MKKN Late Payment: Interest Rates & Compounding Fee 2026

Statutory Genesis & Current Legal Posture

The Maharashtra Kamgar Kalyan Nidhi (MKKN) is established under the Maharashtra Labour Welfare Fund Act, 1953. Under Section 6BB, the contribution is payable twice a year for the periods ending June 30 and December 31, with payment due by July 15 and January 15 respectively. The contribution rates under the 2024 Amendment are ₹25 per employee, ₹75 per employer, and ₹50 per government per six months .

The question of compounding fees for late payment has two distinct components. First, there is the statutory interest levied under Section 6B for late payment of contributions. Second, there is the concept of “compounding of offences” introduced through the 2022 amendment to the Act. As of August 2026, no circular has revised the compounding fee rates; employers must rely on the 2022 amendment framework and check Maharashtra Labour Welfare Board notifications for updates.

Compounding of Offences Under Section 17C

The Maharashtra Labour Laws (Amendment) Act, 2022, was notified on April 11, 2023, and introduced a framework for compounding of offences under various Maharashtra state labour laws, including the Maharashtra Labour Welfare Fund Act, 1953 . The amendment inserted Section 17C into the MLWF Act , which provides for compounding of certain offences under the Act .

What is Compounding? Compounding allows an employer to settle a statutory violation by paying a prescribed fee, thereby avoiding criminal prosecution. The offence is “compounded” or settled. This decriminalisation of non-compliances promotes ease of doing business and prevents bureaucratic inefficiencies in the state .

Eligibility: Section 17C specifies the offences that may be compounded under the MLWF Act. In general, offences that are not of a serious nature may be compounded. The provision is inserted after Section 17B of the Act, indicating its placement in the penalty framework.

Authority: The Welfare Commissioner is the designated authority to grant compounding. The compounding fee is fixed at the prescribed amount, subject to rules made by the State Government.

Statutory Interest Under Section 6B for Late Payment

Notice of Demand: If an employer does not pay contributions under Section 6BB within the prescribed time, the Welfare Commissioner may serve a notice requiring payment within a period of not less than 30 days from the date of service of such notice .

Interest Rates: If the employer fails without sufficient cause to pay within the notice period, simple interest is levied at:

• For the first three months: 1.5% per month of the amount due
• Thereafter: 2% per month of the amount due

Application to Contributions: The interest provision applies specifically to unpaid amounts of the employer’s and employees’ contributions under Section 6BB. The interest is in addition to the principal contribution amount and forms part of the Labour Welfare Fund .

Legacy Framework vs. Current Position

Parameter	Position Under the Act (Pre-2022 Amendment)	Current Position (Post-2022 Amendment)	Practical Operational Impact
Interest on Late Contributions	Section 6B provided interest at 1.5% for first 3 months and 2% thereafter (rates revised in 2003)	Same rates continue	Employers must pay interest at 1.5% per month (first 3 months) and 2% per month thereafter on defaulted contributions
Compounding of Offences	No compounding provision existed	Section 17C inserted for compounding of offences under the Act	Employers may settle certain offences by paying a compounding fee instead of facing prosecution
Penal Interest	Section 3(2)(bb) included penal interest as part of the Fund	Same	Penal interest collected forms part of the Labour Welfare Fund

Operational Implementation Framework for HR & Legal Teams

Phase 1: Determine Late Payment Liability

Step 1: Identify the Contribution Period: The contribution periods under Section 6BB are January to June and July to December, with payment due by July 15 and January 15 respectively . The December 31 deadline is commonly missed .

Step 2: Calculate the Default Period: If payment is not made by the due date, the default period begins. The Welfare Commissioner may issue a notice of demand under Section 6B(1), giving the employer 30 days to pay.

Step 3: Calculate Interest: If payment is not made within the notice period:

• For the first three months: 1.5% per month simple interest on the amount due
• Thereafter: 2% per month simple interest on the amount due

Step 4: The interest is in addition to the principal contribution amount. The interest rates are simple interest, not compound interest.

Phase 2: Consider Compounding of Offences

Step 1: Assess Whether the Offence Is Compoundable: Certain offences under the Act are compoundable under Section 17C . The employer must assess whether the specific violation is eligible for compounding.

Step 2: Apply to the Welfare Commissioner: The employer must apply to the Welfare Commissioner for compounding of the offence. The compounding is subject to such conditions as may be prescribed.

Step 3: Pay the Compounding Fee: Upon approval, the employer must pay the prescribed compounding fee.

Phase 3: Compliance Workflow

Step 1: Self-Correction: If you have missed the contribution deadline, immediately deposit the principal amount due along with the applicable interest under Section 6B. The default notice period under Section 6B(1) gives 30 days before interest applies.

Step 2: Apply for Compounding: If the violation is considered an offence, consider applying for compounding under Section 17C to avoid prosecution .

Step 3: Maintain Records: Keep records of all payments, including proof of payment of interest and compounding fee. The Act requires proper records to be maintained.

Step 4: File Returns: Submit the prescribed returns to the Maharashtra Labour Welfare Board by the due dates.

Penal Consequences, Inspection Triggers, and Corporate Liability

Interest on Late Contributions

Under Section 6B, the Welfare Commissioner may issue a notice to the employer to pay the amount due within 30 days. If the employer fails without sufficient cause to pay within this period, simple interest is levied:

• First three months: 1.5% per month of the amount due
• Thereafter: 2% per month of the amount due

The interest is in addition to the principal contribution amount. The interest collected forms part of the Labour Welfare Fund under Section 3(2)(bb) .

Compounding of Offences

Section 17C allows for compounding of offences under the Act. The Welfare Commissioner is the designated authority to grant compounding, subject to such conditions as may be prescribed .

Penalties and Prosecution

• Section 17A provides for penalties for obstructing inspection or failure to produce documents . First offence: imprisonment up to 3 months or fine up to ₹500 or both. Second or subsequent offence: imprisonment up to 6 months or fine up to ₹1,000 or both.
• The Welfare Commissioner must sanction prosecution under Section 17A. No court shall take cognizance of the offence unless complaint is made within six months of the date on which the offence is alleged to have been committed .

Inspection Triggers

1. Non-registration, non-remittance of contributions, and failure to maintain registers are triggers.
2. Dormant or incorrect LIN/MKKN status on the portal can trigger risk-based inspection; discrepancies in registers or returns are immediate red flags .
3. The Board’s integrated online portal enables audit trail generation.

Corporate Liability

Directors, managers, and partners of the establishment are liable for default. The definition of “employer” under Section 2(3) includes the owner, occupier, manager, or any person responsible for the supervision and control of the establishment.

Strategic Advisory & Edge Cases

Is There a 2026 Circular Revising the Compounding Fee?

The search results do not indicate any circular issued in 2026 revising the compounding fee structure under the Maharashtra Labour Welfare Fund Act. The current framework for compounding of offences was introduced by the Maharashtra Labour Laws (Amendment) Act, 2022, which inserted Section 17C . The specific compounding fee amounts are prescribed by the State Government through rules and may be updated from time to time.

Employers should:

1. Verify the current compounding fee rates with the Maharashtra Labour Welfare Board directly;
2. Check the official rules and notifications published by the State Government;
3. Consult with a qualified legal professional for current rates.

Interest vs. Compounding Fee: The Distinction

The interest under Section 6B is a statutory levy for delayed payment of contributions. The compounding fee under Section 17C is a settlement fee to avoid prosecution for an offence. These are separate and distinct.

Recent Developments

The Maharashtra Labour Welfare Board operates its welfare schemes through the official portal public.mlwb.in and the “Mahakalyan App” . All schemes under the MLWF Act, including scholarships, medical assistance, and recreational facilities, are available through this portal . Workers with LIN (Labour Identification Number) can apply for various schemes online, including:

• General scholarships and higher education scholarships ;
• Textbook and study material assistance ;
• Sports scholarships and recreational facilities ;
• Computer training, sewing classes, and yoga classes ;
• Four-wheeler driving training assistance up to ₹5,000 .

The Board has also restored maternity assistance for registered women construction workers with an increased one-time financial benefit of ₹25,000, in accordance with the Social Security Code, 2020. Death and disability benefits for construction workers have also been revised.

Disclaimer: This guide constitutes statutory commentary and operational analysis based on notifications, rules, and judicial precedents published up to the current date in 2026. The information provided is for general informational purposes only and does not constitute formal legal advice or create a lawyer-client relationship. Labour and welfare laws are subject to frequent amendments and differing interpretations. You are strongly advised to consult a qualified legal professional to obtain advice specific to your company’s factual circumstances and jurisdictional requirements before implementing any of the compliance strategies discussed herein. The authors and publishers assume no liability for any actions taken or not taken based on the contents of this publication.