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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

Gun Violence in America

Writer: Vishwas Pethe
Vishwas Pethe
Dec 27, 2024
3 min read

Updated: Jan 2, 2025

Gun Violence in America

On December 16, 2024, tragedy struck Abundant Life Christian School in Madison, Wisconsin, where a 15-year-old student, Natalie Rupnow, fatally shot a fellow student and a teacher before taking her own life. Six others were injured, with two in critical condition. This devastating event is a grim reminder of the United States' ongoing struggle with gun violence, particularly in schools.


A Long History of Gun Ownership in America

The issue of gun violence in the United States cannot be discussed without acknowledging its deep-rooted history of gun ownership. The right to bear arms is enshrined in the Second Amendment of the U.S. Constitution, adopted in 1791, which states: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”


Initially, this amendment was intended to empower citizens to form militias for self-defense during a time when standing armies were distrusted. Over the centuries, however, the interpretation of the Second Amendment has evolved. Today, it is often cited as a justification for individual gun ownership, a concept reinforced by landmark court cases such as District of Columbia v. Heller (2008), which affirmed an individual's right to own firearms for self-defense.


Gun culture is deeply ingrained in American society, with nearly 400 million firearms in civilian hands—more guns than people. This level of accessibility, coupled with a powerful gun lobby led by organizations like the National Rifle Association (NRA), has made significant legislative reform difficult.


Gun Violence in Numbers

According to the Centers for Disease Control and Prevention (CDC), firearms cause approximately 40,000 deaths annually in the United States—equivalent to 109 deaths per day. This figure includes homicides, suicides, and accidental shootings. Among children and teenagers, firearms are now the leading cause of death, surpassing motor vehicle accidents.


School shootings are a particularly horrifying aspect of gun violence in America. Since 1990, there have been over 800 incidents in K-12 schools, resulting in more than 500 deaths and over 1,000 injuries. High-profile tragedies such as the Columbine High School massacre (1999), the Sandy Hook Elementary School shooting (2012), and the Marjory Stoneman Douglas High School attack (2018) have shocked the nation and the world, yet meaningful reforms remain elusive.


A Global Comparison

The United States stands out among developed nations for its high rate of gun violence. In countries like Australia, Canada, and much of Europe, strict gun control measures have significantly reduced firearm-related deaths. For example: By contrast, the firearm-related death rate in the United States is 12.2 per 100,000 people, significantly higher than other developed nations. The prevalence of guns and the lack of uniform gun control laws contribute to this disparity.


Challenges in Addressing Gun Violence

Efforts to reduce gun violence in the U.S. have faced significant obstacles. One of the most notable is the prohibition of federal funding for gun violence research. In 1996, Congress passed the Dickey Amendment, effectively barring the CDC from studying gun violence as a public health issue. Although the funding ban was partially lifted in 2019, its legacy has left the country with a limited understanding of the causes and solutions to gun violence.


Advocates have long called for measures such as:

• Universal Background Checks: Closing loopholes in gun sales to ensure that all firearm purchases are subject to background checks.

• Safe Storage Laws: Requiring gun owners to store firearms securely to prevent unauthorized access.

• Bans on Certain Firearms: Prohibiting the sale of assault-style weapons, which are often used in mass shootings.


The Debate Over Gun Rights and Reform

The debate over gun control in the United States often pits the rights of gun owners against the need for public safety. Opponents of stricter gun laws argue that restrictions infringe on constitutional rights and fail to address the root causes of violence, such as mental health issues. Proponents, however, point to the success of gun control measures in other countries and the overwhelming public support for policies like background checks.


A Way Forward

Despite the challenges, there is growing momentum for change. Grassroots organizations, survivors of gun violence, and some lawmakers are advocating for comprehensive reforms. The Madison school shooting serves as a stark reminder of the urgency of these efforts. As the nation grapples with its gun violence epidemic, it must look to both its history and the experiences of other countries to find a path toward a safer future.


(The author is a resident of US. Views personal.)

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