Rules 19-20 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 19 states the ESI contribution rates for a wage period and gives employers relief for employees with disabilities. Rule 20 lists what counts as the Corporation's administrative expenses under section 30 and caps them at fifteen per cent of revenue income.
For a wage period the employer's contribution is three and one-fourth per cent (3.25%) of the wages payable and the employee's is three-fourth per cent (0.75%), each rounded to the next higher rupee. For an employee with a disability under the two Acts named in rule 19(2), the employer need not pay its share for up to three years (or a period the Central Government specifies), and the Central Government reimburses the Corporation. Administrative expenses may not exceed fifteen per cent of the Corporation's total revenue income in a year.
Rule 19: who pays how much
Rule 19(1) fixes the contribution for a wage period:
| Contributor | Rate on wages payable | Rounding |
|---|---|---|
| Employer | 3.25% (three and one-fourth per cent.) | To the next higher rupee |
| Employee | 0.75% (three-fourth per cent.) | To the next higher rupee |
Together these make 4% of wages. The rates are printed in the Rules; the wage ceiling for ESI coverage is not stated in the text of these rules. The Code's definition of "wage ceiling" leaves it to be notified, so check the current notification for which employees and wages are covered. Our existing post on ESI contribution rates uses the same percentages under the old law. For employers who need help computing and paying contributions, see our ESI and PF return filing service.
The employer pays the contribution under section 31 of the Code, and our article on sections 30 and 31 covers the payment mechanics.
A worked example of the rounding
An employee's wages payable for a wage period are Rs 18,500. The employer's 3.25% is Rs 601.25, rounded up to Rs 602. The employee's 0.75% is Rs 138.75, rounded up to Rs 139. Total contribution for that employee for the period is Rs 741. (Illustrative; whether a wage qualifies for ESI depends on the applicable wage ceiling and definitions.)
Employees with disabilities (rule 19(2) and (3))
- For an employee who is a person with disability under the Rights of Persons with Disabilities Act, 2016 and under the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999, the employer "shall not be required to pay employer's share of contribution" for a period of up to three years, or such period as the Central Government specifies, from the date of commencement of the contribution period.
- The employer's share for such employees and for that period is reimbursed to the Corporation by the Central Government (rule 19(3)).
The employee's own 0.75% is not mentioned in the relief, so the text reads as relieving the employer's share only. Employers should keep records of the disability status (for instance the certificate relied on) and of the date from which the relief is claimed.
Rule 20: administrative expenses
Section 30 of the Code deals with the Corporation's administrative expenses. Rule 20(1) says the expenditure on the following items is "termed as administrative expenses under section 30":
| Item | Head of expense |
|---|---|
| (a) | Fees and allowances to members of the Corporation, Standing Committee, Medical Benefit Committee and other committees |
| (b) | Salaries, leave and joining time allowances, travelling and other allowances, bonus, gratuities, compassionate allowances, pension, contributions to provident or other benefit funds and training-related expenses of the Corporation's officers and employees |
| (c) | Depreciation and maintenance of staff cars, office buildings, staff quarters, hired accommodation, furniture, office equipment, stationery, printing and other office expenditure |
| (d) | Membership subscription to international organisations and other services for giving effect to Chapter IV |
| (e) | Cost of auditing the accounts and valuing assets and liabilities |
| (f) | Cost of Employees' Insurance Courts set up under the Code |
| (g) | Sums payable under contracts entered into for the purposes of the Code |
| (h) | Sums under any decree, order or award of a Court or Tribunal against the Corporation or its officers for acts done in the execution of duty, or under a compromise or settlement |
| (i) | Cost of instituting or defending civil or criminal proceedings arising out of action under the Code |
| (j) | Publicity of the ESI Scheme, including printing and relevant courses |
| (k) | Evaluation studies on aspects of the functioning of the ESI Scheme |
The cap (rule 20(2))
"The percentage of the total revenue income of the Corporation which may be spent every year on its administrative expenses shall not exceed fifteen per cent." The Explanation defines the "Employees' State Insurance Scheme" as the schemes in Chapter IV, administered by the Corporation, with the Central and State rules, regulations and notifications it must administer, including administrative instructions.
The practical effect is that at least eighty-five per cent of revenue income is available for benefits and other uses, if the Corporation spends up to the cap. The rule does not itself say where the rest must go, so treat this as an inference and not a rule.
Why employers should care
- The rates drive your monthly ESI challan.
- Rounding up applies separately to the employer and employee shares, so compute each share before rounding.
- The disability relief can lower cost and supports inclusive hiring, but it is time-limited.
- The administrative cap is a governance safeguard on the Fund your contributions feed.
These are Central Rules. Where the State Government is the appropriate Government, the State's own rules apply. For the benefit side see our post on ESI benefits.
Need help with ESI contributions and returns?
Correct rates, rounding and relief claims affect every challan. Our ESI and PF return filing team can help you compute contributions, claim applicable relief and file on time.
Key takeaways
- Employer 3.25% and employee 0.75% of wages payable, each rounded to the next higher rupee.
- For employees with disabilities under the two named Acts, the employer's share is waived for up to three years, reimbursed by the Central Government.
- Rule 20 lists eleven heads of administrative expenses.
- Administrative expenses are capped at 15% of revenue income.
- The rule does not state the ESI wage ceiling.
Read next
- Sections 30 and 31: Administrative expenses and payment of ESI contributions
- Rule 18: Insurance of employees
- Rules 21 and 22: Funeral expenses and qualification for benefits
- ESI contribution rates: employer 3.25%, employee 0.75%
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.