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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-Sena cold war may block Uddhav’s entry

Writer: Abhijit Mulye
Abhijit Mulye
Apr 28
3 min read

Mumbai: The upcoming Legislative Council elections for 10 crucial seats are rapidly transforming into a volatile political battleground. What initially appeared to pass off as a routine democratic process like Rajya Sabha elections earlier this year is now increasingly shaping up as a fierce, silent competition for dominance between the Bharatiya Janata Party and the Eknath Shinde-led Shiv Sena. Simultaneously, this power struggle is casting a long shadow over the opposition Maharashtra Vikas Aghadi. The escalating tension has severely jeopardised Shiv Sena (UBT) chief Uddhav Thackeray’s hopes of securing an unopposed entry into the Upper House.


Senior Shiv Sena leader Sanjay Nirupam on Tuesday dropped a political bombshell that altered the election dynamics. He strongly indicated that his party is preparing to field an additional candidate. This calculated manoeuvre is explicitly designed to block Thackeray from an easy, uncontested victory. Nirupam did not mince words when discussing the opposition leadership. He drew a sharp and deliberate contrast between veteran leader Sharad Pawar and Uddhav Thackeray. Nirupam stated that no party should field a candidate against a senior and highly experienced statesman like Pawar. However, he bluntly dismissed Thackeray’s political stature. Nirupam remarked that Thackeray is simply not that great a leader to warrant an uncontested passage.


Political Arithmetic

To back up these aggressive claims, Nirupam outlined the ruling party’s strategic political arithmetic. He asserted that the Shiv Sena holds a comfortable margin of surplus votes even after securing the election of its two primary candidates. Furthermore, he revealed that party strategists are actively working behind the scenes. They are currently in intense negotiations with several smaller political factions and independent legislators. Nirupam expressed absolute confidence that mustering the required numbers for a third candidate would be an easy task. This aggressive posturing is a direct signal of the Shiv Sena’s intent to assert its independent political weight.


Adding fuel to this speculative fire is the potential nomination of former state minister Bachchu Kadu. Political circles are rife with rumours that the Shiv Sena plans to field Kadu as its surprise weapon. However, this potential candidacy is tangled in complex backroom bartering. Sources indicate that the Shiv Sena leadership has laid down a strict prerequisite for his ticket. They are demanding the complete merger of Kadu’s independent political outfit with the Shiv Sena. Kadu is known for his aggressive political style and has refused to back down easily.


Kadu has reportedly countered with a series of steep demands of his own. He is insisting on a guaranteed cabinet minister position within six months of his election to the council. Beyond the ministerial berth, Kadu is also demanding complete control over the party’s organizational affairs in the Vidarbha region. He has stipulated that any merger will only happen after these conditions are strictly met. This high-stakes negotiation highlights the lengths to which the Shiv Sena is willing to go to secure an extra seat.


BJP List

The ruling BJP on Tuesday announced the names of five candidates for the next month’s elections to the Legislative Council.


The party named Sunil Vinayak Karjatkar, Madhavi Naik, Sanjay Natthuji Bhende, Vivek Bipindada Kolhe and Pramod Shantaram Jathar as its nominees for the May 12 biennial polls.


Karjatkar is a veteran party worker, who acted as a strategist for some state elections in the past. He was once close to BJP leader late Pramod Mahajan.


Vivek Kolhe is the son of former party MLA Snehalata Kolhe. She did not contest the 2024 assembly polls as the Kopargaon assembly segment in Ahilyanagar district as it was allotted to ally Nationalist Congress Party (NCP).


Sanjay Bhende was in-charge of Union minister Nitin Gadkari’s Lok Sabha election in 2024, and is the chairperson of Nagpur Urban Cooperative Bank at present.


Madhavi Naik, general secretary of the state unit of the party, who hails from Thane is also nominated by the party for the Upper House of the state legislature. Pramod Jathar is from Sindhudurg and former MLA of the party.


The announcement comes ahead of the filing of nominations, the last date for which is April 30. Scrutiny of nomination papers will take place on May 2, while the last date for withdrawal of candidature is May 4.


Nine council members, including former chief minister and Shiv Sena (UBT) president Uddhav Thackeray, are retiring on May 13.

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