Government of India: Rate of contribution under the ESI Act has been reduced from 6.5% to 4% (employers’ contribution reduced from 4.75% to 3.25% & employees’ contribution reduced from 1.75% to 0.75%). Reduced rates will be effective from 1st July 2019.
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Old Rate Employees Share
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New Rate Employee Share
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Old Rate Employer Share
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New rate of Employer Share
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1.75 %
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0.75 %
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4.75 %
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3.25%
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This would benefit 3.6 crore employees and 12.85 lakh employers.
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.
The Employees’ State Insurance Act 1948 (the ESI Act) provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees. Under the ESI Act, employers and employees both contribute their shares respectively.
These efforts resulted insubstantial increase in the number of registered employees i.e. Insured Persons and employers and also a quantum jump in the revenue income of the ESIC.
The Government of India is committed to the cause of welfare of employees as well as employers. It is also committed to improve the quality of medical services & other benefits being provided under the ESI scheme.
Necessary Notification is appended below
👉ESI NOTIFICATION- New Rate
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