Additional Emoluments (Compulsory Deposit) Act, 1974

• 1. Short title, extent and commencement.- (1) This Act may be called the Additional Emoluments (Compulsory Deposit) Act, 1974.

  (2) It extends to the whole of India.

  (3) It shall be deemed to have come into force on the 6th day of July, 1974, except section 14 which shall come into force at once.

  2. Definitions.- In this Act, unless the context otherwise requires,--

  (a) "appointed day" means the 6th day of July, 1974;

  (b) "additional dearness allowance" means such dearness allowance as may be sanctioned from time to time, after the appointed day, over and above the amount of dearness allowance payable in accordance with the rate in force immediately before the date from which such sanction of additional dearness allowance is to take effect.

  Explanation I.-Where payment of dearness allowance is linked to a cost of living index or any other factor, any automatic payment, after the appointed day, of dearness allowance in consequence of any rise in such cost of living index or in consequence of any change in such other factor shall, notwithstanding the provisions of this clause, be deemed to be the additional dearness allowance.

  Explanation II.-For the purpose of computation of the additional dearness allowance in relation to an employee who enters into any post after the appointed day, dearness allowance payable, immediately before the appointed day, in relation to such post shall be deemed to be the dearness allowance payable to such employee as if, he were holding that post on the appointed day and any excess over and above the said dearness allowance shall be deemed, for the purposes of this Act, to be the additional dearness allowance in relation to such employee;

  (c) "additional wages" means such wages, over and above the wages payable to an employee in accordance with the rates in force immediately before the appointed day, as may become payable to the employee in respect of any period after the appointed day in pursuance of any wage revision, whether by or under an agreement or settlement between the parties or any award, decree or order of any court, tribunal or other authority or otherwise, but does not include-

  (i) any increment due to the employee in accordance with the time scale of pay applicable to the post held by him immediately before the appointed day, and any consequent increase in any allowance (not being dearness allowance) admissible under any rule or order in force immediately before the appointed day;

  (ii) any higher wages payable to the employee on his-

  (a) promotion to a higher post and any increment, being an increment within the prescribed limits, due to the employee in such higher post

  (b) deputation or transfer to an equivalent post or to any post involving higher responsibilities and duties;

  (iii) any special pay, honorarium, fee or reward payable for any special work done;

  (iv) any remuneration payable for overtime work;

  (v) any increase in wages consequent on the revision of the minimum rates of wages fixed under the Minimum Wages Act, 1948; ( 11 of 1948.)

  (vi) any increase in wages sanctioned in pursuance of the recommendations made-

  (a) by the Third Central Pay Commission;

  (b) before the appointed day, by any Pay Commission appointed by a State Government, in relation to the employees of that Government;

  (c) by any committee constituted, before the appointed day, by Parliament, Supreme Court or any High Court in relation to any employee of Parliament, Supreme Court or High Court, as the case may be.

  Explanation I.-Where any wage revision made after the appointed day is to be effective from a date prior to the appointed day, the wages payable immediately before, the appointed day, before such wage revision, shall, for the purposes of computation of additional wages', be deemed to be the wages.

  Explanation II.-Any bonus (including incentive and production bonus) paid after the appointed day at a rate over and above the rate at which it was last paid before the appointed day, shall be deemed or the purposes of this Act, to be additional wages;

  (d) "bank deposit rate" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India tinder the Banking Regulation Act, 1949; (10 of 1949.)

  (e) "dearness allowance" means all cash payments, by whatever name called, made to an employee on account of rise in the cost of living;

  (f) "Deposit Account" means an account opened and maintained under section 5;

  (g) "emoluments" includes wages and dearness allowance;

  (h) "employer" means,-

  (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, and where a person is named as manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948, ( 63 of 1948. ) the person so named;

  (ii) in relation to an establishment belonging to or under the control of the Central Government or a State Government, the person or authority appointed by the appropriate Government for the supervision and control of the employees, or where no person has been so appointed, the head of the Department concerned;

  (iii) in relation to an establishment belonging to or under the control of any local authority, the person appointed by such authority for the supervision and control of the employees, or where no person has been so appointed, the Chief Executive Officer of the local authority;

  (iv) in any other case, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to any other person, whether called a manager, managing director or by any other name, such person; and includes, in the case of a deceased employer, the legal representative of such deceased employer;

  (i) "local authority" means any municipal committee, district board, body of port commissioners, panchayat or other authority legally entitled to, or entrusted by the Central or any State Government with the control or management of any municipal or local fund;

  (j) "nominated authority" means such authority as may be nominated by the Central Government for the purposes of this Act and different authorities may be nominated for different purposes;

  (k) "notification" means a notification published in the Official Gazette;

  (l) "Prescribed" means prescribed by-rules made under this Act;

  (m) "Scheme" means a scheme framed under this Act;

  (n) "specified authority" means the authority specified under sub-section (1) of section 5;

  (o) "wages" means all remuneration (whether by way of salary, allowances or otherwise) expressed, or capable of being expressed, in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes-

  (i) any remuneration payable under any agreement, or settlement between the parties or any award, decree or order of any court, tribunal or other authority;

  (ii) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;

  (iii) any additional remuneration payable under the terms of employment, including bonus, whether under a scheme of profit sharing or otherwise;

  (iv) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force;

  (v) any allowance paid for house accommodation, or where house accommodation is provided, the value of such accommodation, and the value of electricity or water, or both, supplied, and the value of medical attendance or other amenity, but does not include-

  (1) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;

  (2) any travelling or running allowance or the value of any travelling concession;

  (3) any sum, not exceeding rupees two hundred and fifty per annum, paid to the employed person to defray special expenses entailed on him by the nature of his employment;

  (4) any compensation or gratuity payable on the termination of employment;

  (5) any dearness allowance.

  3. Persons to whom this Act applies.- This Act shall apply to an employee of-

  (a) the Central or State Government;

  (b) a local authority;

  (c) a company as defined in section 3 of the Companies Act, 1956, (1 of 1956.) including a foreign company within the meaning of section 591 of the Companies Act, 1956, and a Government company as defined in section 617 of that Act; (43 of 1961.)

  (d) any other corporation, including a society or body established by, or registered under, a Central, Provincial or State Act;

  (e) any individual, association of persons or body of individuals, partnership firm or Hindu undivided family required by the Income-tax Act, 1961 (43 of 1961.) to deduct income-tax at source from the emoluments paid to their employees;

  (f) any establishment owned or maintained in India by a trust, fund or institution established for a charitable or religious purpose, and required by the Income-tax Act, 1961, ( 43 of 1961.) to deduct income-tax at source from the emoluments paid to their employees;

  (g) any establishment, not being an establishment owned by Government, local authority or person specified, respectively, in clauses (a) to (f) (both inclusive), to which the provisions of any law relating to provident funds (other than those established under the Public Provident Fund Act, 1968) (23 of 1968.) apply;

  (h) any other establishment, not being an establishment to which any of the foregoing clauses apply, established at the instance, or in pursuance of a resolution, of the Central or State Government or wholly or substantially financed by the Central or State Government..

  Explanation.-Where any grant or loan to an establishment from the Consolidated Fund of India or of any State or of any Union territory having a Legislative Assembly in a financial year is not less than rupees five lakhs and the amount of such grant or loan is not less than seventy-five per cent. of the total expenditure of that establishment, such establishment shall be deemed, for the purposes of this Act, to be substantially financed by the Central or State Government, as the case may be.

  5. Additional Wages Deposit Account and Additional Dearness Allowance Deposit Account.- (1) There shall be opened by such authorities as may be specified in the scheme two separate accounts, to be known, respectively, as the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, and different authorities may be specified for different establishments or different categories of employees or establishments.

  (2) The specified authority shall, in relation to each Deposit Account, open a separate ledger account in the name of each employee in relation to whom any contribution is made to the said Account, and credit the contributions so made in the said ledger account.

  6. Duty of employer or other person to make deductions of additional wages and additional dearness allowance from emoluments.-(1) For the purposes of this Act, the deductions specified in sub-section (2) shall be made,- (a) in the case of additional wages, for a period of one year from the appointed day; and (b) in the case of additional dearness allowance, for a period of three years from the appointed day.

  (2) On the commencement of this section,-

  (a) every employer, who draws, from the Consolidated Fund of India or of any State or of any Union territory having a Legislative Assembly, and disburses, after the appointed day, emoluments of an employee to whom this Act applies, shall, as and when emoluments are disbursed by him for any period, deduct from the emoluments so disbursed, the whole of the additional wages and one-half of the additional dearness allowance and credit the amount so deducted, in accordance with the scheme, to the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, respectively;

  (b) every other employer, who disburses, after the appointed day, emoluments to any employee to whom this Act applies, shall, as and when emoluments are disbursed by him for any period, deduct from the emoluments so disbursed, the whole of the additional wages and one-half of the additional dearness allowance, and shall remit, in accordance with the scheme, the amounts so deducted to the nominated authority and on receipt of such amounts the nominated authority shall credit the amounts so received to the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, respectively

  (c) any employee, to whom this Act applies, who draws, after the appointed day, his own emoluments shall,-

  (i) if he is employed in an establishment owned or maintained by Government, make deductions from his salary bill in respect of the whole of the additional wages and one-half of the additional dearness allowance and the specified authority shall credit the amount so deducted, in accordance with the scheme, to the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, respectively;

  (ii) if he is employed in any other establishment, remit the whole of the additional wages and one-half of the additional dearness allowance, in accordance with the scheme, to the nominated authority, and on receipt of such amount, the nominated authority shall credit the amount so received to the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, respectively.

  Explanation.-In computing the amount to be credited to the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account. the amount contributed [in relation to such additional wages or additional dearness allowance shall not-

  (a) to the extent of the contribution which is compulsorily required to be made to any provident or other fund under any law for the time being in force; or

  (b) to the extent of the contribution made to any other provident fund, recognised under any other law for the time being in force, at a rate 'not exceeding the rate at which such contribution was being made immediate before the appointed day, be taken into account.

  (3) The specified authority shall, as soon as may be practicable after the end of each year, prepare separately, in relation to the amounts credited to the respective Deposit Accounts to the credit of each employee, and furnish to the employee a copy of the said accounts showing therein the amounts credited thereto in relation to the employee.

  8. Assessment for purpose of income tax.- (1) For the purposes of computing, under the Income-tax Act, 1961, the total income of an employee, the amount credited to his ledger account in the Additional Wages Deposit Account or the Additional Dearness Allowance Deposit Account Shall not be included in his total income of the previous year in which it is so credited; but so much of the amount as is repaid to him shall be liable to be included in his total income of the previous year in which it is repaid.

  (2) For the purposes of computing, under the Income-tax Act, 1961, (43 of 1961.) the total income of an employee, the amount repaid to him under this Act shall be deemed to be salary paid to him in arrears and the provisions of sub-section (1) of section 89 of that Act shall apply accordingly

  Explanation.-In this section, "previous year" and "total income have the meanings respectively assigned to them in the Income-tax Act 1961. (43 of 1961.)

  9. Repayment of deposits.- (1) Subject to the provisions of sub-section (2), every amount credited to the Deposit Accounts shall be repayable with interest due thereon,-

  (a) in the case of an amount credited to the Additional Wages Deposit Account, at any time after the expiry of one year from the appointed day; and

  (b) in the case of an amount credited to the Additional Dearness Allowance Deposit Account,-

  (i) for any period ending on the 30th day of June, 1976, in cash, at any time after the expiry of two years from the appointed day; and

  (ii) for any period ending after the 30th day of June, 1976,-

  (a) by crediting tithe provident fund account of the employee, at any time after the expiry of a period of four years from the appointed day, if such employee is a subscriber to any provident fund;

  (b) in cash, at any time after the expiry of a period of four years from the appointed day, in the case of an employee who is not a subscriber to any provident fund:

  Provided that nothing in this section shall prevent earlier repayment of any amount credited to either of the Deposit Accounts with interest due thereon in any case in which any person authorised by the Central Government in this behalf is satisfied that extreme hardship will be caused unless such repayment is made: Provided further that an employee may, at his option, retain the whole or any part of the amount, credited in relation to him in the Additional Wages Deposit Account or the Additional Dearness Allowance Deposit Account, or both, until his superannuation or until such date as may be specified by the Central Government in this behalf:

  Provided also that the whole of the amount standing to the credit of an employee (not being an employee in a seasonal establishment) in the additional Wages Deposit Account shall be repaid to him in cash on his the Additional Wages Deposit Account shall be repaid to him in cash superannuation or resignation from office or on the termination of his employment.

  (2) The aggregate amount credited to any Additional Wages Deposit Account relation to an employee shall be repaid to the employee in five equal annual instalments commencing from the expiry of one year from the appointed day, together with interest due on the whole, or, as the case may be, part of the amount of compulsory deposit which remains unpaid.

  (3) The aggregate amount credited to the Additional Dearness Allowance Deposit Account by or in relation to an employee for the period ending on the 30th day of June, 1976, shall subject to the provisions of sub-section (5), be repaid, in cash, to the employee in five equal annual instalments commencing from the expiry of a period of two years from the appointed day,. together with interest due on the whole or, as the case may be, part of the amount of compulsory deposit which remains unpaid.

  (4) The aggregate amount credited to the Additional Dearness Allowance Deposit Account by or in relation to an employee for the period commencing on the 1st day of July, 1976, and ending on the 5th day of July, 1977, together with interest due on the whole, or, as the case may be, part of the amount of' compulsory deposit which remains unpaid, shall, subject to the provisions of sub-section (5), be repaid to the employee in five, equal annual instalments commencing on the 6th day of July, 1978, and each such instalment shall be credited to the provident fund account of the employee:

  Provided that the employer shall not be required to make any contribution under the Employees Provident Funds Act, 1952, or under any other law for the time being in force, in relation to the amounts so credited to the provident fund account of the employee:

  Provided further that, in the case of the employees who do not subscribe to any provident fund, the aggregate amount so repayable shall be repaid in cash in five equal annual instalments commencing on the 6th day of July, 1978.

  (5) On the superannuation, resignation or termination of employment of an employee, the whole of the amount standing to the credit of such employee in the Additional Dearness, Allowance Deposit Account, shall be repaid,-

  (a) in cash, in the case of any amount credited to the Additional Dearness Allowance Deposit Account for any period ending on the 30th day of June, 1976;

  (b) in the case of any amount credited to the Additional Dearness Allowance Deposit Account for any period ending, after the 30th day of June, 1976,-

  (i) by crediting such amount-to the provident fund account of such employee, if he is the subscriber of any such account, or

  (ii) in cash, where such employee is not a subscriber to any provident fund.

  Explanation.-For the purposes of this section, "provident. fund" has the meaning assigned to it in section 2(e) of the Provident Funds Act, 1925.

  15. Offences by companies.- (1) Where any offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

  Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

  (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

  Explanation.-For the purposes of this section,-

  (a) "company" means any body corporate and includes a firm or other association of individuals; and

  (b) "director", in relation to a firm, means a partner in the firm, and, in relation to a Hindu undivided family, means the Karta of such family.

  16. Cognizance of offences.- No court shall take cognizance of any offence punishable under this Act except upon a complaint made by the Central Government or any officer or authority authorised in writing by the Central, Government in this behalf.

  17. Power to exempt.- Where the Central Government is of the opinion that it is necessary or expedient so to do either in the public interest or having regard to the peculiar circumstances of any case, it may, by notification, and subject to such conditions, if any, as it may specify in the notification,-

  (a) exempt any establishment or category of employees, working in any establishment from the operation of all or any of the provisions of this Act;

  (b) exempt, in the case of extreme hardship to any employee, from crediting any amount in relation to such employee to the Additional Wages Deposit Account;

  (c) empower deductions from additional wages in relation to an employee or class of employees, at a rate lesser than the rate specified in this Act.

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