Govt. has amended the ESIC Rules and has notified revised/ reduced ESI Contribution rates w.e.f. 01/07/2019 (i.e. during Financial Year 2019-20). New rate of Employer’s ESI contribution is 3.25% (reduced from 4.75%) and Employee’s ESI contribution is 0.75% (reduced from 1.75%), as summarised here-under:
| ESI Contribution Rates | Existing Rate (%) | Revised Rate (%) |
| Employer’s Share | 4.75 | 3.25 |
| Employee Share | 1.75 | 0.75 |
| Total ESI Contribution | 6.50 | 4.00 |
MoLE (GoI) Notification dt. 13/06/2019: Revised ESI Contribution Rates (Employer 3.25%, Employee 0.75%)
G.S.R. 423 (E).- Whereas a draft containing certain rules further to amend the Employees’ 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 15/02/2019, as required by sub-section (1) of the section 95 of the Employees’ 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;
And whereas, the copies of the said Official Gazette were made available to the public on 15/02/2019;
And whereas, objections or suggestions received from the public in respect of the said draft rules within the period specified above have been considered by the Central Government;
Now, therefore, in exercise of the powers conferred by section 95 of the said Act, the Central Government, after consultation with the Employees’ State Insurance Corporation, hereby makes the following rules further to amend the Employees’ State Insurance (Central) Rules, 1950, namely:-
1. (1) These rules may be called the Employee’s State Insurance (Central) Amendment Rules, 2019;
(2) They shall come into force on 01/07/2019.
2. In the Employees’ State Insurance (Central) Rules, 1950, in rule 51, –
(a) in clause (a), for the words “equal to four and three-fourth per cent of the wages”, the words “equal to three and one-fourth per cent. of the wages” shall be substituted;
(b) in clause (b), for the words “equal to one and three-fourth per cent of the wages”, the words “equal to three-fourth per cent. of the wages” shall be substituted.
Note: The principal rules were published in the Gazette of India, Part-II, Section 3, Subsection (i), vide number S.R.O. 212, dated 22/06/1950, and last amended by notification number G.S.R. 605 (E), dated 03/07/2018.
GoI Press Release dt. 14 June 2019
Government Reduces the Rate of ESI Contribution from 6.5% to 4%
The Government of India has taken a historic decision to reduce the rate ofcontribution under the ESI Act 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%). Reduced rates will be effective from 01/07/2019. This would benefit 3.6 crore employees and 12.85 lakh employers.
The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrollment of workers under the ESI scheme and bring more and more workforce into the formal sector. 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. The Government of India through Ministry of Labour and Employment decides the rate of contribution under the ESI Act. Presently, the rate of contribution is fixed at 6.5% of the wages with employers’ share being 4.75% and employees’ share being 1.75%. This rate is in vogue since 01/01/1997.
The Government of India in its pursuit of expanding the Social Security Coverage to more and more people started a programme of special registration of employers and employees from December, 2016 to June, 2017 and also decided to extend the coverage of the scheme to all the districts in the country in a phased manner. The wage ceiling of coverage was also enhanced from Rs. 15,000/- per month to Rs. 21,000/- from 01/01/2017.
These efforts resulted in substantial 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 figures are as under: –
| Year | No. of Employers | No. of Insured Persons (in crores) | Total contribution received (Rs. crores) |
| 2015-16 | 7,83,786 | 2.1 | 11455 |
| 2016-17 | 8,98,138 | 3.1 | 13662 |
| 2017-18 | 10,33,730 | 3.4 | 20077 |
| 2018-19 | 12,85,392 | 3.6 | 22279 |
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.
THANKS FOR REDUCING ESI CONTRIBUTION RATE. ALSO, PLEASE INCREASE COVERAGE THRESHOLD LIMIT FROM 21000 TO 25000.
Thanks to the Govt. It’s useful both for workers and employer.
REQUEST THE GOVT. & MINISTER FOR LABOUR & EMPL. TO SEE THAT THE BENEFIT OF ESI IS RECEIVED BY THE NEEDY HAPLESS WORKERS WHO HAVE TO RUN TO SEVERAL OFFICES TO GET SICKNESS BENEFIT, MEDICAL REIMBURSEMENT & ALSO MEDICAL TREATMENT FOR THE EMPLOYEES & DEPENDENTS.
ALSO REQUEST THE MINISTER TO HELP THE SR.CITIZENS WHO ARE REQUESTING TO INCREASE EPS PENSION SINCE MANY HAVE DIED GETTING RS.1000 UNABLE TO BUY EVEN MEDICINES FOR THEM & THEIR BELOVED FAMILY MEMBERS.
KIND REGARDS & THANKS FOR THE CONCERN FOR THE NEEDY RETD. EMPLOYEES.
RENAMING ESI TO EMI: CHANGE REQUESTED.
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Thanks for providing useful infn. on new proposed reduction in rates of ESI. One point I forgot to mention in my above comments is that;
ESI name to be changed as E.M.I. Meaning
EMPLOYEES MEDICAL INSURANCE.
It is about the
Medical treatment, Medical reimbursement; Medical problems in total.
Change is not only required but it is very important to say it is for EMI i.e., EMPLOYEES MEDICAL INSURANCE & E.S.I doesn’t give or convey correct meaning. Today; many things names are changed & it is high time that ESI which has to serve a majority of employees & dependents should also change to E.M.I to convey correct meaning of what it stands for.
Everybody knows MB Act, MW, PWA, FA. TA Rule, LTA Rule, PL Encashment etc., ESI is mainly about the MEDICAL PROBLEMS of the employees & their dependents. Hence, it is best to change / amend it to EMI instead of ESI. Many employees and even Co.Mngments asks what is ESI. so confusion that employees who contribute are helpless reg. ESI. For the middle & lower level employees, this facility is a great help & it must serve the purpose.
Please recommend to change ESI to EMI since State Insurance do not give or convey the correct meaning; when employees & his dependents main need is MEDICALl.
It is the need for the worker, employees including some officers who draw less salary in case of Sickness, Accident, disablement etc.
And they contribute for their Medical needs. WITH KIND REGARDS.
All is well but there is no improvement in ESI Hospitals and Dispensaries. Need to take some positive step for the same.
I also endorse the comment and suggest the Government to take steps for improvement of ESIC Hospitals.
As per a recent amendment (P/11/14/11/2017-BFT.II) the upper limit on salary for ESIC contribution has been removed in the case of specially disabled persons. Is there any clarification on the max amount that can be deducted from salary? My current salary is 60000 and my company is deducting 1050 every month for ESI Contribution.
Very useful change. Thanks
I have contributed reasonable amount from my salary on account of ESI for last 4 years. But I never took any medicine/ treatment at ESI Hospitals due to improper facilities. So I just request the Govt to please take necessary steps for improving basic amenities and facilities in ESI Hospitals.
In our case, salary bill for the month of June 2019 is to be created on 1 July 2019 9. Which rate will be applicable for the same?
REDUCING THE ESI CONTRIBUTION RATE BENEFITS THE WORKERS EARNING WAGES UPTO 21000. WHAT ABOUT OTHERS CROSSED THE 21000/- BUT CONTRIBUTED OVER THE YEARS FOR ESI? WHEREAS IN EPF THE CONTRIBUTION IS MANDATORY EVEN THE MEMBER CROSSED THE WAGES CEILING WHICH IS 15000 CURRENTLY. HE SHOULD CONTINUED TO BE MEMBER AND THE WAGES RESTRICTED FOR CONTRIBUTION AS PER EPS WAGES LIMIT. THE GOVERNMENT SHOULD CONSIDER AND CHANGE THE ESI RULES ACCORDINGLY, SO THAT THE EMPLOYEES CORSSED THE CURRENT ESI WAGES LIMIT FOR THEM TO AVAIL BENEFIT.
Thanks to the Govt. It’s useful both for workers and employer.please increase coverage Threshold limit from 21000 To 25000.
whether ESI benefits will be available to someone who is contributing for last 10 years (i.e. holding ESI card) but his present salary has increased above Rs. 21,000?
Please increase salary limit from Rs. 25000 to 30000.