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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

India patents HQ to shift from Mumbai to Delhi

Quaid Najmi
Feb 13, 2025
2 min read

Updated: Feb 14, 2025

CGPDTM

Mumbai: 10 years after then Commerce & Industry Minister Nirmala Sitharaman’s first announcement in parliament, the national headquarter of Controller General of Patents, Designs and TradeMarks (CGPDTM) in Mumbai is set to shift to New Delhi shortly, official sources said.


The new CGPDTM base will be at the Intellectual Property Office (IPO) Dwarka Building along with the top brass, decision-makers and their key aides, numbering around 30, from Mumbai.


“The shifting process is at an advanced stage. A notification to the effect is expected shortly from the Centre. Barring the headquarters, the other affiliated offices shall continue to function with limited authority from Mumbai,” a top official told 'The Perfect Voice'.


Presently, the office is headed by Prof. Unnat P. Pandit of Gujarat, who was appointed to the prestigious and powerful position through the Lateral Entry Scheme of the centre.


The official said that Mumbai was chosen over 80 years ago for the CGPDTM given its emerging financial importance, and a few years later, it got a permanent home at the IPO Building in Antop Hill, staffed by around 275 people.


“The new move could impact many of the stakeholders, but its exact short-and-long term repercussions are yet to be analyzed,” said the official guardedly.


Nevertheless, he hinted at challenges arising out of the absence of a full-fledged IP-centric ecosystem with quick access to legal-technical expertise besides logistical difficulties pertaining to filings, hearings, consultations, etc.


Interestingly, a few months ago, there was a purported move to transplant the CGPDTM headquarter to Ahmedabad, but owing to local political opposition it was shelved.


Thereafter, it was decided to shift it to New Delhi, and a letter to the effect was finally in Dec. 2024 from the Ministry of Commerce & Industry, currently headed by Mumbai North MP, Piyush Goyal.


A Mumbai businessman Santosh Deshpande, who is active in the IPR movement said the country’s commercial capital and Maharashtra stand to forfeit yet another crucial department, on the lines of many others in the past 10 years or so.


“It is surprising that Goyal, who is also a Mumbaikar, has allowed a free hand to his ministry to transfer such an important department out to New Delhi. This has unnerved various collaborators and innovators connected with the industry, academia, legal professionals, Indian and global research organisations, etc. They all contribute to shaping India’s IP framework and effective enforcement,” pointed out Deshpande.


India currently ranks among the top 10 countries globally for Patents.


“For the record, the Head Office of Trademark and Patent office Mumbai shall continue working from the city. It is only the office with the administration and finance division that will be based in Delhi.”

Piyush Goyal, Union Minister, Commerce

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