Govt reduces rate of contribution towards ESI scheme, employers to benefit

Government decision may lead to annual savings to the tune of Rs 9,000 crore for the industry.

The government on Thursday announced reducing the total rate of contribution made by workers and employers towards the Employees’ State Insurance (ESI) scheme from 6.5 per cent to 4 per cent for the first time in over two decades.
 
The move is expected to benefit around 1.3 million employers who will see a 40 per cent reduction in the rate of contribution they make for their employees, in line with the provisions of the Employees’ State Insurance Act, 1948.
 
Nearly 4.75 per cent of a worker’s monthly salary goes towards ESI as the employer’s contribution, 1.75 per cent