Chapter X · Social Security Code
This chapter sets the money rules for the Social Security Organisations that run benefits under the Code, such as the Central Board (provident fund) and the Corporation (ESIC). They must keep proper accounts, be audited by the CAG every year, get their yearly budget approved by the government, and send an annual report to the government, which lays it with the budget and audited accounts before Parliament or the State legislature. It also requires regular valuations of every fund, including funds kept by establishments, and sets the framework for investing, borrowing and writing off unrecoverable dues, with the details left to government rules and the schemes.
Key points
In plain words
Each Social Security Organisation must keep proper accounts of its income and spending, in the form the government specifies after consulting the CAG.
Each of the Social Security Organisations shall maintain proper accounts of its income and expenditure in such form and in such manner as the appropriate Government may, after consultation with the Comptroller and Auditor-General of India, specify.
In plain words
The CAG audits each organisation's accounts every year at the organisation's cost, with full powers to demand books and inspect offices, and the certified accounts and audit report go to the government with the organisation's comments.
The accounts of each of the Social Security Organisations shall be audited annually by the Comptroller and Auditor-General of India and any expenditure incurred by him in connection with such audit shall be payable by the respective Social Security Organisation to the Comptroller and Auditor-General of India.
The Comptroller and Auditor-General of India and any person appointed by him in connection with the audit of the accounts of a Social Security Organisation shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General of India has, in connection with the audit of Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers, documents and papers and to inspect any of the offices of the Social Security Organisation.
The accounts of a Social Security Organisation as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded to the Social Security Organisation which shall along with its comments on the audit report of the Comptroller and Auditor-General of India forward the same to the appropriate Government.
In plain words
Each organisation must frame a budget every year for the following year and submit it for government approval by the date the government fixes; the budget must cover its liabilities and keep a working balance.
Each of the Social Security Organisations shall in each year frame a budget showing the probable receipts and the expenditure which it proposes to incur during the following year and shall submit a copy of the budget for the approval of the appropriate Government before such date as may be fixed by it in that behalf.
The budget shall contain provisions adequate in the opinion of the appropriate Government for the discharge of the liabilities incurred by the Social Security Organisation and for the maintenance of a working balance.
In plain words
Each organisation sends the government an annual report and its final budget, and the government lays these, with the audited accounts, CAG report and the organisation's comments, before Parliament or the State legislature.
Each of the Social Security Organisations shall submit to the appropriate Government an annual report of its work and activities and the budget finally adopted by the Social Security Organisation.
The appropriate Government shall cause a copy of the annual report, budget and the audited accounts together with the report of the Comptroller and Auditor-General of India and the comments of the respective Social Security Organisation thereon to be laid before each House of Parliament or the State legislature, as the case may be.
In plain words
Every fund kept by a Social Security Organisation or an establishment under the Code needs a valuation of assets and liabilities by a valuer or actuary appointed with prior government approval: every year for the Central Board, every three years for the Corporation, and as the government orders for everyone else. The government can also direct valuations at other intervals.
Each of the fund maintained by a Social Security Organisation or by an establishment under this Code shall have a valuation of its assets and liabilities made by a valuer or actuary, as the case may be, appointed, with the prior approval of the appropriate Government, by such Social Security Organisation or the establishment, as the case may be, in the following manner, namely:—
in case of Central Board, annually;
in case of Corporation, once in every three years;
in case of any other Social Security Organisation or establishment, as specified by the appropriate Government, by order:
Provided that the appropriate Government, if it considers necessary, may direct such valuation to be made at such intervals other than provided in this section.
In plain words
Organisations other than the Corporation may hold and sell property on conditions set by government rules, and may raise loans and set up staff provident or benefit funds with the government's prior sanction (for Central Board staff, the terms are in the Provident Fund Scheme). All organisations may invest money not immediately needed on conditions set by government rules, with Provident, Pension and Insurance Fund investments following their schemes. The Corporation's own property, loan and staff fund powers are in section 27.
A Social Security Organisation (except Corporation) may, subject to such conditions as may by Social Security Organisation be prescribed by the appropriate Government, acquire and hold property, both movable and immovable, sell or otherwise transfer any movable or immovable property which may have become vested in or have been acquired by it and do all things necessary for such purposes and for the purposes for which the said Social Security Organisation is established.
Subject to such conditions as may be prescribed by the appropriate Government, a Social Security Organisation may, from time to time invest any moneys vested in it, which are not immediately required for expenses properly defrayable and may, subject to as aforesaid, from time to time re-invest or realise such investments:
Provided that in case of Provident Fund, Pension Fund or Insurance Fund, such investment, re-investment or realisation shall be specified in the Provident Fund Scheme or Pension Scheme or Insurance Scheme, as the case may be.
Each of the Social Security Organisations (except Corporation) may, with the previous sanction of the appropriate Government and on such terms as may be prescribed by such Government, raise loans and take measures for discharging such loans.
Each of the Social Security Organisations (except Corporation) may, with the previous sanction of the appropriate Government and on such terms as may be prescribed by such Government, constitute for the benefit of its officers and staff or any class of them, such provident or other benefit funds as it may think fit:
Provided that in case of officers and staff of the Central Board, such terms shall be specified in the Provident Fund Scheme.
In plain words
An organisation may write off contribution, cess, interest or damages it considers irrecoverable, under conditions and in the manner set by government rules, or as the scheme specifies for the Provident, Pension and Insurance Funds.
Subject to the conditions as may be prescribed by the appropriate Government, where any of the Social Security Organisations is of the opinion that the amount of contribution, cess, interest and damages due to it, under this Code, is irrecoverable, the concerned Social Security Organisation may sanction the writing off of the said amount in such manner as may be prescribed by the appropriate Government:
Provided that in the case of Provident Fund, Pension Fund or Insurance Fund, such writing off shall be specified in the Provident Fund Scheme or Pension Scheme or Insurance Scheme, as the case may be.
Applying this at your workplace?
Ask the people who have done it for 50 years.
Chheda Consultants, Mumbai: PF, ESI, payroll and Labour Code compliance across India.