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Karnataka Enacts Welfare Fee for Gig Workers, Mandates 1% Commission Contribution

E commerce

Karnataka Mandates 1% Welfare Fee for Gig Workers

Business Honor
28 January, 2026

Ecommerce operators must contribute to a fund supporting gig workers’ welfare, benefiting thousands across the state.

In order to enhance the quality of life for gig economy workers, the Karnataka State Government has enacted the Gig Workers (Social Security & Welfare) Act, which mandates that all ecommerce companies remit a "welfare fee" that amounts to one percent (1%) of their commission income. The cap on the amount of this fee will be based on the type of ecommerce business model, with Rs0.50, Rs0.75, or Rs1.00 being the maximum charge available, depending on their respective business model.

The purpose of the fee structure is to provide support for the many smaller ecommerce businesses and generate additional revenue for the estimated 1.5 million gig economy workers in the Karnataka region. The Gig Workers Welfare Board is expected to collect between Rs 250 crores and Rs 300 crores a year. The State Government plans to issue a notification outlining the fee very soon, according to officials.

Major aggregators, such as Amazon, Zomato, Uber and others, will be required to remit their weekly aggregate fee payment to the board-designated bank account every week. The Labour Department of Karnataka is working with the International Institute of Information Technology, Bangalore (IIIT-B) and the Azim Premji Foundation to develop a software prototype to facilitate payment of the Welfare fee and to enable quick verification of the fee payments.

There is a large pool of gig workers in Karnataka; estimates suggest there are 500,000 gig workers across many platforms providing services in various sectors including food delivery, e-commerce and ride hailing. Of this total, approximately 275,000 gig workers are located in Bangalore. In order to achieve the goal of establishing and implementing the Welfare fund by the end of August, the Labour Department is currently working with app-based service providers to finalize the fee structure.