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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

Whitewashing Damascus

Correspondent
Jan 21
3 min read

America’s Syrian gamble rewards brutality, betrays the Kurds and reveals how cheaply Donald Trump trades in memory.

In the space of two days, Syria’s map has been redrawn with a speed and savagery that would have seemed unthinkable just a year ago. Government forces, backed by tribal militias of dubious pedigree, have pushed the Kurdish-led Syrian Democratic Forces (SDF) out of large parts of northern Syria they had controlled since the darkest days of the Islamic State. Raqqa, the former capital of ISIS’s grotesque caliphate, has fallen back under Damascus’s sway. So too has much of Syria’s oil wealth, lost to the state for over a decade.


Predictably, Washington’s response has been one of accommodation. Presiding over this moral contortion is Donald Trump, who has chosen to recognise Syrian strongman Ahmed al-Sharaa (better known by his nom de guerre, Abu Mohammad al-Jolani) - a man whose political evolution from al-Qaeda affiliate to interim president has been lubricated by expediency and violence.


His forces’ conduct in Rojava with horrific beheadings filmed on mobile phones, and women discussed as spoils of war, has been chillingly familiar. The SDF itself has said the executions were carried out “in the style of ISIS.” Yet, this is the man Trump has chosen to treat as a partner in counterterrorism.


America’s Kurdish allies have every reason to feel betrayed. For a decade, the SDF served as Washington’s most reliable boots on the ground against ISIS. Kurdish fighters bore the brunt of the war that ended the Caliphate’s territorial rule in 2019, guarding prisons packed with hardened jihadists and camps such as al-Hol, where the families of ISIS fighters still fester in radical limbo. Now Damascus is taking over those prisons, after clashes near facilities like al-Shaddadi and al-Aqtan left Kurdish fighters dead and wounded and ISIS detainees perilously close to escape.


This handover is being hailed as ‘progress’ in Washington, which says all about the cynical and amnesiac nature of American political memory.


Trump, meanwhile, has boasted of coordinating with Damascus to prevent ISIS prisoners from slipping away and speaks approvingly of Jolani’s assurances. His envoy, Tom Barrack, talks of a “pathway” for the Kurds into a unified Syrian state, complete with citizenship rights and cultural protections. Such language would be comforting if Syria’s recent history did not mock it so thoroughly.


But even American officials have admitted to being squeamish about the events unfolding on the ground. Retired officers warn that jihadists and takfiri extremists are embedded within government-aligned forces, raising doubts about Damascus’s ability or willingness to control them. Turkey, long hostile to Kurdish autonomy and eager to brand the SDF as an extension of the PKK, looks on approvingly.


The geopolitical irony is sharp. Trump rose to power railing against “radical Islamic terrorism” and imposing sweeping travel bans in the name of security. Yet he now embraces a man whose past would have once made him a poster child for Trumpian outrage. America has made the mistake before of arming jihadists in Afghanistan to humble the Soviets and indulging warlords in Iraq to suppress insurgents, of outsourcing stability to thugs and calling it ‘pragmatism.’ Each time, there has been a bloody reckoning.


Senator Lindsey Graham has threatened to resurrect “bone-crushing” Caesar Act sanctions if Syrian forces continue their advance, warning of permanent damage to relations. But such threats ring hollow when the White House has already conferred legitimacy. Recognition, after all, is a signal which tells every militia leader in the region that power, once seized and sanitised, can be rewarded no matter how stained its origins.


The tragedy of Syria is that its people have been subjected to every variety of foreign cynicism: Russian bombs, Iranian militias, Turkish interventions and American half-measures. Trump’s recognition of Jolani has added another layer to this ruinous pattern. It abandons allies who fought America’s enemies, launders the reputation of a jihadist in a suit, and mistakes the absence of ISIS flags for the presence of peace. Syria has seen this movie before. It never ends well.

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