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...

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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

Urgent Action Needed: Protect India’s Sugar Industry from Global Threats

Rajendra Joshi

Dec 3, 2024

3 min read

The global sugar industry appears to be embroiled in a controversy targeting India's cooperative sugar sector, raising concerns about a conspiracy to malign its reputation. This comes shortly after Union Cooperation Minister Amit Shah reiterated the government’s commitment to strengthening India's sugar industry at a United Nations event commemorating the International Year of Cooperatives.

Despite the Indian sugar industry’s notable strides in recent years—emerging as a major player in global exports and becoming a critical source of livelihood for millions—allegations of worker exploitation and unhygienic practices have surfaced in the international media. A report by the New York Times has amplified these claims, bringing them to global attention. This development demands immediate intervention from the Central Government, as failure to address these accusations could jeopardize an industry with an annual turnover of approximately ₹2 lakh crore, which supports millions of farmers and labourers.

India's Sugar Industry: A Global Leader Under Attack

India is the world's second-largest sugar producer, often competing with Brazil for the top spot. While Brazil has increasingly shifted its focus towards ethanol production, India's sugar exports have dominated global markets in recent years. However, this success has seemingly irked several nations, including Brazil, Australia, Thailand, and Guatemala, leading them to lodge complaints against India at the World Trade Organization (WTO) over alleged export subsidies. Despite this, India has maintained its position without subsidies, showcasing the industry's resilience.

The latest allegations, however, represent a more insidious strategy to undermine India’s sugar industry. Claims of labour exploitation in cooperative sugar factories have been published thrice since April 2024 in the New York Times. The report alleges forced labour, inadequate wages, poor healthcare facilities, and educational neglect for workers’ families. It also mentions disturbing accusations of coercing female workers into undergoing hysterectomies to ensure uninterrupted labour.

Is the Narrative Distorted?

The allegations presented in the New York Times paint a grim picture, but industry insiders argue that they are far from reality. While isolated incidents may warrant investigation, painting the entire cooperative sugar industry as exploitative is an overreach. The report fails to account for welfare initiatives implemented by sugar cooperatives, such as health camps, educational programmes, and ration distribution for workers.

Furthermore, the claims ignore key aspects of the industry's operations. In Maharashtra, for instance, efforts have been made to accommodate the voting rights of migrant workers by adjusting the sugarcane harvesting schedule. Notably, the labour contractors (known as mukadams), and not the sugar factories themselves, are responsible for hiring, harvesting, and transporting labourers. These contractors operate independently, often receiving advance payments from the factories.

In Northern India, many farmers directly manage their own harvesting and transportation processes, further challenging the claim that factories are exploiting workers.

Economic and Strategic Implications

The timing and nature of these allegations suggest a broader agenda. With multinational beverage and food giants like Coca-Cola, Pepsi, Nestlé, and Cadbury relying heavily on sugar supplies from Indian cooperatives, the fallout from such reports could disrupt these critical supply chains. Attempts to discourage these companies from sourcing sugar from India under the pretext of "humanitarian" and "health" concerns could lead to significant economic losses and harm India's reputation on the global stage.

Government's Role

The Indian government must act decisively to counter this narrative. A robust response highlighting the cooperative sugar industry’s contributions and adherence to labour and safety standards is essential. Furthermore, engaging with international organisations and media to clarify India’s position could prevent further damage.

The stakes are high—not just for India’s sugar industry but for millions of farmers and workers whose livelihoods depend on its continued growth. Left unchecked, this campaign could undermine India's achievements in global trade and cooperative development.

It’s time for the Centre to step in and ensure that India’s sugar industry receives the recognition and protection it rightfully deserves.

(The author is a senior journalist based in Kolhapur. Views personal.)

EPFO’s Big Wage-Band Reset

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