Reserve Bank issued instructions to all the authorised public sector banks in November 1977 stipulating that the receiving branch should brand either an inward stamp of receipt as soon as the challan is tendered over the counter, or a date stamped with provision for two dates, i.e., the date of tender and the date of the realisation of the cheque. The specimen of the date stamp is as under:

Date of tender..............................

Received payment Rs. ...........................

Rupees.......................................

Date of realisation..........................

For.................................Bank

Authorised Signatory

2. Apart from the above procedure, the Central Board of Direct Taxes has revised the proformae of the various challans and new challan forms with colour bands are being progressively used to replace the existing ones. The new challans for the payment of self-assessment tax have already been introduced from April 1, 1979 and it will be noticed therefrom that the counterfoils of the challans meant both for the Income-tax Officer and the taxpayer contain separate columns for recording the date of tender of the cheque and date of its realisation. The other challan forms which are being introduced shortly, also contain similar columns.

3. In view of the foregoing, it is hoped that there will be no difficulty in recording, on the challan, the date of tender of the cheque/draft by the branch of the authorised public sector bank where it is tendered for payment of any of the direct taxes.

Circular: No. 261 [F. No. 385/61/79-IT(B)], dated 8-8-1979.

Clarification 2

1. In Boards Circular No. 261 dated 8-8-1979 [Clarification 1] it was stated that the Reserve Bank of India has requested the authorised public sector banks to brand the challan with the inward receipt stamp which should, inter alia, contain the date of tender of the cheque/draft and the date of its realisation. It was also stated therein that the Board was progressively introducing new-colour-band challans which would contain separate columns for recording the dates of tender of the cheque/draft and of its realisation.

2. A question has been raised as to whether the filling up of the dates of tender of the cheque/draft and its realisation in the revised colour-band-challan would be necessary if in the inward receipt stamp fixed by the receiving bank branch this information is filled in.

3. The objective here obviously is to record evidence on the counterfoils of challan about the dates of tender of the cheque/draft and its realisation. If this evidence is recorded in the inward receipt stamp of the bank, there would obviously be no objection if such dates in the challan forms are not filled. In such cases, the filling up of the relevant columns of the challan should not be insisted upon.

Circular : No. 265 [F. No. 385/61/79-IT(B)], dated 11-4-1980.

sunitha (Sr.Accountant Executive) (21 Points)
Replied 20 October 2010

Sir, Iam working as sr.accountant an organisation, they are Deposited ESI cheque on 21st of the month , but realised from the bank after two days. Iam confused to continue this practice, if the employees contribution is disallowed or not

sreeja

Moyyad Zapawala (Chartered Accountant) (425 Points)
Replied 11 December 2010

The last date for payment of ESI is 21st of next month, payment should be made through cheque only.If cheque is deposited on 21st day and it is clears 2-3 days it will be considered as a timely deposit.

cooldubai (Article) (31 Points)
Replied 20 December 2010

I would further ask WHY is the Due Date 21st(5days grace period) of every month? in other words which rule/law backs the regulation of such payments on this Due Dates.

The ESIC Act's Section 39(4) says the due dates of contribution is the last day of Wage Period.

This inflates my confusion. So people help me out.

Cooldubai