Industry bodies write to Karnataka govt about lack of clarity around welfare fee of gig workers

As Karnataka is expected to implement the proposed 1% welfare fee on payouts to gig workers effective from April 5, 2026, industry bodies have written to the State Government expressing concerns about the lack of clarity around the same. 

Welfare schemes not specified 

IndiaTech.org, an industry association representing Indian startups and technology companies, and the Internet and Mobile Association of India have written to the government, pointing out that the welfare schemes the fee is meant to fund are yet to be notified. 

“Karnataka has not clarified in the Act where the money collected will get deployed,” Rameesh Kailasam, CEO & President of IndiaTech.org, told The Hindu. 

He added that many aggregators already provide insurance coverage to gig workers through different insurance providers, and, therefore, platforms need clarity on what the government would cover so they can adjust their existing coverage accordingly.

Echoing similar sentiments, a communique from IAMAI noted that commencing mandatory welfare fee contribution without corresponding operational State schemes would risk an unavoidable duplication of financial obligations, and may compel aggregators to discontinue existing private insurance coverage, resulting in unintended gaps in protection for gig workers.

CoSS vs Karnataka Act

The associations stated that there are disconnects between the Code on Social Security (CoSS) notified by the Central Government and the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025. 

CoSS mandates that every aggregator contributes between 1% and 2% of its annual turnover towards the social security of gig and platform workers. The Karnataka Act mandates a welfare fee of 1% to 5% on payouts made by aggregators to gig workers within Karnataka. 

Mr. Kailasam noted that while the Karnataka Act states that welfare fee payments made by aggregators would be counted towards the contribution that they are required to pay under the CoSS, the Centre has not clarified its position on the same.  

“Social security and welfare of gig workers is important. But right now, it is a triangular conflict, and it could lead to chaos in terms of compliance. So, we have also written to the Centre seeking clarity regarding notification of rules,” he said. 

IAMAI too noted that in the absence of clarity, aggregators may effectively be put under duplicative obligations.  

The associations sought to defer implementation of the welfare fee until welfare schemes under the Act are notified, and clarity is provided on how obligations under the Karnataka Act will align with those under CoSS.