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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

Sweet revenge for hero Sadanand Date

Quaid Najmi
Apr 10, 2025
3 min read

Mumbai: A year after Sadanand V. Date – a highly decorated IPS officer and 26/11 hero - took over as the Director-General of National Investigation Agency (NIA), it was time to ‘get even’ with one of the country’s most wanted fugitive criminals, Pakistani-Canadian national Tahawwur Hussain Rana, who was extradited to India from the USA, today.


It marks a fulfilling moment for Date - who toiled for months with Indian and US agencies and waded through the legal tangles to ensure his ‘date with Rana’ – as the terror plotter landed along with a NIA team in New Delhi.


After all legal escape doors were slammed on his face in the US, Rana will face trial in the Mumbai terror strikes of Nov. 26-29, 2008 – the 60 hours when 10 heavily armed Pakistani extremists laid siege to the country’s commercial capital – while the world watched with stunned horror the mini-war unfolding live on billions of television screens.


Official sources reveal that after he took over the post of DG-NIA in March 2024, Date pursued the Rana - an associate of David Coleman Headley - proceedings single-mindedly and ensured it fructified in a year.


Himself one of the ‘warriors’ against the 10 Pakistani terrorists and was injured in the gun-battles with them during the 26/11 mayhem, Date’s stints as the DG-Maharashtra Anti-Terrorism Squad, Central Bureau of Investigation and other key positions in his 35-years’ service, helped accomplish ‘Mission Rana’.


However, behind his glamorous success lies a long story of quiet struggles, tears and sacrifices since his birth in an ordinary family in Pune, losing his father at the age of 15, while his mother worked as a cook to feed her own kids.

The bright young Date, hungry for education, chipped in by working as a newspaper delivery boy from 1977 for nearly 10 years, to part-finance his studies in school-college, plus help lessen his mom’s burden.

Subsequently, he completed his B. Com, M.Com., became a Cost Accountant (ICAI), and also earned a PhD in Commerce from the Savitribai Phule Pune University, but was attracted to public service, so also cracked his UPSC exams (1999), to become an IPS officer.


While with the CBI, Date was sent on a Humphrey Fellowship (2005-2006) to the University of Minnesota where he studied the scourge of ‘white-collar and organized crimes in the USA’, plus the theoretical and practical aspects of dealing with it.


Armed with the expertise, after returning to Mumbai, he was appointed the Additional Commissioner of Police (Economic Offences Wing), later headed the elite ‘Force One’ in Maharashtra, built on the lines of the National Security Guards, plus other important posts.


During the 26/11 terror hits, sporting the Mumbai Police’s modest weapons and courageous cops, Date literally chased the Pakistan terrorists, particularly the trigger-happy duo - Ajmal Kasab (nabbed alive) and the equally houndish Abu Ismail Khan – near the Cama and Albless Hospital – where more than 500 women, children, doctors and nurses trembled, awaiting help.


Date and Co. valiantly battled Kasab-Khan, seen lurking around like a cat in the dark around the hospital campus, firing indiscriminately at the police, before moving ahead to create bedlam at another location.


First, the duo hijacked a police jeep, abandoned it; then overpowered a private car driver, sped off in his car towards Chowpatty Beach at the dead of the night, where after a gun-battle, Khan was killed while Kasab was nabbed alive and virtually unharmed.


In the hospital shootout, though many lives of innocents were saved, Date and his men sustained bullet injuries.


At one point early that morning, Date was even speculated to be dead in sections of the media, but he not only survived, recovered fully and bounced back to his passion of policing, grabbing accolades and honours over the past 17 years.


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