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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

World Environment, Day-to-Day

Jun 4
4 min read

For a greener future, environmental concern must become a daily practice rather than a symbolic annual ritual.

AI generated image
AI generated image

Every year on June 5, the world observes ‘World Environment Day’ with seminars, tree plantation drives, social media campaigns and solemn declarations about saving the planet. Governments issue statements, schoolchildren hold placards, and citizens post photographs of greenery and rivers. For a day, environmental concern becomes fashionable and urgent.


Then comes June 6 and the plastic bottle returns to the roadside. Garbage again appears beside lakes and rivers. Water leaks from public taps for hours. Rivers continue receiving untreated sewage. All environmental concern slips back into annual rituals.


Everyday Consciousness

Perhaps the biggest environmental challenge today is not lack of awareness. Humanity has never known more about environmental destruction than it does now. The real challenge is the enormous gap between what we know and how we behave. This is why the future of the environment may depend less on one grand annual celebration and more on what may be called ‘World Environment Day-to-Day.’ The environment cannot just be protected once a year but daily, through thousands of ordinary daily decisions made by ordinary people.


Modern civilization has achieved astonishing technological progress. Humanity has reached the Moon, developed Artificial Intelligence systems, mapped the human genome, and connected billions of people digitally. Yet the same civilization struggles to keep rivers clean, reduce plastic waste, and provide breathable air in cities.


According to the United Nations, the world generates more than 2 billion tons of municipal solid waste every year. A significant fraction is not managed scientifically. Plastic production has crossed hundreds of millions of tons annually, and millions of tons eventually enter oceans and ecosystems. Scientists estimate that around 11 million tons of plastic enter oceans every year and even human blood.


Air pollution remains one of the world’s biggest environmental health threats. According to global health estimates, millions of premature deaths every year are linked to polluted air. Several Indian cities frequently appear among the world’s most polluted urban centres. Air pollution today is a public health crisis and a quality-of-life issue.


India’s environmental challenges are especially complex because development pressures are enormous. India supports nearly 18 per cent of the global population with only about 4 percent of the world’s freshwater resources. Urbanization is accelerating. Energy demand is rising. Consumption patterns are changing rapidly.


The consequences are visible everywhere. Rivers are stressed by untreated sewage and industrial waste. Groundwater levels are falling in several regions. Heatwaves are becoming more intense. Mountains of waste rise outside cities as monuments to modern consumption.


The tragedy is that many environmental problems are not technologically impossible to solve. Humanity already possesses remarkable scientific and technological tools. Satellite systems can monitor deforestation almost in real time. Artificial Intelligence can predict floods and optimize energy systems. Nanotechnology is being explored for water purification and pollution remediation. Smart sensors can continuously monitor air and water quality. Renewable energy technologies have become dramatically cheaper over the last decade.


Inconsistent Implementation

The world is not suffering from a shortage of environmental technologies. The deeper problem lies in inconsistent implementation, fragmented governance and excessive consumption.


Consider a simple paradox. Many educated citizens passionately discuss climate change while simultaneously following highly wasteful lifestyles. Expensive sustainability conferences sometimes generate huge carbon footprints through travel, energy use and luxury consumption. Environmental concern often remains intellectual rather than behavioural.


The environmental crisis is therefore also a crisis of human habits. A leaking tap may appear insignificant, but a tap leaking one drop every second can waste thousands of liters of water over time. A single plastic bag may appear trivial, but billions of plastic bags create global ecological stress. One smoke-emitting vehicle may not seem alarming, but millions such transform urban air into a health hazard.


Environmental degradation is often the cumulative result of countless small acts repeated daily. The opposite, fortunately, is also true. Environmental improvement can emerge from millions of small responsible actions repeated consistently. If citizens reduce unnecessary consumption, waste generation decreases.


This is where education becomes critical. Environmental science should not remain confined to textbooks and annual celebrations. Students must understand ecological systems not merely as academic subjects but as survival systems. Future engineers must think about sustainable infrastructure. Future scientists must develop affordable green technologies. Future citizens must learn responsible consumption. Environmental literacy may become one of the most important forms of literacy in the 21st century.


India has a unique opportunity here. The country does not need to blindly imitate Western models of development. It can become a global leader in affordable sustainability and scalable public solutions.


India’s strengths are a young population, a growing startup ecosystem and an increasing scientific capability. But environmental progress requires a shift in national mindset. For decades, development and environmental protection were often presented as opposing goals. This is no longer valid. A polluted society cannot become a truly developed society. Environmental damage affects agriculture, tourism, biodiversity, urban life and economic efficiency. Environmental protection has never been more essential for long-term development.


Perhaps the greatest lesson nature teaches is balance. Natural ecosystems recycle resources efficiently. Forests generate little waste. Human systems, in contrast, operate through extraction, consumption, waste generation and disposal. Modern civilization must eventually learn ecological efficiency.


This does not mean rejecting technology or returning to a primitive lifestyle. The solution is not an anti-science romanticism. Humanity needs more science, more innovation and more technology. But these must be guided by ecological wisdom. Technology without environmental responsibility can become destructive. Technology guided by sustainability can become transformative. The future will belong to societies that can combine economic growth with ecological intelligence.


As another World Environment Day passes, the most important question is not how passionately we speak about the environment on every June 5 but how responsibly we behave in the remaining 364 days. The planet does not need environmental concern only during commemorative events. It needs environmentally responsible behaviour woven into daily life.


(The writer is an ANRF Prime Minister Professor at COEP Technological University, Pune, and former Director of the Agharkar Research Institute, Pune. Views personal.)

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