top of page

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

Global Warming: A Growing Threat to Our Planet

Writer: Anil D. Salve
Anil D. Salve
Apr 17
3 min read

Global warming refers to the gradual increase in the Earth’s average temperature due to the excessive accumulation of greenhouse gases such as carbon dioxide, methane, and nitrous oxide in the atmosphere. These gases trap heat from the sun, creating a “greenhouse effect” that leads to a steady rise in global temperatures. Over the past century, human activities-particularly the burning of fossil fuels, deforestation, rapid urbanisation, and industrialisation-have significantly accelerated this process, making global warming one of the most serious environmental challenges of our time.


One of the most visible and alarming consequences of global warming is climate change. Rising temperatures have caused glaciers and polar ice caps to melt at an unprecedented rate, leading to a continuous rise in sea levels. This poses a direct threat to coastal regions and island nations, where millions of people are at risk of displacement. In addition, extreme weather events such as heatwaves, floods, cyclones, and droughts are becoming more frequent and intense. These events not only cause loss of life and property but also disrupt ecosystems and weaken economic stability. Agriculture, which is highly dependent on climatic conditions, is also severely affected. Irregular rainfall patterns, prolonged droughts, and unexpected floods reduce crop productivity and increase the risk of food shortages. Farmers face uncertainty, leading to financial distress and migration in many regions. The loss of biodiversity is another critical issue, as many plant and animal species struggle to adapt to rapidly changing environmental conditions, resulting in ecological imbalance.


Health Concern

Global warming is not just an environmental issue; it is also a major public health concern. Rising temperatures increase the incidence of heat-related illnesses such as heatstroke and dehydration. Moreover, changing climatic conditions create favourable environments for the spread of vector-borne diseases like malaria, dengue, and chikungunya. Air pollution, closely linked to greenhouse gas emissions, further contributes to respiratory diseases, heart problems, and other serious health conditions, particularly in urban areas. Addressing global warming requires immediate and collective action at all levels-global, national, and individual.


Governments must take the lead by implementing strict environmental policies, promoting clean energy, and investing in sustainable infrastructure. Industries need to adopt eco-friendly technologies and reduce their carbon footprint. At the same time, individuals must recognize their responsibility and adopt sustainable lifestyles to contribute to environmental protection. Transitioning from fossil fuels to renewable energy sources such as solar, wind, and hydro power is one of the most effective ways to reduce greenhouse gas emissions. Improving energy efficiency in homes, industries, and transportation systems can also play a significant role. Public transport, electric vehicles, and carpooling should be encouraged to reduce vehicular pollution.


Forests play a vital role in maintaining ecological balance by absorbing carbon dioxide from the atmosphere. Therefore, afforestation and reforestation initiatives must be strengthened, along with the protection of existing forests. Conserving natural resources, reducing waste, and promoting recycling are equally important steps toward sustainability. Equally important is spreading awareness among people about the causes and consequences of global warming. Education and community participation can drive meaningful change.


When individuals collectively take small but consistent actions, the overall impact can be significant. In conclusion, global warming is one of the most pressing challenges facing humanity today. Its effects are far-reaching, impacting the environment, economy, and human health. If left unchecked, it could lead to irreversible damage to our planet. However, with timely action, strong policies, and responsible behaviour, it is still possible to control its impact and ensure a safer, healthier, and more sustainable future for generations to come.


Remedies to Control

Controlling global warming requires a combination of practical and sustainable measures. The most important step is reducing the use of fossil fuels such as coal, petrol, and diesel, and shifting towards clean and renewable energy sources like solar, wind, and hydro power. Increasing energy efficiency in homes, industries, and transportation can significantly cut emissions. Afforestation and reforestation are essential to absorb carbon dioxide, making tree plantation and forest conservation crucial. Individuals should adopt eco-friendly habits like using public transport, carpooling, minimizing plastic use, recycling waste, and conserving water and electricity. Governments must enforce strict environmental laws, support green technologies, and promote climate-friendly policies. Public awareness and individual responsibility are equally vital, as small collective actions can bring meaningful change in reducing global warming.


(The writer is Principal at Podar International School, Ausa, Latur.)

Comments

bottom of page