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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

The Invisible Air Divide

Jun 3
4 min read

India’s battle against pollution cannot be won without confronting the social inequities hidden within the smog.

Each winter, India’s cities disappear behind a familiar grey curtain. Schools are closed; flights are delayed while hospitals are full of respiratory patients Air pollution has become so common in India that it is like a season in itself.


But beneath this ecological catastrophe lies another, less talked-about crisis. India’s pollution is very uneven. Not everyone breathes the same way. While whole cities are affected by pollution, the most vulnerable people are informal workers, low-income households, migrant communities, slum dwellers, sanitation workers, traffic cops, street vendors, construction workers and children growing up near industrial areas or highways. Air pollution in India is also a reflection of social and economic inequity. The rich can breathe toxic air, but they often have the resources to escape, filter or relocate away from it, or recover from it. Millions of others don’t have this luxury.

 

Class Divide

In urban India, health often depends on topography. Richer neighborhoods tend to have more open space, wider streets, more infrastructure, and be further from industry. Poorer areas are often situated close to landfills, factories, busy highways, building sites, open drains and filthy rivers. The result is an environmental segregation that exposes the poor to higher levels and a constant barrage of pollution.


Pollution is dangerous but manageable for a child raised in a gated neighborhood with air filters, private healthcare and climate-controlled spaces. For a child who lives near a dump or a busy road, pollution is part of the daily routine. The difference is most apparent during severe pollution events in cities like Delhi. Middle-class conversations often focus on buying masks or air purifiers. For the millions working outside, losing a day’s wages is simply not an option.


As the Air Quality Index worsens, construction workers can’t help but breathe in dust. Likewise, a sanitation worker cannot avoid exposure to harmful garbage burning. The economic imperative of environmental risk is inescapable.


The informal sector bears a large share of India’s pollution burden. Delivery drivers spend hours in their cars on congested highways choked with vehicle exhaust. Traffic policemen are often exposed to fumes of exhaust. For years, factory workers have been inhaling industrial toxins. Rickshaw pullers, garbage collectors, and street vendors live in some of the most polluted microclimates in metropolitan India.


These workers often do not have adequate access to health care, insurance coverage or long-term medical support. Pollution presents a health and employment dilemma for them. This imbalance is all the more troubling because those most at risk from pollution are often those least responsible for creating it. The poorest people in India tend to use less energy, own fewer private vehicles, and contribute little to carbon-intensive lifestyles. But they are disproportionately affected by environmental damage.


Effect on Children

The most concerning part of the situation is the impact of pollution on children. Doctors are reporting more and more children with respiratory problems, asthma, reduced lung capacity, allergies, and developmental health problems who have been exposed to polluted environments.


Kids from wealthier families may still be exposed to pollution, but they generally have cleaner indoor environments, better nutrition, earlier detection, and private health care. Poorer children tend to be housed in overpopulated communities with poor ventilation, open waste burning and limited medical care.


Air pollution during a child’s early years can seriously impact education, cognitive development and future productivity at work.


Pollution affects women in distinct and more subtle ways. Many low-income women spend more time handling domestic tasks in poorly ventilated environments, while also being exposed to indoor pollution from cooking fuels, particularly in places where access to clean energy is intermittent.


Women working in the informal sector, such as domestic workers, street vendors, rubbish pickers, and agricultural workers, are also exposed to the outdoors for extended periods of time. But gendered pollution loads are rarely discussed in mainstream policy debates. Pregnant women exposed to extreme air pollution are more likely to develop difficulties while infants born into polluted areas may suffer health repercussions from the very beginning. In India, it is not only income but also gender, occupation, and geography that determine susceptibility to environmental damage.


India is entering a dangerous phase when clean air can become a class privilege. Private air purifiers, climate-controlled homes, cleaner residential neighborhoods, priority health care, and the ability to temporarily migrate during pollution spikes are increasingly dividing those who can and those who can’t.


Environmental protection is gradually being commercialized. This has major implications for democracy and public policy. If the poor are disproportionately affected by pollution while the rich can largely shield themselves, the political imperative for structural reform can wane over time.


The pollution situation in India is often termed an ‘ecological emergency’ but there’s also a crisis of social justice. The country does not breathe the same air in the same amount. In India, class, location, work, gender and access to protection influence exposure to pollution. The least economically secure are often exposed to the greatest environmental risk.


The tragedy is that this injustice is largely unrecognized. Pollution statistics can measure particle matter in the atmosphere, but they rarely capture the unequal human reality that underlies it. Clean air should be a right, not a privilege. It is not only an environmental concern but a matter of dignity and equality. Until India decides to see pollution as an environmental and social inequality issue, millions will keep breathing uneven air in silence.


(The writer is a columnist and climate researcher with experience in political analysis, ESG research, and energy policy. Views personal.)

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