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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

Bharat’s Jetson Cities, Light-years Away from Nature

Jan 18, 2025
5 min read

Updated: Jan 20, 2025

Jetson Cities

One thing is for certain: our Bharatiya cities, the big metros and towns, are fast becoming like the ‘Jetson’ cities. For those who are unaware of Jetson cities, these were first shown in the famous Hanna-Barbera cartoon series, the Jetsons, set in the 2100s, where cities are air-tight glass globules tethered to the ground, and the only way to get in and out are the flying cars. Yes, we, the city-dwellers, aspire to tall skyscrapers, spectacular bridges, world-class tunnels, swooshing metro trains, and we are building Jetson-like flying cars. A few HD drone images here and there, during the day and at night and around twilight, and we are content that our cities have become the cynosure of our own eyes. We want our cities to be brightly lit, with neon signs, laser shows, and large billboard videos. We would then fulfil our inner desire to have a city on par with Tokyo, New York, and Shanghai.


Our buildings, designed for the next 30 years, are well air-conditioned, shielding occupants from a soupy dust bowl of brown smog, soot, particulate matter, and fine dust. It is said that most new home buyers invest at least 10% of their property’s price in enhancing the interiors, soundproofing their homes, using air purifiers and conditioners, and disconnecting from the outside world for that much-needed solace. Indeed, large builders promote their projects as close to nature amidst tranquillity. However, there is always another builder eager to get one plot of land ahead of yours to enjoy that nature. To be truthful, access to nature now comes at a premium - even the skies.


Let’s assume the working-age population is occupied in the leisure of our Jetson cities, but how many of their young school and college-going kids have seen the long arm of the Milky Way galaxy from their cities? How many have witnessed a comet zooming by? How many know about endemic plants with medicinal properties? When did they last see a chirping house sparrow? How many know that the nearest sewage drain was once a freshwater stream? When did they last find their suburban beach prettier than the resort beaches of Maldives?


The intent to ask these questions is simple: Bharat is currently at a crossroads. Pundits are enthusiastic about a cultural renaissance on the horizon. Corporate leaders, on the other hand, want us to invest hundreds of hours each week to pay our dues to the growth of the national GDP. But no one asks, if a cultural renaissance is to occur, who will generate the new understandings and insights of nature that arise typically during such a period of human advancement? No one is actually asking, for whom are we building the nation if there is no time for children, or worse, if there is no time or intent to have children. In the process of growing rich, we are about to become old. By 2047, 65% of the population under the age of 35 will grow beyond 35 all at once, and we’d have an enormous population in advanced ages with a tapering young population, a graph that looks like a banyan tree. Unfortunately, that young population will have no access to the knowledge that nature has to offer, neither flora and fauna nor the seas and the skies.


Our urbane lifestyles need tempering. Such tempering can occur only if we ensure the revival of natural sciences during this period of cultural renaissance and nation-building. Let’s not rely solely on the educational system. With Indian Knowledge Systems, constructive changes are underway, and academic curricula are poised to improve for the greater good. However, true knowledge arises only when parents and grandparents introduce children to nature. Genuine understanding also develops from extracurricular activities in schools and colleges that encourage kids to observe, journal, and act on their discoveries. On the positive side, our country’s forest cover is increasing, as announced by the government. However, efforts must be made to ensure that every school or college, whether in Mumbai, Vijayawada, Gorakhpur, Ratlam, Thrissur, Bhuj, Faridabad, Imphal, Manali, Cuttack, or Ajmer, guarantees that their students are well aware of the endemic nature of their surroundings and are regularly observing and recording data on whatever interests them. Let kids observe rivers and understand the volume of water that flows through them. Let children learn about the decline of house sparrows in their cities and what steps should be taken to revive their populations. Let them study the bees in their nearby groves and recognise the vital role these bees play in nature.


Of course, you need to learn AI, robotics, fintech, the next generation of management courses, and all the engineering bells and whistles. However, we must not leave the next generation with inadequate comprehension and skills for understanding nature. We must ensure that nature conservation is not merely lip service or a tool for politicised green activists. This can be achieved if natural sciences are given the respect they deserve at the school, undergraduate, and postgraduate levels.


Indeed, I am a plebeian, and you might feel that you, too, could write a rant about the plight of our urban lives. Urban development and municipal experts have many solutions to propose, but few are willing to take action. However, that is not the issue I wish to highlight. I aim to illustrate a much larger concern—that Indian city dwellers are disoriented and devoid of nature, lacking a guiding star to lead them toward a brighter future. Our cities of Mumbai, Delhi, Bengaluru, Ahmedabad, Kolkata, and Chennai have taken on characteristics reminiscent of Jetson-like cities. We show little regard for the Nagar Devata, Gram Devata, and Van Devata, who have protected the cities, towns, and forests that once surrounded us. We wait for formal governance to clean up our beaches, rivers, and ponds without making sufficient efforts to prevent pollution in the first place.


For those striving to grasp spirituality not through the Puranas and Aadi-Granth but through new-age podcasts, I recommend watching Vinay Varanasi’s podcast on Bhagavan Vishnu’s Dashavatar. If it is clear that Bhagavan Vishnu does not tolerate disregard for Bhudevi or Mother Earth, why do we, the devotees of Bhagavan Vishnu, continue to pollute our Mother Earth—her air, soil, waters, and sounds? Or have we taken Elon Musk's words at face value, assuming our next destination is Mars after destroying Earth, only to ruin Mars later, even worse than its current clinically sterile state? If that is the case, then bear with me when I say this: these Jetson cities stand on precarious pillars of ego, victimhood, apathy, and consumerism, waiting to be toppled either by the true harbingers of order or by false prophets. Therefore, teach the next generations to observe nature, appreciate our coexistence with other species, and venerate the forces of nature. By doing so, we humans will be good, at least for the next thousand years. If not, prepare for a bleak future by the end of this century.


(The author is a Space and Emerging Technology Fellow at the Centre for Security, Strategy and Technology, Observer Research Foundation, Mumbai. Views personal.)

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