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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

Power and Precision: A Morning with India’s Artillery Brilliance

Jan 28, 2025
4 min read

Updated: Jan 29, 2025

Events like Exercise Topchi restores your faith in the greatness of our nation and infuse a new sense of national pride.

Artillery Brilliance

On a day when the newspapers had nothing but bleak news of brutal murders of whistleblowers, a remote possibility of the politically-influential getting convicted and the rising number of young Indians seeking residence in Canada, Germany and New Zealand, an invitation for Exercise Topchi 2025 popped up through a phone call. The firepower exercise was arranged by the Regiment of Artillery in Nashik as an annual show of the prowess of our armed forces.


Like everything about the armed forces, the event was planned meticulously. The bumpy roads in Nashik’s ‘civilian’ areas transformed into smooth tracks as we entered the cantonment towards the Devlali Fields Firing Ranges. Army jeeps ferried us from the main car park to the open dusty ground where the firepower show was to take place. No on scrambled for seats that were clearly marked; trash cans placed everywhere ensured that there were no water bottles strewn on the floor and everyone sat in their seats. There’s something about the air in army areas that forces even regular, rowdy people to suddenly act disciplined. There seems to be a mortal fear of being court-marshalled.


Two helicopters thundered overhead, slicing through the stillness of the tented gathering. But the real spectacle was yet to begin. “Look straight ahead,” urged a voice from the public announcement system, directing our gaze toward the sprawling expanse of hills and ridges in the distance. A map projected on a screen laid out the terrain—a tactical canvas where the Regiment of Artillery, under the command of General Navneet Singh Sarna, would soon unveil its formidable prowess. What followed was a symphony of precision and power, showcasing not just advanced weaponry but also the sheer discipline and ingenuity of India’s armed forces.


Massive trucks rumbled into view, carrying the iconic FH 77B02 Bofors and the indigenous Dhanush, their silhouettes stark against the dusty horizon. In a blur of practiced motion, soldiers leapt from the vehicles, their movements fluid and purposeful. Within moments—three minutes, to be exact—the artillery was unloaded, assembled, and primed for action, a testament to the regiment’s readiness under pressure. Next came the sleek 155 mm M777 Ultra-light Howitzer, its lightweight frame belying its devastating potential. But the pièce de resistance was undoubtedly the K-9 Vajra, a self-propelled gun system that unleashed a torrent of firepower, its booming salvos reverberating across the firing range. Each shot was a declaration: of innovation, of preparation, and, perhaps most poignantly, of sovereignty.


On show were the indigenous ammunition systems that are being built as part of Atmanirbhar Bharat—K-9 Vajra, Dhanush, Pinaka multi-barrel launchers—that send a fresh wave of admiration for the technological advances of our country. The showcased cutting-edge rocket systems, unmanned aerial surveillance swarm drones and aircrafts.


The next instruction that came our way was, ‘keep your mouths open to minimise the impact of the loud sounds’. Nothing could prepare you for the booming shots as the guns were fired. Seconds later, the hills of Igatpuri in the distance were spitting out billowing smoke. The fire had reached a distance of more than 45 km in a few seconds. That’s how promptly we can defend our land and counter the enemy. The firepower was formidable.


They then simulated a war-like situation. Sitting comfortably in Devlali, a town with salubrious weather, we were told to imagine that the enemy was approaching. The army took positions, brought out it guns, swarm drone, helicopters and battle tanks. A truck went past carrying rockets and the screen showed images of missiles landing on the Nicobar Island during an earlier trial and training. It was nothing short of exciting! Every booming gunshot was met with a cheery applause from the audience. It was evident, yet again, that we are in the safe hands of our armed forces.


The event ended on a mixed note—some were stunned by the sheer magnificence, some were forcing a yawn top unblock their ears and for some like me, the national anthem led to moist eyes. Was it a fresh wave of national pride sweeping over us? Maybe yes.


There’s something disarming about watching young soldiers, unfazed by the deafening roar of gunfire, handle their weapons with the grace of a practiced craft. When they march with the national flag held high, their pride palpable, even the most hardened cynics might falter, if only for a moment. For every headline cataloguing corruption and decay, there is an untold story of a soldier standing resolute at the borders, far from home and family. For every grim report of power misused or violence unleashed, there exists the quiet heroism of a young Indian willing to risk everything - not for glory, but for duty.


An event like Exercise Topchi is a great initiative with a multi-fold impact. It showcases our growing power as a nation and it also serves as a reminder of our nation’s talent and prowess to everyone who complains of the current state of affairs.

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