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By:

Sumit Ranjan Das

21 August 2024 at 4:08:59 pm

EPFO’s Big Wage-Band Reset

Twelve years is a long time for a wage ceiling to remain unchanged. The last revision came in September 2014, when the limit was raised from Rs.6,500 to Rs.15,000. Last week, the Union Cabinet approved another increase, taking the ceiling to Rs.25,000 a month with effect from 17 September 2026. The government’s estimate is that more than 51 lakh additional employees will come within mandatory EPFO coverage as a result of the change. For employers and payroll professionals, however, the...

EPFO’s Big Wage-Band Reset

Twelve years is a long time for a wage ceiling to remain unchanged. The last revision came in September 2014, when the limit was raised from Rs.6,500 to Rs.15,000. Last week, the Union Cabinet approved another increase, taking the ceiling to Rs.25,000 a month with effect from 17 September 2026. The government’s estimate is that more than 51 lakh additional employees will come within mandatory EPFO coverage as a result of the change. For employers and payroll professionals, however, the headline number is only the starting point. The more important questions are who will be covered, which wages will be taken into account and how the revised provisions will be implemented. Wage Ceiling The existing wage ceiling of Rs.15,000 a month is being raised by Rs.10,000, or 66.7 percent, to Rs.25,000. The change takes effect from 17 September 2026 and marks the first revision since September 2014. The government expects more than 51 lakh additional employees to be covered. Estimated expenditure is about Rs.56,696 crore over five years, while annual government outgo is expected to rise to approximately Rs.11,339 crore. The standard contribution remains 12 percent each from the employee and employer, subject to applicable provisions. The Cabinet said the decision will expand access to provident-fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), in accordance with the applicable scheme provisions. The wage ceiling is not merely an administrative threshold. It determines the point at which mandatory EPF coverage applies under the existing framework. At present, a fresh employee joining employment at wages above Rs.15,000 a month is not automatically brought within mandatory EPF coverage and may remain outside mandatory provident-fund, pension and associated insurance protection, subject to applicable statutory provisions. The revised ceiling will bring a substantial section of employees earning between Rs.15,000 and Rs.25,000 within the mandatory coverage framework. The government has also quantified the fiscal impact. The estimated expenditure is about Rs.56,696 crore over five years, while annual government outgo is expected to rise to approximately Rs.11,339 crore, compared with existing annual budgetary support of about Rs.10,250 crore. The Labour Ministry has linked the revision to sustained wage growth, rising incomes and the continued expansion of formal employment since the previous revision in 2014. Payroll Illustration Consider an employee earning Rs.22,000 a month who becomes subject to mandatory coverage under the revised ceiling. At the standard 12 percent contribution rate, if the full eligible wage is used as the contribution base, the employee’s contribution would rise from Rs.1,800 to Rs.2,640 a month, while the employer’s contribution would similarly rise from Rs.1,800 to Rs.2,640. Total monthly contributions would therefore increase from Rs.3,600 to Rs.5,280 — a combined increase of Rs.1,680. However, this should not be treated simply as Rs.1,680 of additional employee savings. Contributions are allocated between EPF and EPS components as prescribed, with the EPF component accumulating in the employee’s account and the EPS component providing pension benefits subject to scheme conditions. The Rs.22,000 example is illustrative, not a universal payroll formula. The final treatment of wage components, existing employees in this band, EPS allocation and transitional matters will depend on the statutory notification and EPFO implementation instructions. For payroll professionals, the immediate task is to assess the operational impact. Key questions include the effective date for existing employees and new joiners, which wage components will count towards PF, whether the 10 percent concessional rate for notified establishments will continue, how the revised ceiling will interact with EPS pensionable wages, and what changes will be required in payroll systems. The Cabinet approval establishes the policy decision; the formal Gazette notification and EPFO instructions will determine how it is translated into payroll processes. The revised ceiling is the first increase since September 2014 and is expected to bring more than 51 lakh additional employees, particularly those in the Rs.15,000-Rs.25,000 wage band, under mandatory EPFO coverage. For them, the change can expand access to provident-fund savings, EPS pension and EDLI insurance, subject to scheme provisions. For employers, it means reviewing payroll costs, employee data, eligible wage components, contribution calculations and compliance systems. The government has described the move as part of efforts to extend statutory social security and strengthen formal employment. The policy has been announced. For payroll professionals, the next chapter is implementation. (The writer is a Cost and Management Accountant and founder of TaxoDas. Views personal

A beacon of hope for rural athletes

Correspondent
Oct 8, 2024
3 min read

Updated: Oct 22, 2024

How Akash Shinde transformed from a shy village boy to a prominent kabaddi player

beacon of hope

Mumbai: In the heart of Nashik's Adgaon village, a young boy Akash Shinde dared to dream big. Little did he know that his journey from playing in the muddy grounds of his town to becoming a PKL winner would inspire a generation of aspiring athletes.


“Initially, when I used to play, I would come home with bruises because Kabaddi was played in the mud,” Akash recalls as he enters his fourth season with the Puneri Paltan. And despite his family's initial concerns, his passion for kabaddi burned bright, fuelled by the unwavering support of his early mentors Sagar Malwade and Vinod Labde.


His path to success was far from smooth. He faced numerous setbacks, failing to make the cut in his first attempts at various levels. “I fell short in my first attempts at all levels. I went for my senior camp for Maharashtra and fell short there too!”


But instead of letting these failures discourage him, Akash used them as stepping stones. “These setbacks kept me determined, and I knew I needed to try harder and with renewed energy to show the world what I could do and achieve.”


His breakthrough came in 2019 at a seniors’ trial in Nashik. This performance opened doors, leading him to play in the Junior Nationals and eventually catching the eye of Yuva Paltan, which is the Puneri Paltan’s academy.


The turning point in Akash’s career came when he represented his college in Beed, earning his first chance to play for Maharashtra. Under the guidance of Anil Jagdale and Kailas Jagdale, his skills flourished. His journey accelerated as he moved from Mahindra & Mahindra to Yuva Paltan, where mentors like Sangram and Ashok helped refine his game.


Akash’s PKL debut with Puneri Paltan in Season 8 was a moment of immense pride, not just for him but for his entire village. “No player from the Nashik region had made it to PKL or even the Maharashtra team, so it was a shock, a pleasant one, for everyone. The entire Nashik district was very happy. It felt really good,” he reminisces.


But it was in Season 9 that he truly announced his arrival, becoming a formidable force on the mat. In the 22 matches that Akash played on the way to his first PKL final, he scored 139 raid points, averaging 6.32 raid point per match.


His performances caught the eye of the national selectors, earning him a spot on the Indian team for the Asian Games. “I received my Team India kit on the 27th of October. I still remember it,” he says.


The crowning glory came in PKL Season 10 when Akash, along with his Puneri Paltan teammates, lifted the coveted trophy. Albeit playing a diminished role, he managed an impressive 56 raid points in the 13 matches he played. “There was only one target then... we had made up our minds that we had to win the title this season, whatever it took,” he shared, reflecting on the team’s collective determination. Now, Akash stands as a beacon of hope for young athletes from rural India. His message to them is clear: “Keep believing in yourselves and your dedication and efforts.” He emphasizes the importance of loyalty, urging young players to stay true to the clubs that nurture them.


As he prepares for PKL Season 11, his journey from the muddy grounds of Adgaon to the bright lights of Pro Kabaddi serves as a testament to the power of dreams, determination, and unwavering support.

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