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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 Narsimha Moment: India in a Shifting World Order

Mar 18
3 min read

AI generated image
AI generated image

In this reading of the Narasimha story, Prahlad becomes a metaphor for Bharat—resilient, restrained and rising amid external pressure and internal challenge.

 

The story of Mahavatar Narsimha is widely known. Yet read differently, it resonates with the geopolitical and political currents unfolding in India and across the world. At its heart is the story of Vishnu’s Narsimha avatar and his devotee, Prahlad.


Prahlad and Bharat

As Rajnath Singh said, “Bharat ko rokne ke liye saari taaqatein prayas kar rahi hain, par Bharat nahi rukega” (“All forces are trying to stop Bharat, but Bharat will not stop growing”). In this reading, Prahlad symbolises Bharat.


Prahlad, gentle and compassionate, stands for coexistence with nature and all living beings — an echo of Vasudhaiva Kutumbakam. When his gurukul teachers equate power with violence against the weak, he insists that true power lies in defending and protecting them.


India in a Hostile World

In today’s geopolitical landscape, Prahlad comes to symbolise Bharat, while China and America are cast as the forces trying to restrain it. America may speak of stronger ties, but the argument here is that it remains uneasy with India’s rise.


As India moves towards becoming the world’s third-largest economy, it faces pressure from both powers. China, more covertly, has sought leverage by restricting rare earth supplies, affecting sectors such as EVs and defence. In this reading, both mirror Hiranyakashipu, repeatedly trying to halt Prahlad’s advance.


America and Pakistan, meanwhile, are likened to Holika — seeking to burn Prahlad, only to be consumed themselves while he remains unharmed.


This mirrors what the US is doing to itself through tariffs and by providing aid to Pakistan, which is then used for attacks such as Pahalgam. In effect, it is setting fire to itself, not India.


As for China, cast here as Hiranyakashipu, the stronger of the two brothers, it is expected to try to crush Prahlad at every opportunity — and India is prepared for that challenge.


With the decline of Western power, and Trump in the most powerful office acting as an accelerant, South Asia is emerging as a new centre of power. As the world turns towards Asia, China, with its authoritarian model, is unlikely to be seen as a credible alternative. India, embodying the qualities of Prahlad, stands out as the stronger option. Despite many challenges, it remains the world’s fastest-growing major economy.


India, as Prahlad, stands for a multipolar world — not a unipolar or bipolar one. It supports smaller nations in their development. Where much of the world speaks the language of war, India speaks for peace.


Operation Sindoor is presented as a striking example of how conflict can be brought to an end — in contrast to the US record of unnecessary war. Its message is clear: those who harm India will be dealt with firmly, while those who treat it with respect — such as Israel and Russia — are met with equal respect and support.


A World Looking to India

“India is not demanding a seat at the table; it is creating its own table,” actor Denzel Washington is often quoted as saying. Whether in Brazil’s outreach to PM Modi or Canada’s decision to invite India to the G7, the message is the same: India’s global weight is growing.


When Trinidad and Tobago Prime Minister Kamla Persad-Bissessar welcomes PM Modi in a saree, it reflects the cultural impression India leaves on the world. When Papua New Guinea Prime Minister James Marape touches PM Modi’s feet, it suggests that Indian culture resonates beyond national borders. And when European Commission President Ursula von der Leyen says, “When India stabilises, the world also gets stabilised,” it reflects a wider global belief in India’s rise.


For years, India was mocked as a country that “missed the bus”. But, as PM Modi said in Parliament recently, “India today drives the bus, and the world says we should not miss it.” The recent Artificial Intelligence Summit is presented as one more sign of India moving from participant to leader.


In this telling, India is the Prahlad the world is waiting for — and with the strength of its civilisation and culture, it can help make the world better.


Prahlad’s story also contains a second warning: the threat from within. His tormentors are not only external but also familial — a reminder of CDS Bipin Rawat’s “2.5-front war”, with the “0.5 front” coming from inside. In this reading, hostility to PM Modi can harden into narratives that do not merely target a leader but damage India’s image itself.


India, like Prahlad, will rise above both external pressure and internal doubt. For many, this is a defining phase in the nation’s ascent — a civilisation moving with confidence towards Viksit Bharat 2047. Jai Hind.

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