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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’s campaign raises eyebrows

Writer: Abhijit Mulye
Abhijit Mulye
Jan 11
2 min read

Insiders points to the party’s strategy to strip opposition of possible scoring points by keeping it a low affair

Bihar BJP MLA Maithili Thakur campaigns in favour of Mahayuti candidate Rekha Yadav for the upcoming BMC election at Borivali on Sunday. | Pic: PTI
Bihar BJP MLA Maithili Thakur campaigns in favour of Mahayuti candidate Rekha Yadav for the upcoming BMC election at Borivali on Sunday. | Pic: PTI

Mumbai: In a departure from its high-octane, star-studded campaign templates of the past, the Bharatiya Janata Party (BJP) has adopted a notably austere and localised approach for the Brihanmumbai Municipal Corporation (BMC) elections. As the city approaches the polling date of January 15, the ‘glamour quotient’ that once defined the saffron party’s Mumbai outreach is conspicuously absent.


For a party that has historically leveraged the charisma of its celebrity MPs like Hema Malini and Kangana Ranaut, their absence from the narrow lanes of Dadar, Parel, and Ghatkopar is striking. Similarly, former MPs and seasoned campaigners like Paresh Rawal, Kirron Kher, and Sunny Deol have been kept away from the limelight. Manoj Tiwari, Annamalai, Maithili Thakur and likes of them, with lower glamour quotient did campaign in some pockets of Mumbai. But, their roles were much limited.


The crowd pullers like UP Chief Minister Yogi Adityanath and Union Home Minister Amit Shah are also missing from the BJP’s campaign.


This shift suggests a calculated pivot. The ‘Bollywood factor’ while effective for national narratives, often risks alienating the grassroots ‘Marathi Manoos’ who view BMC polls as a battle for the city’s soul rather than a cinematic spectacle. By keeping these figures at bay, the BJP is likely shielding itself from the ‘outsider’ tag that the Shiv Sena (UBT) and MNS frequently employ to whip up regional sentiment.


Marathi Wind

The primary reason for this strategic ‘glamour fast’ appears to be a precautionary measure to take the wind out of the Thackeray cousins’ sails. With this kind of campaign that consciously keeps away the glamour quotient, the BJP appears to be wanting to neutralise regionalism. Both Uddhav and Raj Thackeray are banking heavily on Marathi identity. By deploying local booth-level workers and grassroots leaders instead of Hindi film stars, the BJP is attempting to present a ‘Bhoomiputra’ (son of the soil) face.


The second piller of the BJP›s campaign appears to be the direct engagement with voters. The party has pivoted to ‘Nukkad Sabhas’ and ‘Chawl meetings’ led by local corporators who speak the language and dialect of the residents, making it harder for the MVA to paint the BJP as a party controlled solely by Delhi.


However, the key of the BJP’s campaign still remains the Fadnavis Factor, the Mantle of the State. The strategy seems to have been designed to cement the leadership of Chief Minister Devendra Fadnavis. He has been the face of this campaign, positioning himself as the ‘architect of modern Mumbai’.


Sources within the party suggest that top national leaders were deliberately kept on the periphery to prove that the state unit is capable of winning the ‘Battle for Mumbai’ on its own merit. Fadnavis’ confidence – having predicted that the Mahayuti will win 27 out of 29 Municipal Corporations – is being tested here. This election is as much a referendum on his governance as it is on the party’s popularity.

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