Ministry of Labour & Employment
Government Reduces the Rate of ESI Contribution from 6.5% to 4%
Posted On: 13 JUN 2019 7:35PM by PIB Delhi
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 beingreduced from 4.75% to 3.25% and employees’ contribution beingreducedfrom 1.75% to 0.75%). Reduced rates will be effective from 01.07.2019.Thiswould benefit 3.6 crore employees and 12.85 lakhemployers.
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 oflaw.
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 since01.01.1997.
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/- from01.01.2017.
These efforts resulted in substantial increase in the number of registered employees i.e. Insured Persons and employers and also a quantum jump in therevenue income of the ESIC.The figures are as under: -
||No. of Employers
||No. of Insured Persons (in crores)
||Total contribution received (in Rs. crores)
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.
CBI Releases Booklet
India's export incentive scheme called Merchandise Exports from India Scheme (MEIS) will be scrapped and replaced with a new duty refund scheme called Rebate of State and Central Taxes and Levies (RoSCTL).
The MEIS scheme is an export incentive scheme which was challenged by the United States at the World Trade Organisation (WTO), which is likely to take a call on the dispute in September this year. Pre-empting an adverse report, CNBC-TV18 learns that the Commerce Ministry has floated a Cabinet note for a WTO-compliant scheme to ensure that India's exports remain competitive.
Instead of giving export incentives, the new scheme will seek to reimburse duties to exporters. As per current estimates, 11 State taxes and 6 Central taxes are not reimbursed to exporters.
"Exports should be zero rates from a tax point of view, need to take measures to ensure that disabilities to export companies are minimised," said India's former ambassador to WTO Jayant Dasgupta.
Reimbursements will be done through a freely transferable scrip, which will be determined by the duty drawback committee under the Department of Revenue. This committee will take into account the non-refunded duties that exporters have to bear and based on that it will derive a scrip rate for each export product. Since this is a massive re-orientation exercise, the new duty refund scheme will replace MEIS in phases.
Ajay Sahai, DG and CEO of Federation Indian Export Organisations (Fieo) said: "Embedded structure of tax being included in product costs needs to be looked at. Ease of credit access with competitive interest rate will further help export companies.”
As per current estimates of the Finance Ministry, the duty foregone on account of MEIS has been estimated at Rs 44,000 crore in FY19 and it is expected that the new scheme at the most will have the same level of duty foregone.
It remains to be seen whether exporters suffer competitive disadvantage vis-a-vis other countries in the global market, where exports are losing traction, after the removal of MEIS and the implementation of the new scheme.
Ministry of Finance: Department of Revenue
New Delhi, July 31 (KNN) As Government is considering to replace Merchandise Exports from India Scheme (MEIS) with a new duty refund scheme called Rebate of State and Central Taxes and Levies (RoSCTL), GEMA, which is north India's biggest apparel association has sent a representation to the Government appealing not to discontinue MEIS.
In a representation sent, the Garment Exporters & Manufacturers Association (GEMA) said that the consideration of RoSCTL as a substitute to MEIS is unjustifiable. The two should be seen independent of each other.
It may be noted that ROSCTL, which is a reimbursement of taxes already paid by the industry, is not similar in scope or role of MEIS and hence should not be considered as a replacement of the same, said GEMA.
Also, with ROSCTL yet to be rolled out and backlogs of more than 8 months reported by a lot of smaller players, there is already a working capital crunch in the industry, it added.
“A discontinuation would aggravate these challenges for Indian exporters and render them competitive. I strongly request the Government to continue the MEIS Scheme as the apparel sector has recently recovered from a long spell of stagnation”, said Animesh Saxena, General Secretary of GEMA.
Requesting Government that MEIS for Garments (HS Code 61& 62) should be continued with the existing rate of 4% until such time alternative WTO complaint scheme is formulated and implemented, he said RoSCTL scheme was introduced to provide reimbursement of Central and State Taxes to ensure that the taxes are not exported along with the products. RoSCTL is not an export subsidy Scheme.
August 16, 2019
TO ALL MEMBERS:
Subject: Invitation for stakeholders interactive meeting on National Textiles Mission on Quality & Compliance and MMF
For information of members, we are reproducing below the E.mail message received from Mr R.K.Sharma, Sr.Director, AEPC regarding Invitation for stakeholders interactive meeting on 20th August, 2019 at 3:00 PM at AEPC Gurugram regarding National Textiles Mission on Quality and Compliance and MMF.
The Government of India at highest levels have accepted Textiles Committee’s plan to launch a “Textiles Mission on Quality & Compliance” for the benefits of the Textiles & Apparel (T&A) industry with a view to improve the quality & compliance and thereby increase exports & reduce sub-standard imports. In fact this is one of the important interventions short listed by Ministry of Textiles for the new government’s 100 days programme. Accordingly, it has been decided to undertake Stakeholders Consultation with important Business Associations/ Leaders/ Clusters. The interaction on National Textiles Mission on Quality & Compliance will help in fine tuning the mission to be launched by Ministry for addressing the issues relating to Quality & Compliance on Textile & Apparel (T&A) sector.
2. As part of these initiatives and to interact with key stakeholders on these important initiatives, etc.Textiles Committee in association with AEPC is organising a stakeholders interactive meeting at AEPC, Gurugram (NCR) on 20 August, 2019 at 3.00 PM. The consultation meeting/ FGD will help in understanding the key issues and challenges being experienced by the Textile sector with respect to quality and compliance besides collecting their views on this important initiatives for strengthening quality & compliance eco-system of the sector.
3. In addition, the Textiles Committee has been assigned a project by the Ministry of Textiles, Government of India to conduct a study viz “Promoting Growth of Man Made Fibre Textile Industry in India – Roadmap to Identify Gaps and Suggest Measures with the objectives of strengthening the production of MMF Textiles including blends and technical textiles and its domestic consumption & exports besides improving the competitiveness of the MMF sector.
4. The studies once completed may help in devising appropriate policy interventions for strengthening the value chain of the man-made textiles in India and establishing Indian Man-made Textile Industry as a major global player in the international market.
You are requested to kindly make it convenient to attend the interaction meeting.
6. For further clarification or more details, you may contact Shri Ganesh Bangar, Assistant Director, Textiles Committee on email: firstname.lastname@example.org or email@example.com and Tel No: 0124-2544201, 2544202 or Mobile No: 9224278642 and Shri R. K. Sharma, Sr. Director, AEPC on firstname.lastname@example.org and Mobile No. 9899167235.
Line of confirmation is highly appreciated at email@example.com.