As per notification issued by Ministry of Labour and Employment dt. 22nd December, 2016, in exercise of the powers conferred by section 95 of the Employees’ State Insurance Act, 1948, 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 Employees’ State Insurance (Central) Third Amendment Rules, 2016. (2) They shall come into force from 1st day of January, 2017. 2. In the Employees’ State Insurance (Central) Rules, 1950, in rule 50, for the words “fifteen thousand rupees” occurring at both the places, the words ‘twenty one thousand rupees” shall be substituted in chartered accountant firms in mumbai.
In simple words, lower rate of contributions (3% instead of 4.75% for employers and 1% instead of 1.75% for employees) will apply in areas where the Act is implemented for the first time in Tax consultancy firms in India.
The increase in wage cap will augment the burden on employers as they have to pay 4.75% of an employee’s salary as ESI contribution every month (Rule 51 of the Rules). A benevolent amendment indeed for the employees; however the far reaching effect & impact thereof will be seen in times to come.
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