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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

Trust on Trial

May 1
4 min read

Mamata Banerjee’s EVM protest bodes ill for Indian democracy

New Delhi: Mamata Banerjee’s EVM protest spotlights a deeper crisis. When constitutional officeholders question institutions like the Election Commission, it risks eroding public trust, blurring accountability, and weakening democratic legitimacy.


The greatest strength of Indian democracy lies in its institutional credibility, the trust that assures citizens that the systems created by the Constitution are fair, transparent, and accountable. However, when those who occupy constitutional offices themselves begin to publicly express distrust in these very institutions, the issue transcends any single incident or individual and strikes at the legitimacy of the entire democratic framework.


In this context, the events of the night between April 30 and May 1 in West Bengal demand serious reflection. Chief Minister Mamata Banerjee sat for nearly four hours outside an EVM strong room set up at a school in south Kolkata, where voting machines from the Bhabanipur Assembly constituency had been stored. Despite heavy rain, her decision to be physically present at the site, and to raise concerns about a possible “loot” of EVMs and “manipulation” during counting, inevitably raises several troubling questions.


Her statements that “we are ready to risk our lives” and “we can gather 10,000 people at a signal.” Her words go beyond routine political rhetoric. They can be interpreted as a direct challenge to the credibility of India’s electoral process and to an independent constitutional authority like the Election Commission of India. In contrast, West Bengal’s Chief Electoral Officer Manoj Kumar Agarwal clarified that all eight strong rooms (seven containing EVMs and one for postal ballots) were fully sealed, under continuous CCTV surveillance, and accessible for monitoring by political representatives beyond a three-tier security perimeter. He further noted that the postal ballot room had been opened in accordance with established rules, with all candidates duly informed.


At its core, this is not merely a factual disagreement but a deeper constitutional dilemma. When a sitting Chief Minister questions the impartiality of the Election Commission, the implications extend far beyond a single election. Such assertions risk casting doubt over the entire electoral history of independent India. Are we then to believe that democratic exercises over the past 75 years have been a mere façade? That governments, state or national, have been formed through manipulation rather than mandate? Or is this a political strategy aimed at shaping public perception amid electoral uncertainty?


It is true that Mamata Banerjee is a candidate in the ongoing Assembly elections. But it is equally true that she continues to hold a constitutional office. This dual role makes her actions subject to greater scrutiny. The episode raises important questions that can an individual occupying a constitutional office stage protests against the very system they are sworn to uphold? Does such a position not entail a higher degree of institutional responsibility, regardless of political contestation?


This brings us to a broader issue, the definition and responsibilities of a “public servant.” In India, administrative officials, police personnel, and members of the armed forces are prohibited from participating in public protests, precisely because they are expected to maintain institutional neutrality. Yet, elected representatives, Prime Ministers, Chief Ministers, ministers, and legislators, are also paid from the public exchequer. Should they be exempt from similar standards of restraint? If not, do they possess the moral or legal authority to publicly challenge constitutional institutions while in office?


History suggests that this is not an isolated occurrence. Mamata Banerjee herself staged a three-day sit-in in Kolkata in February 2019 against a CBI action. Her protests against demonetisation in 2017 and against voter list revisions in 2024 and 2025 reflect a continuing pattern. Similarly, Arvind Kejriwal held protests in 2014 outside Rail Bhavan and in 2018 at the Lieutenant Governor’s residence. Ashok Gehlot and Bhupesh Baghel also joined demonstrations in Delhi against central investigative agencies while serving as Chief Ministers.


Taken together, these instances reveal a growing pattern, individuals occupying constitutional offices engaging in public protests against institutional processes. This trend blurs the fine line between democratic dissent and constitutional propriety. While dissent is a fundamental democratic right, it becomes problematic when it undermines the legitimacy of the very institutions that sustain democracy.


Another critical concern is the apparent “double standard.” When pension benefits and other privileges for administrative officials are curtailed or withdrawn, why are similar principles not applied to elected representatives, Members of Parliament, legislators, and ministers? If all are public servants, why this disparity in rights and obligations? This is not merely an economic question but one of ethical consistency and constitutional equality.


It is evident that the Indian constitutional framework requires a clearer and more comprehensive articulation of the definition, responsibilities, and limits of public servants. This is not just a matter of legal reform, but of strengthening democratic culture itself. Those who hold constitutional offices are not only expected to exercise power, but also to safeguard institutional dignity and public trust. Democracy does not function on elections alone, but it runs on trust. And when that trust begins to erode, the greatest responsibility lies with those who wield power to restore and protect it.


No scope for wrongdoing

West Bengal Chief Electoral Officer (CEO) Manoj Agarwal on Friday asserted there is no scope for wrongdoing at the counting centres, stating that round-the-clock CCTV monitoring of strong rooms was in place. “One should have reason and evidence for making allegations,” he said, maintaining that the complaints made by TMC spokesperson and Beleghata constituency candidate Kunal Ghosh, are baseless.

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