The Ministry of Labour & Employment vide Gazette Notification dated 8 May 2026 under Section 127 of the Code on Social Security, 2020.
Key Highlights:
- Employers are now liable to pay simple interest at 12% per annum on any delayed contributions or amounts payable under the Social Security Code.
- This uniform rate applies across all social security obligations including PF, ESI, Gratuity, BOCW Cess, Employee Compensation, and other dues under the Code.
- Earlier provisions under individual Acts (e.g., 10% interest under the Payment of Gratuity Act) stand superseded.
- The revised rate is effective prospectively from 8 May 2026. Dues delayed prior to this date will continue under the earlier regime, while delays occurring on or after this date will attract 12% interest.
- During inspections or audits, authorities will uniformly apply the 12% rate for any delayed payments post 8 May 2026.
- This notification does not replace PF damages under Section 14B-equivalent provisions.
Action Points:
- Review current processes for PF, ESI, Gratuity, and SSCode compliances.
- Update statutory response templates and advisory notes to reflect the new interest rate.
- Communicate this change to relevant stakeholders within your organisation to ensure audit-readiness.