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

Imran Khan’s Fall from Grace

Aug 27, 2024
4 min read

Updated: Oct 21, 2024

Imran Khan’s Fall from Grace

Imran Khan, once hailed as Pakistan’s most charismatic and resilient leader now finds himself in a position unprecedented for a man of his stature.

The former Prime Minister of Pakistan, once known for his unyielding spirit and fierce determination, now shows signs of strain. Imprisoned and facing numerous charges, Khan appears to be a shadow of the leader who once inspired millions.

Khan’s recent meeting with journalists revealed a man who is a shell of his former self. Once confident and commanding, his body now shows a sense of unease and agitation. Those who met him describe a waning spirit, a stark change for a leader once known for his steadfastness in adversity.

The journalists described Khan as a man who is aware that his political party, Pakistan Tehreek-e-Insaf (PTI), is losing its once-iron grip on the nation’s imagination―a realisation that visibly shook him.

The PTI, once a magnet for massive crowds and inspired loyalty among its supporters, is now struggling. The much-hyped rally scheduled for August 22 in Islamabad, was embarrassingly cancelled due to a lack of public interest. Khan, in a bid to save face, claimed that the rally was called off to avoid potential violence. In a sign of growing desperation, Khan rescheduled the rally for September 8 and directed his party leaders to overcome any obstacles. This defiant stance is typical of Khan’s confrontational style, and his public directives highlight his insecurity about his party’s ability to mobilise support.

While Khan outwardly appears calm and composed, the multiple cases against him and his time in jail have left him isolated and struggling with loneliness. Even in this difficult situation, he remains in the headlines, thanks to his uncanny ability to stay in the public’s eye. Khan recently made headlines by applying for the University of Oxford Chancellorship, a move initially dismissed as a rumor but confirmed by his spokesman, Sayed Zulfikar Bukhari. As an Oxford alumnus, Khan would be the first Asian to take the role. Many see this bid as a strategic play to leverage his international profile against Pakistan’s establishment, a move that has kept him prominently in the media spotlight.

The political landscape in Pakistan is deeply divided. Prime Minister Shahbaz Sharif, in his second term, has failed to address critical issues including unemployment, soaring inflation, and deteriorating law and order. His administration’s inability to deliver on its promises has only deepened the public’s disillusionment, leading to growing nostalgia for Khan’s past leadership.

Shahbaz Sharif’s government is a source of frustration for the Pakistani people and a cause for concern for the country’s military. Historically, the military has shaped Pakistan’s political trajectory, stepping in when civilian governments falter. The military reportedly is growing uneasy about the government’s performance especially Sharif’s inability to stabilize the country and mend relationships with key neighbors, particularly India. Additionally, its deteriorating ties with Afghanistan and Iran have left Pakistan increasingly isolated. Even China, Pakistan’s longstanding ally, has expressed dissatisfaction with the government’s policies, a worrying sign given the importance of the China-Pakistan Economic Corridor (CPEC) to the country’s economic future.

It is within this context of political turmoil and international isolation that Imran Khan remains a potent force. Despite his legal troubles and the challenges facing his party, Khan’s popularity endures. For millions of Pakistanis, his tenure as Prime Minister is seen as a time of relative stability and hope, a stark contrast to the current administration’s ineptitude. This perception has kept Khan’s political base intact, even as his party faces an uphill battle in the coming months.

However, Khan’s ability to navigate the current political landscape is far from guaranteed. The PTI’s diminishing support, coupled with the increasing pressure from the establishment, raises questions about Khan’s long-term strategy. His recent moves, including the application for the Oxford Chancellorship, suggest a leader willing to explore unconventional avenues to maintain his relevance. But whether these tactics will translate into a successful political comeback remains to be seen.

Pakistan’s political future is more uncertain than ever. Imran Khan’s journey from cricketing legend to political maverick has been extraordinary. Still, as he faces the toughest challenge of his career, the question remains: Can he once again defy the odds and reclaim his place at the helm of Pakistani politics, or is this the beginning of the end for a once unstoppable leader?

Khan’s story is a testament to the complexities of power and the unpredictable nature of political life in Pakistan. His rise, driven by charisma, populism, and a genuine desire for change, now faces the realities of personal and political challenges, raising the possibility that his time may be running out.

Imran Khan is a beacon of hope for his supporters, and a polarizing figure for detractors, whose ambitions have often clouded his judgment. As the nation watches, the world is left to wonder: What will Imran Khan’s next move be? And more importantly, what does it mean for the future of Pakistan? The coming months will be critical not only for Imran Khan but for Pakistan as a whole. The decisions made during this period will shape the country’s trajectory for years. Whether Khan emerges victorious or is consigned to the annals of history as a fallen leader, one thing is certain: The story of Imran Khan is far from over.

(The writer is a senior jounalist based in Islamabad. Views personal)

Comments


bottom of page