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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

Rolls-Royce, IIT-B ink strategic tech pact

Quaid Najmi
Aug 12, 2025
2 min read

Mumbai: The Rolls-Royce and Indian Institute of Technology-Bombay (IIT-B) have signed a pact to foster knowledge exchange, drive innovation and together develop future-ready engineering talent, officials said here.

 

The move, which underscores the growing synergy between Indian academic institutions and global industry leaders, will allow IIT-B students to get internship opportunities with Rolls-Royce’ defence engineering team in Bengaluru, plus gain exposure to advanced tech development in modern day real-world industrial settings.

 

This collaboration also aims to open doors for joint research projects, skill-building programmes, and technology co-creation in areas of mutual interest, said the officials.

 

The agreement was signed by IIT-B’s Dean (Research & Development) Prof. Sachin C. Patwardhan and Rolls-Royce India Executive Vice-President G. S. Selwyn, in the presence of the Rolls-Royce Director of Business Development and Future Programmes (UK & International) Alex Zino, besides senior representatives from both sides.

 

“The partnership with IIT-B reflects our broader commitment to building strategic collaborations that advance shared ambitions in innovation, talent development, and technology leadership,” said Selwyn on the occasion.

 

He said that as his company deepens its engagement with India, initiatives such as this would “help unlock new opportunities to co-create solutions,” through structured engagement between the academic and industrial ecosystems.

 

The second oldest in India, IIT-B at Powai was established in 1958 and ranks among the  premier engineering institutions, world-renowned for producing top-tier graduates and groundbreaking research in multiple streams.

 

It has consistently ranked among the best engineering universities in Asia and recognised for its strong industry linkages, state-of-the-art research facilities, and a vibrant culture of innovation.

 

IIT-B has multiple Centres of Excellence, fostering advances in fields ranging from aerospace engineering to AI and sustainability, and its alumni have gone on to captain global technology companies, research institutions, and government bodies.

 

Started as a luxury car manufacturing company some 120 years ago in the United Kingdom, today Rolls-Royce is a global leader in power and propulsion technologies serving markets ranging from civil and defence aerospace to marine engineering.

 

Years ago, Rolls-Royce had supplied engines for the Indian Air Force’s first combat aircraft, the Jaguar, and other fighter planes. The company’s Bengaluru engineering centre is a hub for innovation in defence aerospace delivering solutions for both Indian and international programmes.

 

Experts consider the new partnership ‘crucial’ as India’s engineering and technological ecosystem is in a transformative stage, driven by a push for indigenous capability development and supported by a growing pool of highly talented engineers.

 

“Such collaborations between IIT-B and Rolls-Royce are viewed as essential to narrow the gap between academic research and industrial applications, enhance talent readiness and accelerate the translation of theoretical breakthroughs into deployable technologies,” remarked a technocrat.

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