Introduction
All the provisions and guidelines in respect to Wages of India is governed by The Code on Wages, 2019. Employers mandate the need for Code on wages, Registration and return filing for critical compliance requirements. Requirements such as wage payment norms, employee benefits, benefits, and statutory obligations in the law.
Code on Wages Registration and Returns is vital for individual HR professionals, employers, or payroll managers to avoid penalties or legal issues. This guide outlines the registration and filing process under the Code of Wages , helping business stay compliant while streamlining the operations..
Failing to comply can lead to heavy penalties and legal consequences, making it crucial for businesses of all sizes to stay informed and updated. Read our article: How to Calculate Gratuity in India: Formula, Eligibility & Tax Implications.
Understanding Code on Wages Registration and Returns
What is Registration Under the Code of Wages?
- Under wage regulation, employers must register their establishments with the appropriate state or central labour department.
- Registration provides legal recognition and allows authorities to monitor compliance with wage laws.
- It ensures transparency regarding salary payments, proper deductions, and lawful employee benefits.
- It curbs wage nonpayment issues and even fraudulent practices.
- Registration acts as evidence of legal compliance that can help in the event of labour inspections and audits.
Returns Under the Code on Wages
- Employers have to file periodic returns reflecting wage payments, deductions, and other compliance metrics.
- Depending on the state-specific rules, the returns may be annual, half-yearly, or quarterly.
- Filed returns provide authorities with accurate wage records and help prevent employee wage grievances.
- Filing returns timely is vital and failure to do so will not only lead to legal consequences but registration may also get suspended due to non-compliance .
Registration Process as per the code of wages
Who Needs to Register?
- All establishments, employer, contractors, or business entities that pays wages.
- Covers manufacturing, trade, services, IT, etc.
- No minimum threshold, but almost all businesses should comply with the Code regardless of size.
- Industries like construction, manufacturing, and IT services have specific compliance requirements.
- In some details, freelancers and gig workers may also be covered under specific provisions of minimum wage regulations.
Step-by-Step Registration Process
1. Gather Required Documents
For a start, employers are to prepare the following documents to register:
- Business registration certificate
- PAN Card and GSTIN details
- Employer identification number
- Employee details (number of employees, wages paid, etc.)
- Proof of business address
- Bank details linked to your Aadhaar (where applicable for tracking of wage disbursement).
2. Web Registration Through the Labour Department Portal
- Visit the state or central government portal.
- Sign up and log in as an employer.
- Complete the registration form online.
- Upload all relevant details.
- Review for any errors or blank fields before submitting.
3. Payment of Registration Fees
- Some states might require a registration fee.
- Payments are usually made online.
- Retain a digital payment receipt as evidence of submission.
4. LMS Verification & Approval Process
- Reviewed by the labour department.
- If all documents are in order, then approval is granted.
- Applicants may also be asked to amend or clarify data in case of any differences.
- The employer is granted a Registration Certificate that can be used to prove such compliance.
5. National Qualification Registration Certificate
- The certificate serves as evidence of compliance under the Code on Wages.
- The certificate must be shown at the workplace by businesses.
- Keep a digital copy for future reference.
Code on Wages Returns: Types & Filing Process
Types of Returns Under the Code on Wages
1. Annual Returns
- You are expected to file an annual return detailing wage payments, deductions, compliance measures, etc.
- This is critical for tax compliance and regulatory transparency.
2. Half-Yearly Returns
- Some states need half-yearly returns to track mid-year compliance.
- Ensure wage structures are compliant throughout the year.
3. Other Periodic Returns
- Some states mandate quarterly or monthly filings.
- Employers must monitor regulatory changes to remain compliant.
Step-by-Step Process to File Returns
1. Log in to the Labour Department Portal
- Visit the official government website for where the business is registered.
- Log in with your employer credentials
- Enable two-factor authentication for safe access, if required.
2. Choose the Type of Return that Applies
- Choose annual, semi-annual, or other applicable returns.
- Check other filing deadlines before filing.
3. Fill in Employee & Wage Details
- Enter total salaries paid, number of employees, and any deductions or any benefits provided.
- Maintain data on working hours and overtime.
- You may also attach a digital record of the employee salary slips.
4. Upload Supporting Documents
- Attach documents like payroll records and tax submissions.
- Ensure all figures match payroll records.
5. Pay Fees (If Any) & Submit
- Certain states charge processing fees for return filing.
- Ensure timely submission to avoid penalties.
6. Download Acknowledgment Receipt
- After you submit successfully, you must download the acknowledgment and save it.
- Take this receipt for audit inspections or compliance checks.
Compliance & Deadlines for Registration and Returns
To avoid penalties and to take care of the legal aspects, it is therefore important for businesses to register and file returns under the Code of Wages on time. Employers need to remain cognizant of state-specific compliance differences, filing requirements, and consequences for non-compliance.
New Companies Registration Deadline
- Every employer is also required to register his establishment under the Code on Wages, 2019, within 30 days of starting a business.
- Businesses can register online through the Labor Department Portal.
- What is the registration deadline for small businesses under the Code on Wages? Small Businesses have 30 days to register, but some states may have relaxed compliance requirements for micro enterprises.
Filing Deadlines for Annual and Half-Yearly Returns
- Annual Returns: Generally due on 31st March of every year.
- Half-Yearly Returns: Some states require mid-year compliance filings which are usually due at the end of 30th September.
- Which individuals must submit half-yearly returns as per the Code on Wages? Certain businesses must submit half-yearly returns depending on their state or industry, such as the manufacturing and IT industry.
Compliance Across Different States
- Some states have made stricter compliance measures, while others offer relaxed regulations for start-ups and MSMEs.
- How do state-specific variations impact wage return filing deadlines? Employers must check their respective State Labour Departments to confirm the exact deadline and filing requirements.
Impact of Not Meeting Deadlines
- Employers who do not register before the deadline can face a penalty up to ₹50,000.
- Wage returns can incur progressive penalties for late filing, ranging from ₹5,000 for delays up to one month, 10,000 for delays between one and three months, and up to ₹50,000 for delays beyond three months.
- Can filing for an extension for the return be requested by the employer? In some states, businesses must request an extension of deadlines by writing to the Labour Commissioner, and the same may be granted the extension if there is a genuine reason.
Penalties for Non-Compliance Under the Code of Wages
Failure to comply with registration and filing of returns under the code on wages may attract several penal provisions, consequential financial burdens, and adverse reputational damages.
Civil Penalties & Fees for Not Registering
- Employers that do not register their establishment within the stipulated time, can be fined a minimum of ₹50,000.
- Can a business operate without registering under the Code on Wages? Registration is mandatory for all wage-paying establishments, regardless of their size.
When Returns Are Filed Late Penalties
- A “system of progressive penalties” applies to businesses that fail to submit wage returns on time.
- Penalties vary between ₹5,000 — ₹20,000 based on the extent of delay and frequency of non-compliance.
- What if an employee fails to file wage returns repeatedly? Continued non-compliance can lead in legal actions and suspension of a business license.
Liability of Employer for Misrepresentation of Wages
- Organisations that misrepresent wage payments can be slapped with a maximum fine of ₹1 lakh.
- Is a company liable for payroll mistakes under the Code on Wages? Yes, both the employer and HR personnel may be held liable for erroneous wage reports.
How to Address a Non-Compliance Issue
- Employers should immediately file any overdue returns and pay any penalties that accrued.
- Can businesses correct the overpayment of wages on their own? Yes, businesses can submit revised wage returns within the correction window provided by authorities.
- Seeking legal consultants’ help and advice can help companies avoid compliance risks and penalties in the future.
Expert Insights & Recent Updates on Registration & Returns
The evolving commercial landscape under the Code on Wages shaped by government notifications, expert recommendations, and legal interpretations.
Government Notifications Circulars Related to Registration & Filing of Return
- Earlier this month, the Labour Ministry issued clarifications on the filing of digital returns and made it mandatory for returns to be filed online for companies having employees more than 50.
- What are the Government updates on the Code on Wages? Since 2024, the government has facilitated the compliance process through the Shram Suvidha Portal, which allows for online registration and filing for ease in compliance.
Practices in Compliance: Perspectives from the Experts
- Legal Pofessionals recommend automation of wage return filing with HRMS (Human Resource Management Systems) for compliance and better management.
- How to ensure wage compliance – Maintaining proper documentation, records of payroll, and using compliance software.
Real-life Examples of Companies Fined for Not Complying
- Case Study: XYZ Pvt Ltd The company failed to file returns for two consecutive years, leading to scrutiny of the ESI authorities.
- Eventually, XYZ Pvt. Ltd. avoided heavy penalties by rectifying its filings and improving wage compliance systems.
Labour Compliance – Digital Transformation & Automation
- The government is implementing AI-driven compliance monitoring systems to automate the identification of wage violations and enhance enforcement.
- How should businesses adopt technology to meet wage compliance? Automating payroll systems minimizes mistakes and increases the efficiency of reporting. Further implementation of compliance dashboards helps in tracking any real time wage obligations.
FAQs on Code on Wages Registration & Returns
1. Is registration under the Code of Wages mandatory for all businesses?
Yes, every business that pays wages must register, regardless of size or industry.
2. Can I change a return after it has been submitted?
Yes, employers can file revised return within the correction window as specified by the Labour Department’s procedure.
3. Can MSMEs and Startups be exempted from wage return filing?
No, registration remains mandatory. However, some states offer relaxed compliance requirements for start-ups and MSMEs, reducing the frequency of return filings.
Conclusion
Any failure to register or file returns under the Code on Wages, 2019 can spark serious consequences for business of all sizes. Proper compliance helps to maintain transparency, and avoid penalties, and also streamlines wage management.
By following the stepwise process of registration and filing of returns, businesses can eliminate compliance risks and facilitate smooth payroll functioning. Wage requirements can be complex, so employers should also utilize automation tools and professional legal guidance to ensure streamlined compliance.
Not abiding by the Code of Wages registration requirements can result in heavy penalties, legal action, and even business disruptions. Staying updated with government notifications, best practices, and industry trends, businesses remain compliant and meet evolving labour regulations effectively.
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