S.O. 2698(E): 12% simple interest under Section 127
Reviewed by Finin2min Editorial Desk · Last reviewed 20 August 2026
The Central Government has specified simple interest at 12% per annum on any amount due from an employer under the Code, running from the date the amount became due until actual payment. The notification is deemed effective from 21 November 2025.
S.O. 2698(E), Ministry of Labour & Employment, 29 May 2026 · F. No. S-35025/14/2026-SS-II.
What the notification changes operationally
- The rate specified under Section 127 is 12% per annum.
- The instrument expressly uses simple interest.
- Interest runs from the date the amount became due to the date of actual payment.
- The notification states that it is deemed to have come into force on 21 November 2025.
Linked provision
Implementation example
If an employer has an amount that is legally “due” under the Code, the interest calculation should not begin from an arbitrary internal processing date. First identify the statutory due date, then apply the 12% simple-interest rate through the actual payment date, subject to the exact Code provision, scheme/rule and facts that determine when the amount became due.
Verification checklist
- Identify the exact amount legally due under the Code.
- Establish the statutory due date from the applicable chapter/scheme/rule.
- Calculate simple interest at the notified rate, not a compound rate.
- Check later Gazette amendments before finalising a live recovery/payment.