Social security contributions; firms warned of action in case of delay in deposits

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The government on Monday said the employers who delay the deposit of workers’ share of social security contributions like employees’ provident fund will not be able to claim the amount as deduction from their income.

  An amendment in this regard is proposed in the Finance Bill 2021, to ensure that firms deposit the social security contributions of their employees like Employees’ State Insurance (ESI) well in time.

Besides it is proposed to tax interest earned on annual provident fund contribution of over Rs 2.5 lakh from April 1, 2021. At present there is no tax on interest earned on provident fund deposits.

The government has also proposed to set up a web portal to map informal sector workers, like gig and platform workers, to provide them various benefits like health, credit and food etc.

In her budget speech, Finance Minister NirmalaSitharaman said in LokSabha, “We have noticed that some employers deduct the contribution of employees towards Provident funds, superannuation funds, and other social security funds but do not deposit these contributions within the specified time.”