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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

Cable Wars in the Deep

Correspondent
Feb 26, 2025
3 min read

Updated: Feb 27, 2025

As tensions simmer in the Taiwan Strait yet again, the battle for undersea cables signals a new front in the geopolitical brinkmanship between China and Taiwan.

Taiwan

In the contest for Taiwan’s future, China has mastered the art of subtle yet insidious pressure. From balloon overflights to sand dredging, the Chinese Communist Party (CCP) has perfected aggressive ‘grey zone’ tactics. The latest manifestation of this strategy has surfaced, quite literally, in the waters of the Taiwan Strait, where repeated damage to undersea communication cables has heightened fears of Chinese sabotage.


The Taiwan Straits has long been a geopolitical powder keg with its 110-mile breadth separating a self-governing democracy from an authoritarian giant that claims it as its own. Taiwan’s economic and strategic vitality hinges on a web of undersea cables connecting it to the world. Disrupting these cables is a calculated form of hybrid warfare to test Taiwan’s resilience.


The latest episode unfolded this week when Taiwan’s coast guard intercepted a Togolese-flagged cargo ship after a key undersea cable linking the main island to the Penghu archipelago was mysteriously severed. The ship, reportedly financed by China and staffed exclusively by Chinese nationals, had dropped anchor alarmingly close to the cable before communications were cut. Though Beijing dismissed Taiwan’s claims as political manipulation, Taipei pointed to a broader pattern of similar disruptions in recent years.


In early 2023, two cables near Taiwan’s Matsu Islands, critical links between the island and its outposts, were severed within a week. Taiwanese officials identified Chinese vessels as the culprits but stopped short of officially blaming Beijing. More recently, a China-owned, Cameroon-registered vessel was suspected of damaging another cable leading to the United States. Taiwan now maintains a watchlist of over 50 ships believed to be operating under “flags of convenience” - an obfuscation tactic allowing Chinese firms to avoid direct association with the CCP while operating in contested waters.


China’s denials are predictable, but follow a pattern of maritime intimidation. Beijing’s ‘grey zone’ operations, which fall below the threshold of conventional military aggression, extend beyond undersea sabotage. Chinese coast guard patrols near Taiwan’s Kinmen Islands (territory controlled by Taipei but located perilously close to China’s Fujian province) have intensified. These so-called ‘law enforcement’ operations, occurring four times a month on average, are seen by Taiwan as deliberate harassment aimed at undermining its sovereignty.


The cable disruptions have also drawn uncomfortable parallels to events in the Baltic Sea. Following Russia’s invasion of Ukraine, several undersea cables and gas pipelines were mysteriously damaged, with Moscow emerging as the prime suspect. Like Taiwan, NATO members feared these incidents were trial runs for more aggressive hybrid warfare tactics.


Why does China care so much about Taiwan’s undersea cables? The answer lies in Beijing’s long-term strategy. By interfering with communications infrastructure, China signals its ability to sever Taiwan’s lifeline in the event of a conflict. The cables are crucial not just for internet access but also for financial markets, military coordination, and government communications. In a full-scale blockade scenario - one of Beijing’s most likely invasion strategies - Taiwan’s isolation would begin with the snipping of these fiber-optic arteries.


Taipei is responding with vigilance. The government has ramped up patrols, fortified its monitoring of suspect vessels and pushed for greater international awareness. Yet, as tensions rise, so does the risk of miscalculation.


Undersea cables have long been a battleground in modern geopolitics. During the Cold War, the United States and the Soviet Union engaged in deep-sea espionage, tapping each other’s communication lines. Today, a new version of that contest is playing out in the Taiwan Strait. The difference now is that China’s goal is not merely surveillance but disruption, coercion and ultimately, dominance.


If Beijing is testing the limits of what it can get away with, Taiwan’s response will set a precedent. The next phase of the island’s struggle for sovereignty may not be fought in the air or on land, but the murky depths of the sea.

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