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

Plastic’s Silent Assault on Marine Life

Apr 10
3 min read

Dear reader, last week, we saw how microplastics enter the aquatic food chain and eventually reach giants such as whales. This week, let us move a little further through the marine world and understand how plastic pollution is harming other ocean creatures as well, including sea turtles, seabirds and many other marine species.


Like many other animals, sea turtles have been around for 100 million years. They have survived periodical mass extinctions and they have survived through the “Golden Age of Reptiles”, outliving the dinosaurs who once ruled the Earth. But now their survival is at stake, and they are struggling to withstand the impacts of plastics on them and their environments.


There are seven different species of sea turtles living in the oceans, and all of them are at high risk from plastic. Depending upon the species, their natural food includes sea animals and plants such as jellyfish, crabs, shrimps, corals, algae and seagrass. But plastic has never been part of their diet. How could it be? However, when a turtle comes across a light, translucent polythene bag floating on the surface of water and moving along with the current, it gets delighted, thinking that the bag is a jellyfish. Yes, that floating bag looks exactly like a jellyfish, and so it immediately grabs the bag in its mouth and gulps it down.


Such ingested plastic bags and other plastic items keep accumulating in the poor turtle’s stomach, giving it a sense of fullness. However, in the long run, this leads to starvation and, ultimately, death. In addition to this, plastic articles thus swallowed can also damage the delicate lining of the gut wall. Many a time, plastic straws — used by us to sip a cold drink, lassi or similar beverages and later discarded in the dustbin — are found stuck in a turtle’s nose, injuring its delicate inner tissue lining. Scientists have also found that plastic debris settling on algae or seagrass is easily consumed by turtles while eating their natural food.


Another major hazard turtles have to face is entanglement in worn-out and discarded fishing gear, often labelled as 'ghost nets'. Most of the time, fisherfolk do not bother about repairing torn and worn-out nets and simply discard them in the oceans. Turtles get trapped in such nets and find it impossible to swim around. With restricted movements or no movement at all, turtles rarely survive. Additionally, microplastic consumption is also taking a heavy toll on the survival of turtles.


Seabirds at Risk

Seabirds are especially vulnerable to plastic pollution because of their surface-feeding habits. Often, they mistake floating plastic debris for food, which can lead to internal blockages, tears, starvation and toxic accumulation in their bodies. Alarmingly, some seabirds have even been observed feeding plastic to their chicks, putting entire populations at risk. (See the accompanying cartoon as an eye-opener!)


The threat is so severe that a new disease — plasticosis (plastic-induced fibrosis) — has emerged exclusively in seabirds. In this condition, tiny pieces of plastic irritate the digestive tract and cause scar tissue formation, which disrupts their growth, digestion and overall health.


According to the Ocean Blue Project, plastic waste kills an estimated one million seabirds every year through ingestion, entanglement and toxicity, while nearly 90 per cent of seabirds have already ingested plastic by mistake. By 2050, it is projected that 99 per cent of seabird species will be affected by plastic ingestion. And now comes an important question: what about us humans? Let us explore that next Saturday. Till then, have a great weekend!


(The writer is an environmentalist. Views personal.)

Comments


bottom of page