Government reduces the rate of ESI contribution from 6.5% to 4%

Jun 14, 2019 | by Avantis RegTech Legal Research Team

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Labour Compliance

The Government of India on June 13, 2019, has reduce the rate of contribution under the Employees State Insurance Act, 1948, from 6.5% to 4%(employers’ contribution being reduced from 4.75% to 3.25% and employees’ contribution being reduced from 1.75% to 0.75%).

The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrollment of workers under the ESI scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law.

Reduced rates will be effective from July 01, 2019.

Click here to download the Press Release.


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