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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 Reluctant Heiress Takes Centre Stage

Dec 22, 2024
3 min read

Updated: Dec 23, 2024

Gandhis

The winter session of Parliament offered a rare tableau: the three Gandhis—Sonia, Rahul, and Priyanka—walking into the Lok Sabha together. Among them, Priyanka Gandhi Vadra, freshly elected as the MP from Wayanad, stood out, not only for her sartorial choices but also for her audacious political messaging. As she took the oath holding a copy of the Constitution, dressed in a traditional Kerala Kasavu saree, it was clear she was embracing both the symbolism of her new role and the weight of her family’s political legacy.


Her first parliamentary session was as theatrical as it was symbolic. Whether carrying a bag emblazoned with “Palestine” or wielding props inscribed with slogans against the ruling Bharatiya Janata Party (BJP), Priyanka signaled her intent to challenge the government on its policies and its messaging. The Palestine tote, in particular, drew ire from BJP members, who accused her of pandering to minority voters. Priyanka dismissed the controversy as “patriarchy,” asserting her right to wear and carry what she pleased.


For decades, Priyanka has been seen as the ‘reluctant Gandhi,’ a figure who could electrify Congress party loyalists yet preferred the shadows to the spotlight. Her grandmother, Indira Gandhi, was India’s first female Prime Minister, a symbol of charisma and iron will. Priyanka, with her striking resemblance to Indira, has often been cast as the political heir apparent. Yet, until now, she resisted fully stepping into that role.


Priyanka’s trajectory has been anything but linear. Born into India’s most prominent political dynasty, she grew up amidst the privileges and perils of power. The assassination of her grandmother in 1984 and her father, Rajiv Gandhi, in 1991 deeply influenced her guarded approach to public life. After pursuing psychology and a master’s degree in Buddhist studies, she married Robert Vadra, a businessman, and largely avoided political headlines, preferring to raise her two children in relative privacy.


When she did step into the limelight, it was often as a behind-the-scenes strategist, crafting campaigns and canvassing votes for her brother, Rahul Gandhi, and her mother, Sonia Gandhi. Her eloquence and ability to connect with crowds earned her a devoted following. Party workers donned “Priyanka Sena” t-shirts, and her roadshows in Uttar Pradesh were marked by fervent support, despite Congress’s electoral struggles in the region.


Her official entry into electoral politics came in 2019, as Congress’s general secretary in charge of eastern Uttar Pradesh. The assignment was widely seen as a test run, though Congress faltered in the elections. This year’s landslide victory in Wayanad, however, marked a turning point. Priyanka entered Parliament not just as a Gandhi, but as a politician with a constituency to represent.


While her gestures in Parliament were controversial, they also underlined a broader strategy of personalizing her opposition to the BJP’s policies. Priyanka has project herself as a voice for the disenfranchised, whether Muslims in India or Palestinians abroad, a tactic that has evoked both admiration and criticism.


Her political ascent is not without complications. Her husband, Robert Vadra, has been embroiled in allegations of money laundering and questionable land deals. The accusations have cast a shadow over Priyanka’s public image.


Internally, her rise has also reignited debates about dynastic politics within Congress. For a party struggling to revive its fortunes after successive defeats, Priyanka represents both hope and risk. While her surname carries weight, critics argue it underscores Congress’s dependence on the Gandhi family rather than fostering new leadership.


Priyanka’s speeches blend sharp critiques of the government with appeals to India’s pluralistic traditions, echoing her grandmother’s style. But the India she seeks to lead is vastly different from the one Indira governed. Polarized along religious and ideological lines, today’s electorate demands more than nostalgia for Congress’s past glories.


As Priyanka settles into her role, her challenge will be to transcend the symbolic and deliver substantive results. Whether addressing economic disparities, or environmental challenges, she must prove her mettle not just as a Gandhi but as a leader for a new India.


For now, she remains the once-reluctant heir who has finally stepped into the spotlight, eclipsing even Rahul Gandhi in the current Parliamentary session.

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