Government reduces ESI contribution rate to 4%, industry to save Rs 5,000 crore annually
NEW DELHI: The government on Thursday announced a cut in contributions made by employers and employees toward the health insurance scheme of Employees' State Insurance Corporation (ESIC) to 4 per cent from the existing 6.5 per cent, a move which would lead to an estimated annual saving of around Rs 5,000 crore for firms.
The reduced rates will be effective from July 1, 2019, the labour ministry said in a release. This would benefit 3.6 crore employees and 12.85 lakh employers.
"The government has taken a historic decision to reduce the rate of contribution under the Employees' State Insurance Act from 6.5 per cent to 4 per cent (employers' contribution being reduced from 4.75 per cent to 3.25 per cent and employees' contribution being reduced from 1.75 per cent to 0.75 per cent)," the ministry said.
As many as 12.85 lakh employers and 3.6 crore employees contributed Rs 22,279 crore towards the ESI scheme in 2018-19.
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