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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

Rejected Abroad, Consumed at Home

Jul 30
3 min read

Pesticides used within approved limits are generally safe; the real risk comes from excessive, frequent, or prolonged exposure.

Two years ago, Hong Kong, Singapore, and five other countries rejected consignments of certain Indian spice brands. More recently, Japan rejected Indian mangoes, and last week China turned back a shipment of Indian chillies. The reasons were either pesticide residues exceeding permissible limits or deficiencies in pest-control treatment procedures.


These incidents raise an important question. If export-grade products, subjected to the highest levels of scrutiny and testing, fail to meet international standards, what is the condition of food reaching ordinary Indian consumers? Beyond affecting India's reputation in global markets, these developments cast serious doubts on the country's pesticide regulatory system and whether food available domestically is safe.


Indian farmers continue to use several pesticides banned in many developed countries because of their harmful effects. These include chlorpyrifos, profenofos, paraquat, and monocrotophos. Many agricultural universities and extension services still recommend these chemicals without adequately considering their international regulatory status. Moreover, nearly 40 per cent of pesticides in circulation are estimated to be counterfeit or unregistered, leaving their exact composition and potential toxicity unknown.


Food safety in India is overseen by the Food Safety and Standards Authority of India (FSSAI), while pesticide registration falls under the Central Insecticides Board and state agencies. However, coordination among these institutions remains inadequate. Enforcement is further weakened by the outdated Insecticides Act, 1968, under which authorities have only 60 days to file a court case after a sample fails quality testing. If the deadline is missed, the case automatically closes, significantly weakening regulatory action.


India's pesticide industry is highly organised and influential. Industry pressure has reportedly weakened national monitoring initiatives such as the All India Network Project on Pesticide Residues (AINPPR). The extent of this influence is reflected in the government's 2020 proposal to ban 27 hazardous pesticides—a move that was later shelved.


The risk posed by pesticide residues depends on what we eat, how much we eat, and how often. Leafy vegetables such as spinach, fenugreek, and coriander are among the highest-risk foods because they are often heavily sprayed before harvest and have no protective peel. Okra, brinjal (eggplant), and tomatoes also fall into this category.


Among fruits, grapes, strawberries, and plums, which are commonly eaten without peeling, may pose a greater risk than fruits whose skins are discarded. Spices have consistently recorded some of the highest pesticide residue levels, leading to export rejections by Singapore, Hong Kong, and China. Yet domestic consumers have no practical way of knowing the contamination levels in the spices they purchase.


To safeguard public health, the government must prioritise three critical policy measures.


First, all major food categories should undergo large-scale testing through independent laboratories, and the results should be released promptly and made publicly available. Unless consumers know the level of pesticide residues present in the food they eat, meaningful reform will remain impossible.


Second, highly hazardous chemicals such as monocrotophos, paraquat, and chlorpyrifos should be phased out and eventually banned. Farmers should receive financial incentives, technical support, and access to safer alternatives. At the same time, counterfeit pesticides must be removed from the market.


Third, responsibility for food safety and pesticide monitoring remains fragmented across multiple agencies. India needs a strong, unified institution capable of overseeing the entire chain—from pesticide registration and distribution to the safety of food sold in the marketplace. The proposed Pesticides Management Bill, 2025, could provide an important opportunity to strengthen this framework.


It is important to note that pesticides are generally regarded as safe when used within limits established by food safety authorities. The real concern arises from excessive, frequent, or long-term exposure, particularly when combined with diets high in processed foods.


Such exposure can contribute to a range of health problems. Since everything we eat first passes through the digestive system, certain chemicals and highly processed foods can disrupt beneficial gut bacteria, leading to bloating, acidity, indigestion, constipation, or diarrhoea.


The unnecessary use of antibiotics in poultry and livestock farming is another serious public health concern. It contributes to the growing problem of antimicrobial resistance, making future infections more difficult to treat.


The liver also processes everything we consume as part of its normal physiological function. However, prolonged exposure to harmful chemicals may increase the risk of fatty liver disease and other metabolic disorders.


Ultimately, food safety is not merely an issue of agricultural productivity or export competitiveness—it is a fundamental public health imperative. Protecting consumers from excessive pesticide exposure requires stronger regulation, transparent monitoring, scientific accountability, and a coordinated institutional framework that places public health above commercial interests.


(The writer is a columnist and assistant professor, Department of Mechanical Engineering, Kanpur Institute of Technology, Kanpur. Views personal.)

 


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