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

The English Tax

Jun 26, 2025
3 min read

India’s colonial hangover and corporate impatience are shrinking its talent pool by confusing fluency with merit.

Earlier this week, a leading Indian IT firm announced it would increase vendor bonuses to accelerate “quality hiring.” It’s a familiar move: companies, under pressure to execute fast, throw money at speed. But beneath this urgency lies a deeper problem that’s particularly acute in India’s job market.


What does ‘quality’ mean? The term itself is subjective. In hiring, it often serves as shorthand for attributes that are easy to spot but hard to define - communication skills being one of the most frequently cited. While quality should also include technical proficiency and/or cultural fit, for clarity’s sake let’s limit this discussion to communication - a global skill that’s increasingly central in an AI-driven, services-led economy.


Communication matters! But how we define and evaluate communication in India reveals a layered contradiction shaped by colonial history, social hierarchy, and market pressures.


For years, corporate India has complained that candidates lack strong communication skills. But what’s being said is this: they don’t speak English the way we expect them to. This has little to do with intelligence or clarity of thought but everything to do with class-coded fluency - accent, articulation and confidence.


We confuse polish with potential. A brilliant candidate from a small town, fluent in regional languages and technically sound, might be rejected for lacking verbal fluency in English. Meanwhile, a less competent candidate who presents well in corporate English is considered “client-ready.” The result is a hiring ecosystem that values conformity over capability.


This bias is structural. During colonial rule, the education system was designed to create an elite class fluent in English and trained to serve the empire. Post-independence India inherited this model wholesale. The emphasis on English as a medium of instruction wasn’t about empowerment but filtering. That filter persists today, silently sorting job candidates based on presentation rather than potential.


And nowhere is this more ironic than in the current language debate across India, where the controversy is more on the streets than in the Boardroom. As India debates linguistic identity through movements against Hindi imposition and regional pride in local languages, English continues to dominate where it matters most: education and employment.


There is a loud political defence of linguistic diversity, but in corporate settings, English remains the default currency of competence. It’s not enough to be understood - you must sound “global.” This silent expectation widens the gap between skilled candidates and job opportunities, particularly for those outside urban, English-medium ecosystems. We celebrate multilingualism culturally but penalize it economically. That contradiction undermines the very idea of inclusive growth. A society that claims pride in its linguistic heritage must ask why are we still measuring intelligence through the lens of one language?


This brings us back to the hiring rush. In a capitalistic system, and especially in an AI-disrupted world, speed has become the dominant metric. Companies want candidates who are not just ready but “ready now.” Bonuses are offered to vendors not just to find the right candidate but to find them quickly.


Speed is not a strategy. A small fraction of the workforce can independently upskill, self-train, and master corporate English without institutional support. Yet companies chase this narrow pool - a practice that is neither smart nor sustainable. Patience is treated as ‘inefficiency’ in an economy obsessed with readiness.


Incentivising ‘quality hiring’ is futile if quality remains ill-defined. If communication is the metric, firms must ask what kind truly drives performance and not merely what sounds polished in interviews. Are we rewarding clarity or just fluency? Are we building diverse teams or repackaging the same pipeline with slicker tools?


Often, quality means someone who not only has the technical skills but also communicates flawlessly, demonstrates emotional intelligence, collaborates without friction, shows initiative, adapts instantly, and never ruffles feathers. In other words, someone who can walk on water!


This impossible ideal becomes the baseline. And the more we chase it, the more we overlook real people who might need time to grow or just one manager who believes in them.


Can vendor bonuses tied to ‘quality hiring’ work when quality is so elastic and so unrealistic? Perhaps they’ll plug short-term gaps. But they won’t fix the deeper problem: an unwillingness to invest in human potential while waiting for mythical perfection to arrive ready-made.


In a country rich with linguistic, cultural and intellectual diversity, the real opportunity is not in filtering faster; it is in recognizing better.


(The writer is learning and development professional. Views personal.)

Comments


bottom of page