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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

From Concrete to Compute

Correspondent
Jul 18
3 min read

How SN Subrahmanyan Is Shaping L&T's AI Future

For more than eight decades, Larsen & Toubro (L&T) has been synonymous with India's physical infrastructure, delivering metro systems, airports, power plants and some of the country's most complex engineering projects. Under L&T Chairman SN Subrahmanyan, however, the company's definition of infrastructure is expanding. Increasingly, it includes artificial intelligence, cloud computing, data centres and sovereign digital infrastructure the building blocks of India's next phase of economic growth.


That shift came into sharp focus at the India AI Impact Summit 2026, where SN Subrahmanyan joined NVIDIA founder Jensen Huang to unveil a strategic collaboration aimed at accelerating AI infrastructure in India. The announcement reflected more than a technology partnership; it signalled L&T's ambition to evolve from a builder of physical assets into an enabler of the country's AI-powered future.


An Engineer's Perspective on AI

Unlike many business leaders who entered the AI conversation as the technology gained mainstream attention, SN Subrahmanyan approaches it through the lens of an engineer. A civil engineering graduate, he joined L&T in 1984 as a project planning engineer and spent four decades leading some of the company's largest infrastructure businesses across India and the Middle East, including projects such as the Riyadh Metro, Doha Metro and Salalah Airport. After serving as Chief Executive Officer and Managing Director from 2017, he became Chairman and Managing Director in 2023.


That experience continues to shape his leadership philosophy. Rather than viewing AI as a standalone technology trend, Subrahmanyan sees it as an extension of engineering one that can improve planning, design, execution and operations at scale. During L&T's FY2024 Annual General Meeting, he described generative AI as a "game changer" and outlined how the company was embedding it across the project lifecycle to improve productivity and decision-making.


Why L&T Is Investing in AI Infrastructure

For L&T Chairman SN Subrahmanyan, AI is not only about adopting intelligent software; it is about building the infrastructure that makes large-scale AI deployment possible.


Through its collaboration with NVIDIA, L&T plans to develop one of India's largest proposed AI infrastructure ecosystems. The first phase includes expanding GPU capacity at its Chennai campus to approximately 30 megawatts while developing a 40-megawatt AI-ready data centre in Mumbai. The infrastructure is intended to support hyperscalers, enterprises, research institutions and government organisations building AI applications across manufacturing, healthcare, financial services, energy and the public sector.


The initiative aligns with Lakshya 2031, L&T's long-term growth strategy, which identifies digital infrastructure, cloud services and artificial intelligence as key growth engines. Alongside expanding AI-ready data centres, the company has strengthened its technology portfolio through investments such as its strategic stake in E2E Networks while leveraging businesses including LTIMindtree and L&T Technology Services to create an integrated digital ecosystem.


As governments worldwide race to build sovereign AI capabilities, companies that control compute infrastructure rather than just software are expected to occupy a strategic position in the AI value chain. L&T's investment signals that India's AI ambitions extend beyond developing models to building the physical and digital infrastructure required to run them at scale.


Building India's AI Backbone

Subrahmanyan has consistently argued that AI requires more than algorithms it requires infrastructure. As enterprises move from experimentation to production-scale AI, access to secure compute, cloud platforms and data infrastructure is becoming as critical as traditional industrial assets.


This philosophy reflects a broader global trend. Countries are increasingly investing in sovereign AI capabilities to reduce dependence on overseas infrastructure and strengthen digital resilience. L&T's strategy positions the company to participate in this transformation by combining its expertise in large-scale infrastructure delivery with emerging AI technologies.


For an engineering company known for constructing roads, ports and industrial facilities, building digital infrastructure is a natural evolution rather than a departure from its core strengths.


Leadership Beyond Technology

Despite leading one of India's most significant AI infrastructure initiatives, SN Subrahmanyan has consistently maintained that technology alone cannot drive transformation. In L&T's FY2025 Annual Report, he emphasised that while AI is accelerating innovation, long-term value will continue to depend on human judgment, responsible deployment and disciplined execution.


That balanced perspective reflects the leadership approach that has defined his career. Rather than pursuing technology for its own sake, he has focused on integrating new capabilities into L&T's long-standing engineering excellence and execution discipline.


From Concrete to Compute

As industries become increasingly digital, infrastructure itself is being redefined. The assets powering future economies will include not only highways, airports and power plants, but also AI factories, cloud platforms, GPU clusters and data centres.


Under SN Subrahmanyan's leadership, L&T is positioning itself at the intersection of these two worlds. The company's strategy is not about replacing concrete with compute; it is about recognising that tomorrow's infrastructure will combine both. If that vision succeeds, L&T Chairman SN Subrahmanyan may be remembered not only for leading one of India's largest engineering companies but also for helping build the digital foundations of the country's AI economy.

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