Karnataka to collect 5% cess from aggregator platforms like Amazon-Flipkart, Ola-Uber for Gig Workers' Fund: Siddaramaiah

The decision came after Siddaramaiah met Congress leader and Leader of the Opposition in the Lok Sabha Rahul Gandhi in Delhi to discuss the Gig Workers' Bill.

Karnataka Chief Minister Siddaramaiah on April 3 said that the state will collect a 5 percent cess from aggregators such as Amazon, Flipkart, Ola, and Uber for Gig Workers' Fund.

"A cess of 5 percent of the total payout to gig workers will be levied on the concerned companies, while the remaining required funds will be provided by the state government to support welfare schemes for gig workers," Siddaramaiah said.

A senior official clarified that the 5 percent cess will be levied on payouts to gig workers by the platforms, not on the total transaction value.

Also, read: Congress woos gig workers with welfare fund from transaction fee on aggregator platforms

The decision came after Siddaramaiah met Congress leader and Leader of the Opposition in the Lok Sabha Rahul Gandhi in Delhi to discuss the Gig Workers' Bill. The meeting comes after differences emerged among state ministers regarding the bill.

A statement from the Chief Minister’s Office (CMO) said that the Karnataka government has decided to establish a Gig Workers' Welfare Board to ensure the well-being of workers employed by companies like Amazon, Flipkart, Ola, and Uber.

Speaking to Moneycontrol, Karnataka Labour Minister Santosh Lad said, "Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill proposes a 1-2 percent cess on a per-transaction basis for the gig workers' fund. The cabinet will take a final decision on the percentage of cess to be imposed. The Social Security Code allows for a cess of up to 5 percent."

As per the Code on Social Security, 2020, aggregators (platforms employing gig workers) must contribute 1-2 percent of their annual turnover—capped at 5 percent of the amount paid to gig workers—toward a social security fund for life and disability cover, accident insurance, and health benefits.

The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, initially scheduled for tabling last year, was deferred due to differences among ministers. While labour minister Santosh Lad backed the bill, IT-BT Minister Priyank Kharge and Industries Minister MB Patil reportedly raised concerns about its impact on startups and industries. All three ministers attended the meeting at Gandhi’s residence on Thursday.

Siddaramaiah said that a comprehensive bill covering all aspects of gig workers' welfare will be prepared and presented before the state cabinet for approval.

Also, read: Karnataka Gig Workers' Bill could impact ease of business in the state, warns IAMAI

It may be recalled that National Association of Software and Service Companies (NASSCOM) and the Internet and Mobile Association of India (IAMAI) have flagged provisions of the bill, warning that they could negatively impact aggregators' businesses and hinder ease of doing business in Karnataka.

Shaik Salauddin, National General Secretary of the Indian Federation of App-Based Transport Workers (IFAT), who attended the meeting said: "The Karnataka Gig Workers’ Bill is a much-needed step toward recognising gig and platform workers as an essential part of the economy. It must ensure fair wages, job security, and social protection for workers who drive the app-based economy."

He added, "We stand in solidarity with gig and platform workers across Karnataka and India. We urge the government to ensure this bill remains worker-centric, offering fair wages, social security, and safety provisions."

Also, read: Karnataka Gig Workers Bill: Aggregators, industry bodies seek more time, wider consultation