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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

Breaking the Macaulay Mindset

Dec 9, 2025
4 min read

India’s colonial hangover cannot be vanquished until its democratic institutions relearn how to govern themselves.

Prime Minister Narendra Modi’s recent invocation of the need to defeat the “Macaulay mindset” has stirred a familiar fault line in India’s public life. Almost at once, the debate collapsed into its usual trenches: the dominance of English, the legacy of colonial education and the supposed invasion of foreign culture. These are easy targets, and comforting ones. They suggest that psychological freedom will arrive once syllabi are rewritten and accents corrected. Yet this diagnosis misses where the problem truly festers. A colonial mindset is not merely inherited through textbooks but rehearsed daily through institutions. And in a sovereign democratic republic, that responsibility rests squarely on the four pillars of democracy, namely the legislature, executive, judiciary and media.


The British cultivated submission through law, bureaucracy and hierarchy. Independent India promised to replace it with self-rule, accountability and equality before the law. Whether that promise has been honoured is an awkward question confronting the republic.


Collective Interests

Consider the legislature. India’s parliaments and assemblies are theatres of ideological combat. Verbal duels, adjournments, walkouts and occasional scuffles are routine. Yet whenever the collective interests of legislators are threatened - from salaries and pensions to legal immunities - partisan fury melts into bipartisan harmony with remarkable speed. The same instinctive coordination is visible between the legislature and executive. When courts are seen to encroach upon legislative terrain, parliaments retaliate through swift amendments, often with cross-party cooperation that would be unthinkable on matters affecting ordinary citizens.


But the most revealing asymmetry lies in how democracy is structured for rulers and ruled. Voters are locked into the blunt ‘first past the post’ system, where candidates can prevail with wafer-thin pluralities, encouraging endless social fragmentation. Elections become exercises in dividing society by caste, language, income, religion and geography into ever-smaller electoral blocs.


Lawmakers, however, often operate under an alternative logic when voting among themselves by ranking candidates, forging wider consensuses, and being forced into accommodation. The result is a permanently polarised society governed by representatives structurally encouraged to reconcile with one another. A people trained to quarrel cannot easily develop the collective confidence needed to overthrow a mindset of subordination.


If the legislature cultivates division, the executive institutionalises resignation. On paper, India is heavily regulated. In practice, enforcement is sporadic to the point of farce. Traffic rules are treated as polite suggestions. Wrong-side driving, phone use at the wheel, encroachment of pavements, haphazard banners blocking sightlines have become the texture of daily civic life.


All of this unfolds in full view of authorities. The message absorbed by citizens is not merely that rules are broken, but that they are expected to be broken. Yet the same streets can be resurfaced overnight when a VIP is scheduled to pass through. The truth is that the state can act decisively when it chooses not to ignore.


The philosophy of ‘civil disobedience’ once dignified the struggle against unjust colonial authority. In post-independence India, it has curdled into civic lawlessness. The pervasive ‘chalta hai’ culture of shortcuts, compromises and casual violations have bred poor quality, low expectations and institutional sloth. And inevitably it deepens the sense that India remains, in practice, an inferior version of those Western societies where laws are followed not because they are feared, but because they are believed.


If the executive weakens respect for rules, the judiciary strains belief in justice itself. “Justice delayed is justice denied” is no longer a moral warning but a statistical description. Chronic shortages of judges, staggering backlogs and cases that outlive the litigants involved have turned the judicial process into a punishment in its own right. Years of expenses and uncertainty grind citizens down regardless of whether acquittal or conviction eventually arrives.


Defensive Reflexes

This erosion of trust is compounded by the judiciary’s own defensive reflexes. Like the other pillars, it is acutely sensitive to any perceived threats to its autonomy and swift to repel them. The collegium system of judicial appointments, for instance, has been ring-fenced against legislative interference with near-sacred intensity. But institutional independence that coexists with prolonged inefficiency slowly hollows out legitimacy.


The media, which is the fourth pillar, is formally tasked with keeping the other three honest. In theory, a vigilant press should expose wrongdoing relentlessly until accountability is unavoidable. In practice, sustained scrutiny is rare. Scandals are pursued intensely only until the next sensation erupts.


What emerges from this institutional mosaic is not a society marching toward psychological freedom, but one trapped in contradiction. Citizens are encouraged to splinter politically, indulged in civic indiscipline, exhausted by judicial delay and overstimulated by relentless media noise. In such an environment, pride seeks refuge not in lived experience, but in distant civilisational achievements and iconic personalities of a long-vanished past.


There is nothing improper in revering history. A civilisation that forgets itself is easily conquered. But pride that rests only on antiquity, unrefreshed by the daily experience of dignity in the present will struggle to shed a slave’s psychology, however often they are reminded of ancient glory.


Defeating the Macaulay mindset is not a cultural skirmish but an institutional reckoning. It requires a polity that discourages fragmentation, an executive that enforces laws impartially rather than theatrically, a judiciary that delivers justice within human timeframes, and a media that sustains accountability beyond the lifespan of a headline. None of this requires a rejection of English, Western ideas or global engagement. It requires something more demanding, and that is the routine practice of self-respect through governance.


Colonial rulers did not simply command India but trained it to doubt itself. Independent India will not unlearn that reflex through rhetoric alone. It will do so only when its citizens encounter, in the ordinary transactions of daily life, a state that functions with fairness, discipline and consequence.


Until those four pillars change how they work, calls to defeat the Macaulay mindset will continue to echo loudly and achieve very little.


(The writer works in the Information Technology sector. Views personal.) 

 


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