Sections 117 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 117 requires each Social Security Organisation to frame an annual budget and get it approved by the appropriate Government. Section 118 requires an annual report and says the Government must lay the report, budget and audited accounts before Parliament or the State legislature.
Every year each Social Security Organisation frames a budget of probable receipts and expenditure for the following year and submits it for the appropriate Government's approval before the date the Government fixes (s.117(1)). The budget must provide adequately for liabilities and a working balance (s.117(2)). The organisation also submits an annual report and the budget finally adopted; the Government lays these with the audited accounts, the CAG's report and the organisation's comments before each House of Parliament or the State legislature (s.118).
Why it matters
The budget decides how the money in the Employees' Provident Fund Organisation, ESIC and other bodies is planned, and the annual report with audited accounts is the public record of how it was used. For employers and professionals advising on the Code, these provisions show where accountability sits. If you need to place these bodies and their oversight in the wider scheme of the Code, our legal consultation team can assist. This article follows sections 115 and 116 on accounts and audit.
Section 117: budget estimates
Sub-section (1): the annual budget
| Step | Content |
|---|---|
| Who | Each Social Security Organisation |
| When | Each year, for the following year |
| What | A budget showing probable receipts and proposed expenditure |
| Submit | A copy for the approval of the appropriate Government, before the date it fixes |
Sub-section (2): what the budget must contain
It must contain provisions adequate, in the appropriate Government's opinion, for:
- the discharge of the liabilities the organisation has incurred; and
- the maintenance of a working balance.
So approval is not a formality. The Government can require the budget to cover existing liabilities and keep a cushion. Which Government is "appropriate" depends on the organisation; see the definitions in section 2.
Section 118: annual report
Sub-section (1): the report
Each Social Security Organisation submits to the appropriate Government:
- an annual report of its work and activities; and
- the budget finally adopted by it.
Sub-section (2): laying before the legislature
The appropriate Government shall cause a copy of:
- the annual report;
- the budget;
- the audited accounts;
- the report of the Comptroller and Auditor-General of India; and
- the comments of the respective organisation on that report,
to be laid before each House of Parliament or the State legislature, as the case may be.
The "shall" in s.118(2) makes the laying mandatory. The CAG's audit route it relies on is in section 116.
What the Central Rules add for the Corporation
For the Employees' State Insurance Corporation, rule 52 of the Code on Social Security (Central) Rules, 2026 provides (Central Government as appropriate Government) that the annual report is considered by the Standing Committee and placed for adoption at a meeting of the Corporation before 10 December following the close of the financial year. The adopted accounts, CAG report and annual report, authenticated with the common seal, go to the Central Government not later than 20 December, for placing before Parliament, with the CAG report expected by 20 November. If the CAG report is not received by 20 November, the accounts and CAG report go separately from the annual report. The Rules are silent in the text we have reviewed on a separate budget deadline; the date is left to the Government under s.117(1).
Budget and report at a glance
| Item | Who acts | To whom | What the Code says |
|---|---|---|---|
| Budget for the next year | Each Social Security Organisation | Appropriate Government | Frame every year; submit a copy for approval before the date fixed (s.117(1)) |
| Content test | Appropriate Government | Organisation | Adequate for liabilities and a working balance, in the Government's opinion (s.117(2)) |
| Annual report and adopted budget | Each organisation | Appropriate Government | Submit (s.118(1)) |
| Laying | Appropriate Government | Parliament or State legislature | Cause copies of report, budget, audited accounts, CAG report and comments to be laid (s.118(2)) |
Practical points
- The Code fixes no calendar date for the budget; the appropriate Government names the date. Check the notice or order for your organisation.
- The phrase "budget finally adopted" in s.118(1) signals that the organisation may revise the budget after the Government's approval process, and the adopted version is the one reported.
- Laying before the legislature is the accountability step: the legislature sees the budget and the audited accounts side by side, along with the CAG's report and the organisation's reply to it.
- The same appropriate-Government logic applies throughout: the Central Government for the Central Board and the Corporation, and the State Government for State bodies. Always confirm which Government is appropriate for the body in question.
- For employers, nothing in these two sections creates a filing duty. The relevance is to know that contributions paid into these funds are budgeted, audited and reported to the legislature.
A worked example
A Social Security Organisation prepares next year's budget in the autumn, estimating receipts and spending, and sends it to the Government before the due date. The Government finds that the budget does not provide a working balance and asks for changes before approval, as s.117(2) contemplates. After the year closes, the organisation submits its annual report and the adopted budget under s.118(1). The Government then arranges for these, with audited accounts and the CAG's report with the organisation's comments, to be laid before the legislature. (Illustrative.)
Need help placing these provisions?
These sections sit in the finance part of the Code rather than in employer compliance, but they explain how oversight works. Our legal consultation team can help you understand how they connect to your obligations and where to focus.
Key takeaways
- Each Social Security Organisation frames a yearly budget for the following year.
- The budget needs appropriate Government approval before the fixed date.
- It must cover liabilities and a working balance in the Government's opinion.
- An annual report and the adopted budget go to the Government.
- The Government must lay the report, budget, audited accounts, CAG report and comments before the legislature.
Read next
- Sections 115 and 116: Accounts and audit
- Sections 119 to 121: Valuation, investment and writing off
- Sections 25 to 27: ESI fund, expenditure and holding of property
- 4 New Labour Codes 2020: Complete guide to India's labour law reform
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.