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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

Faultlines in the Sugar Belt

Writer: Rajendra Pandharpure
Rajendra Pandharpure
May 18
3 min read

Tensions within the ruling Mahayuti portend a significant upheaval in the political landscape of Western Maharashtra.

CM Fadnavis with DCM Sunetra Pawar during the inauguration and unveiling of the foundation plaque of a cancer hospital in Pune. Pic: PTI
CM Fadnavis with DCM Sunetra Pawar during the inauguration and unveiling of the foundation plaque of a cancer hospital in Pune. Pic: PTI

Pune: In the 2024 Lok Sabha elections, the Mahayuti had suffered a setback across the Western Maharashtra districts of Pune, Satara, Sangli, Kolhapur, and Solapur. Had the seat-sharing arrangement within the rival Maha Vikas Aghadi (MVA) been executed more effectively during that election, the Mahayuti’s tally in this region would have been reduced to zero.


However, in the Assembly elections that year, the Mahayuti achieved resounding success in the region. Prominent Mahayuti stalwarts including the late Ajit Pawar, Chandrakant Patil, Dilip Walse Patil, Hasan Mushrif, Shambhuraje Desai, and Jaykumar Gore were elected from this region. Sharad Pawar’s then undivided Nationalist Congress Party (NCP) was rendered ineffective, and former Chief Minister Prithviraj Chavan suffered a defeat.


Strained Relations

Currently, however, relations between Western Maharashtra and the Mahayuti’s constituent parties appear strained. During the election for the Satara Zilla Parishad (District Council) President, Shambhuraje Desai—a Shiv Sena leader and cabinet minister—was manhandled by the police themselves. This incident left Desai aggrieved and began to create a rift between the BJP and the Shinde faction of the Shiv Sena. With an eye on the 2029 Assembly elections, Deputy Chief Minister Eknath Shinde has undertaken a vigorous campaign to strengthen his party’s organizational structure. The BJP is closely watching the level of response and support that Shinde garners across Western Maharashtra.


Following the untimely demise of Ajit Pawar, rapid developments have been unfolding within the Nationalist Congress Party (NCP). Pawar’s wife, Sunetra Pawar, assumed the office of Deputy Chief Minister subsequent to his death and was subsequently elected as an MLA from the Baramati Assembly constituency. Her son, MP Parth Pawar, along with his brother Jay Pawar, has begun to tighten their grip on the party’s affairs. Consequently, a rift has emerged within the party, pitting the ‘old guard’ against the ‘new generation.’ NCP leader Rupali Chakankar became entangled in the ‘false godman’ Ashok Kharat scandal, compelling her to resign from the post of Chairperson of the State Women’s Commission - an episode that dealt a blow to the party’s image. Meanwhile, speaking at an event in Baramati, Jay Pawar declared that Sunetra Pawar is the “future Chief Minister.” He reiterated this declaration on two separate platforms. The BJP has taken this announcement seriously.


Firm Foothold

The BJP has successfully established a foothold in the urban areas of Western Maharashtra. However, as traditional voters begin to gravitate back toward the Congress, the BJP is compelled to focus its attention on the Congress’s activities in urban centers, while simultaneously monitoring the moves of the Pawar and Shinde factions in rural regions.


Caste-based agitations within the Hindu community have once again begun to rear their heads. Social issues—such as the recording of caste data in the census and the sub-categorization of reservations—have become subjects of intense public debate. Furthermore, the farming community in Western Maharashtra has suffered a severe economic blow due to the prevailing atmosphere of conflict in Muslim-majority nations; the likelihood of them recovering from this setback in the near future appears slim. Issues such as job instability within the IT sector are also beginning to come to the fore. Consequently, while navigating their own internal political dynamics, the ruling Mahayuti is simultaneously compelled to confront these pressing socio-economic challenges facing Western Maharashtra.


In Western Maharashtra, the battle ahead will not be fought merely over seats and alliances, but over who can steady an anxious society where caste, livelihood, and political loyalty are all beginning to shift at once.

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