Government reduces rate of ESI Contribution from 6.5% to 4%; gains effect from 1st July, 2019

Government reduces rate of ESI Contribution from 6.5% to 4%; gains effect from 1st July, 2019

June 15, 2019 Compliance Blog 0

In a recent notification dated 13th June, 2019, the Ministry of Labour & Employment (“Ministry”) has issued the Employee’s State Insurance (Central) Amendment Rules, 2019 (“Amendment).

As per this Amendment, the Rate of Contribution (for both employer and employee) under Rule 51 of the Principal Rules has been reduced.

The reduced rates will gain effect from July 1, 2019.

Principal Rules Amendment Implication
Rule 51: Rate of contribution

 

The amount of contribution for a wage period shall be in respect of:

 

(a) employer’s contribution, a sum (rounded to the next higher rupee) equal to four and three fourth per cent of the wages payable to an employee; and

 

(b) employee’s contribution, a sum (rounded to the next higher rupee) equal to one and three fourth per cent of the wages payable to an employee.

 

Rule 51: Rate of contribution

 

The amount of contribution for a wage period shall be in respect of:

 

(a) employer’s contribution, a sum (rounded to the next higher rupee) equal to three and one-fourth per cent. of the wages to an employee; and

 

(b) employee’s contribution, a sum (rounded to the next higher rupee) equal to three-fourth per cent. of the wages payable to an employee.

The rate of contribution has been reduced 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%)


Source:
 Ministry of Labour & Employment

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