Karnataka Gig Workers Welfare Fee
If you are an Aggregator or on a Service Platform, review your compliance immediately
The Government of Karnataka has operationalised a landmark social safety net for its gig workforce by notifying the quantum of the Gig Workers Welfare Fee under the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025. Platforms and aggregators operating in Karnataka are required to begin debiting and depositing the applicable fee with effect from February 13.
Minimum fee: 1% of the transaction amount
|
Notified range: Up to 5%
|
Current notification: 1% with per-transaction caps
Key Highlights
Mandatory welfare fee:
All aggregators and platforms must levy a welfare fee on payouts made to gig workers.
Fee structure:
Minimum 1% of payout; up to 5% as notified. Current notification applies 1% with caps per transaction.
Category-wise caps:
Ride-hailing (2W, 3W, 4W): ₹0.50 – ₹1.00; Food and grocery delivery: ₹0.50; Logistics: ₹0.50 – ₹1.50; E-marketplaces: ₹0.50 – ₹1.00; Professional services: ₹1.50.
Quarterly compliance:
Platforms must calculate, declare, and deposit the welfare fee within prescribed timelines.
PWFVS integration:
Transactions and welfare fee deductions will be tracked through the Payment and Welfare Fee Verification System (PWFVS) for monitoring and transparency.
Interim requirement:
Until PWFVS is operational, platforms must self-report payout details quarterly.
Welfare Fee Rates (Ready Reference)
| Service Category |
Vehicle Type |
Rate |
Cap (₹) |
| Ride Hailing |
2 W |
1% |
0.50 |
| Ride Hailing |
3 W |
1% |
0.75 |
| Ride Hailing |
4 W |
1% |
1.00 |
| Food and Grocery Delivery |
2 W |
1% |
0.50 |
| Logistics |
2 W |
1% |
0.50 |
| Logistics |
3 W |
1% |
0.75 |
| Logistics |
LCV |
1% |
1.00 |
| Logistics |
HCV |
1% |
1.50 |
| E-marketplace |
2 W |
1% |
0.50 |
| E-marketplace |
3 W |
1% |
0.75 |
| E-marketplace |
LCV |
1% |
1.00 |
| Professional Activity Providers |
Any |
1% |
1.50 |
Note: The current notification specifies 1% with caps per transaction across service categories as listed above.
Why this matters
This is a structural shift aimed at extending social security benefits to gig workers while introducing new compliance obligations for digital platforms. For businesses operating in the gig economy, the immediate impact is operational: payout systems need updates, welfare fee computation must be accurate, and reporting frameworks must be strengthened.
Action required for platforms
Step 1: Review and configure payout workflows for Karnataka transactions.
Step 2: Implement automated welfare fee calculations aligned to category-wise caps.
Step 3: Prepare for quarterly filings and interim self-reporting until PWFVS is fully operational.
Step 4: Align internal controls, audit trails, and documentation for regulatory readiness.
Bottom line: the gig economy is entering a regulated phase where worker welfare and compliance operate together. Early system readiness reduces operational friction and lowers regulatory risk exposure.
What experts are indicating
Professional experts indicate the immediate financial impact on companies may remain limited given the per-transaction caps (₹0.50 to ₹1.50). Some expect marginal pass-through to consumers via small adjustments in service or delivery charges. Others point to a longer-term benefit through improved social security and stability for gig workers who form the backbone of platform business models. Karnataka is expected to collect approximately ₹250 crore to ₹300 crore annually through the welfare fee, and market sentiment may remain cautious in the near term without materially changing the platform economics.
Karma Global will be happy to discuss how businesses can navigate this transition efficiently.
Talk to Karma Management about payroll, international workers and PF, labour laws, staffing, training, RERA and governance frameworks tailored for your establishment.
Write to: marketing@karmamgmt.com
Disclaimer: This note is for general informational purposes and should not be treated as legal advice. For applicability and implementation support, seek professional guidance.
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