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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

BJP eyes chances in Western Maharashtra after the Pawars

Writer: Rajendra Pandharpure
Rajendra Pandharpure
Feb 15
3 min read

The death of Ajit Pawar has unsettled western Maharashtra, leaving the BJP cautiously biding its time

Pune: Western Maharashtra has long been Indian politics in miniature: dense with sugar cooperatives, caste arithmetic, money and muscle power. For decades it was shaped by one extended family – the Pawars - whose writ ran from district banks to dairy unions and from assembly halls to village panchayats. The sudden death of Ajit Pawar, the Nationalist Congress Party (NCP) strongman and Maharashtra’s deputy chief minister, has jolted this ecosystem. The aftershocks are being felt most keenly not by his rivals, but by his ally, the ruling Bharatiya Janata Party (BJP) that has long coveted the region.


Maharashtra’s politics has always been regionally segmented. The BJP is entrenched in north Maharashtra; it has broken through spectacularly in Mumbai, including wresting control of the municipal corporation; Vidarbha remains Congress-leaning while Marathwada is competitive and volatile.


Family Bastion

Western Maharashtra, by contrast, has remained been the Pawars’ citadel. Control over cooperatives, especially sugar, has translated into rural loyalty, financial muscle and electoral dominance. The NCP, founded by Sharad Pawar, thrived on this architecture. The BJP, despite its national rise, has struggled to crack it.


Rather than dislodge the system, the BJP sought to co-opt it. Disaffected satraps were inducted like Udayanraje Bhosale in Satara; the Mahadiks in Kolhapur; the Mohite-Patils in Solapur. Local strongmen such as Rahul Kul in Pune district were elevated and veterans like Harshvardhan Patil were brought in, if only briefly. The idea was to gradually bleed the undivided NCP led by patriarch Sharad Pawar.


That effort has intensified as the BJP eyes an audacious goal: returning to power in Maharashtra on its own in the 2029 Assembly election. For that to happen, western Maharashtra is indispensable. It is no accident that the Modi government had created a new Union ministry of cooperation, handing it to Amit Shah. Cooperatives are the region’s political bloodstream. After the 2024 general election, Muralidhar Mohol, elected from Pune, was made minister of state in the same department. He was also informally tasked with western Maharashtra in a clear signal of the BJP’s strategic focus.


Mohol’s brief was daunting: contain both Pawars. Sharad Pawar’s stature as a national deal-maker and Ajit Pawar’s grip on local machinery made them a formidable duo even when divided. Yet, the recent municipal contests in Pune and Pimpri-Chinchwad hinted at change. When both Pawars campaigned together, the BJP still managed to defeat them, suggesting that the old formula no longer guaranteed victory.


Uncertain Times

Then came the plane crash on January 28 leading to Ajit Pawar’s tragic death. His wife, Sunetra Pawar, was sworn in as deputy chief minister, an act of continuity intended to steady the ranks. While public sympathy is palpable, it has nothing to do with organisation. Sunetra Pawar will need time to command the networks her husband once ran by instinct. Her early gestures like visiting Karad to pay homage to Yashwantrao Chavan and invoking the legacy of Phule, Shahu and Ambedkar signal an attempt to anchor the party in its progressive tradition. Whether that rhetoric can substitute for Ajit Pawar’s authority is uncertain.


Uncertainty abounds elsewhere too. Rumours swirl of a rapprochement or even a merger between the rival NCP factions. One scenario has Supriya Sule entering the Union cabinet. Another asks a more existential question: could Sharad Pawar, architect of Maharashtra’s secular, centrist politics, ever align formally with the BJP’s Hindutva project? His reported unease with a recent India–America trade agreement has fuelled speculation among supporters already anxious about ideological drift.


Against this haze, the BJP’s restraint is striking. Rather than rushing to exploit the moment, it has preferred to wait and watch. The party knows that western Maharashtra is not won in a season. Cooperative elections, local bodies and caste coalitions move slowly. For now, the BJP is content to let the Pawars recalibrate, to allow factions to test their strength, and to intervene only when the contours are clearer.


In a region where politics has long been about inheritance, Ajit Pawar’s absence has exposed how fragile even the most entrenched systems can be. The BJP senses opportunity, but is also aware of the attendant risks. Its wait-and-watch posture reflects a calculation born of experience. And in western Maharashtra, patience can be a weapon.

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