{"id":19761,"date":"2019-06-17T18:00:26","date_gmt":"2019-06-17T12:30:26","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=19761"},"modified":"2019-06-18T10:26:29","modified_gmt":"2019-06-18T04:56:29","slug":"change-in-esi-contribution-rates","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/change-in-esi-contribution-rates\/","title":{"rendered":"Change in ESI Contribution Rates"},"content":{"rendered":"<p class=\"has-drop-cap\">A Draft containing certain rules was published in official gazette regarding the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>amendment<\/a> in Employees&rsquo; State Insurance Rules, 1950. Under which government has reduced the <a href=\"https:\/\/enterslice.com\/esi-registration\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"ESI (opens in a new tab)\">ESI<\/a> contribution which will take effect from 1<sup>st<\/sup> July 2019 from <strong>6.5% to 4% <\/strong>with the motive to provide a substantial relief to workers and that will result in more workforce into the formal sector.<\/p>\n\n\n\n<div class=\"shadow1\"><ul><li><strong>The Date\nof drafting rules in the official gazette as required by Section 95(1)\nof Employees&rsquo; State Insurance Act<\/strong> &ndash; 15<sup>th<\/sup> February\n2019<\/li><li><strong>The Date\non which Official Gazette was made available to the public<\/strong> &ndash; 15<sup>th<\/sup>\nFebruary 2019<\/li><li><strong>The Date\non which notification shall come into force<\/strong> &ndash; 1<sup>st<\/sup> July\n2019<\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is\nESI Contribution?<\/strong><\/h2>\n\n\n\n<p>Employees&rsquo; State Insurance is self-financing security benefits for employees by providing medical, sickness, dependent, maternity, employment injury and Funeral benefit start with their 1<sup>st<\/sup> day of on the job. <\/p>\n\n\n\n<p>Additional benefits are also provided by the condition to complete their job for a certain time period. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Applicability\nof ESI Contribution Scheme<\/strong><\/h2>\n\n\n\n<p>ESI Scheme is applicable in all factories. It can also apply to other sectors such as Industrial, Commercial and agricultural sector as per the order of Appropriate Government.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"445\" height=\"390\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Contribution.png\" alt=\"ESI Contribution\" class=\"wp-image-19790\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Contribution.png 445w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Contribution-300x263.png 300w\" sizes=\"(max-width: 445px) 100vw, 445px\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Benefits\nof ESI Scheme<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/enterslice.com\/esi-registration\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"ESI (opens in a new tab)\">ESI<\/a> is providing various benefits to the employees by providing Six Social Benefits-<\/p>\n\n\n\n<ul><li>Medical Benefits<\/li><li>Sickness Benefits<\/li><li>Maternity Benefits<\/li><li>Disablement Benefits<\/li><li>Dependents Benefits<\/li><li>Other Benefits like Funeral, old age Medicare,\nPhysical and Vocational Rehabilitation<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\nare the Reasons for the change in ESI Contribution Scheme?<\/strong><\/h2>\n\n\n\n<p>The government has taken such steps of reducing the <a href=\"https:\/\/enterslice.com\/learning\/tag\/esi\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"employee contribution (opens in a new tab)\">employee contribution<\/a> for the following reasons &ndash;<\/p>\n\n\n\n<ul><li>Big relief to the workers.<\/li><li>A contribution by the employer will reduce\nfinancial liability.<\/li><li>To improve the viability of the establishments.<\/li><li>To Enhance the ease of doing Business.<\/li><li>To increase the final salary of the employees\nand to reduce the burden of the Employers.<\/li><\/ul>\n\n\n\n<p>The\nreduction of <strong>2.5%<\/strong> includes a reduction of &ndash;<\/p>\n\n\n\n<ul><li>1.5% in Employer contribution from 4.75% to\n3.25%<\/li><li>1% in Employees contribution from 1.75% to 0.75%<\/li><\/ul>\n\n\n\n<table class=\"wp-block-table is-style-stripes\"><tbody><tr><td>\n  <strong>ESIC CONTRIBUTION<\/strong>\n  <\/td><td>\n  <strong>REVISED RATE<\/strong>\n  <\/td><td>\n  <strong>EXISTING RATE<\/strong>\n  <\/td><\/tr><tr><td>\n  Employer\n  <\/td><td>\n  3.25%\n  <\/td><td>\n  4.75%\n  <\/td><\/tr><tr><td>\n  Employee\n  <\/td><td>\n  0.75\n  <\/td><td>\n  1.75%\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><strong>Now the Total ESI contribution is 4%<\/strong><\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note <\/strong>&ndash; Earlier the wage ceiling for coverage under the scheme has resulted in increase in enrollments<\/div><br>\n\n\n\n<br><div class=\"shadow1\"><strong>Note &ndash;<\/strong>Under the Scheme in 2018-19 of ESI, the data of Labour Ministry shows &ndash; 36 million workers are insured under ESI with the contribution of Rs 22,279 crore.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Administration\nand Facilities Provided by ESI Act 1948<\/strong><\/h2>\n\n\n\n<p>The administration of ESI Act is administered by (ESIC) Employee State Insurance Corporation. It provides the benefit of-<\/p>\n\n\n\n<ul><li>Medical, <\/li><li>Cash, <\/li><li>Maternity, <\/li><li>Disability and\ndependent benefits to the insured person.<\/li><\/ul>\n\n\n\n<p>These Benefits are provided under <a href=\"https:\/\/enterslice.com\/esi-registration\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"ESI (opens in a new tab)\">ESI<\/a> are funded by the contribution made by both the Employer and Employee.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Highlights\nof the Notification<\/strong><\/h2>\n\n\n\n<p><strong>Notification Dated 13<sup>th<\/sup> June 2019, Revised ESI Contribution rates are (Employer 3.25%, Employee 0.75%)<\/strong><\/p>\n\n\n\n<p>G.S.R. 423 (E)-Whereas a draft containing certain rules further to amend the Employees&rsquo; State Insurance (Central) Rules, 1950 were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (i) vide number G.S.R. 121(E), dated the 15<sup>th <\/sup>February, 2019, as required by sub-section (1) of the section 95 of the Employees&rsquo; State Insurance Act, 1948 (34 of 1948), inviting objections or suggestions from all persons likely to be affected thereby before the expiry of a period of thirty days from the date on which the copies of the Official Gazette containing the said notification was published were made available to the public;<\/p>\n\n\n\n<p><strong>In the Draft Rules following amendments shall be made &ndash;<\/strong><\/p>\n\n\n\n<ol><li>Rules may be called the Employees&rsquo; State\nInsurance (Central) (Amendment) Rules, 2019.<\/li><li>Draft rules shall come into force on the date of\nits final publication in the official Gazette.<\/li><li>Amendment in Rule 51 of the Employees&rsquo; State\nInsurance (Central) Rules, 1950, Words &lsquo;&rsquo;equal to Four percent of the wages&rsquo;&rsquo;\nshall be substituted against the word &ldquo;equal to four and three fourth percent\nof the wages. Words &ldquo;equal to one percent of the wages&rdquo; shall be substituted\nagainst the word&ldquo;equal to one and three fourth percent of the wages&rdquo;.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Who has the Authority to decide the rate of ESI Contribution under ESI Act?<\/strong><\/h2>\n\n\n\n<p>GOI (Government of India) through the Ministry of Labour and Employment decides the rate of contribution of Employers and employees.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/ESI-Contribution.png\" alt=\"ESI Contribution\" class=\"wp-image-19793\" width=\"393\" height=\"245\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/ESI-Contribution.png 589w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/ESI-Contribution-300x187.png 300w\" sizes=\"(max-width: 393px) 100vw, 393px\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p>With the view to increase the in-hand salary of the employees and to reduce the financial burden of the employer the government has reduced the rate of ESI contribution of Employer and employees under <a href=\"https:\/\/www.esic.nic.in\/esi-acts\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"ESI Act  (opens in a new tab)\">ESI Act <\/a>which as a result also reduces the financial liability and to improve the working condition of the organization.The revision of rates is finalized by the government after taking into consideration the suggestions of the stakeholder. <\/p>\n\n\n\n<p>Also Read: <a href=\"https:\/\/enterslice.com\/learning\/esi-registration-mandatory\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Why ESI Registration is Mandatory? (opens in a new tab)\">Why ESI Registration is Mandatory?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Draft containing certain rules was published in official gazette regarding the amendment in Employees&rsquo; State Insurance Rules, 1950. Under which government has reduced the ESI contribution which will take effect from 1st July 2019 from 6.5% to 4% with the motive to provide a substantial relief to workers and that will result in more [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":19822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1399],"tags":[2563],"acf":{"service_id":"14"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Government reduces ESI Contribution Rates from 6.5% to 4%<\/title>\n<meta name=\"description\" content=\"Government has reduced the rate of ESI contribution of Employer and employees under ESI Act to increase the in-hand salary of the employees.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/change-in-esi-contribution-rates\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Government reduces ESI Contribution Rates from 6.5% to 4%\" \/>\n<meta property=\"og:description\" content=\"Government has reduced the rate of ESI contribution of Employer and employees under ESI Act to increase the in-hand salary of the employees.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/change-in-esi-contribution-rates\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-06-17T12:30:26+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-06-18T04:56:29+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Revised-ESI-Contribution.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"700\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":511,"readingTime":3,"nextPost":{"id":19796,"slug":"dissolution-of-partnership-firm"},"prevPost":{"id":19634,"slug":"account-receivable-services"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/06\/Revised-ESI-Contribution.jpg","postTerms":"ESI Registration","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/19761"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=19761"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/19761\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/19822"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=19761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=19761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=19761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}