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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

Green flag to Rs 87,000-cr Uttan-Virar Sea Link

Quaid Najmi
May 2, 2025
2 min read

Mumbai: In a significant development, the state government has cleared the revised Phase I of the proposed 24.35-kms long Uttar-Virar Sea Link (UVSL) project costing over Rs 87,000-crore, with enhanced design, connectivity and economic benefits, officials said here.


A MMRDA meeting chaired by Deputy Chief Minister Eknath Shinde along with Metropolitan Commissioner Dr. Sanjay Mukherjee granted approval for UVSL that envisages unlocking the regional economic potential, improved mobility, better quality of life and other advantages to the Mumbai Metropolitan Region (MMR).


Originally planned as the Versova-Virar Sea Link by the MSRDC, it was transferred to MMRDA in Oct. 2022, and subsequently in Feb. 2024, re-cast into two phases – Uttan to Virar (P-1), for immediate implementation, and Virar to Palghar (P-2), currently undergoing feasibility studies.


The Versova-Uttan stretch has been excluded from the current scope as it overlaps with the BrihanMumbai Municipal Corporation (BMC)’s upcoming 5-kms long north Coastal Road Project linking Dahisar and Bhayander.


The officials said that the UVSL, slated for completion by 2029, with possible financing by the Japan International Cooperation Agency (JICA), would comprise a high-speed 8-lane north-south corridor in the MMR, linking directly with the Mumbai-Delhi Expressway.


Besides the main Sea Link, there will be 30.77 kms long connectors at Uttan, Vasai and Virar of six lanes each, a 1.2 kms long tunnel near the Arnala Fort in Virar, navigational spans for maritime traffic in the Arabian Sea and other modern features.


The UVSL is expected to decongest traffic on major roads in Mumbai like the Western Express Highway, SV Road, Link Road, leading to lower pollution levels, better road safety, slashing travel time and adding to the quality of life of people in the region.


The UVSL would complement the upcoming Mumbai-Ahmedabad Bullet Train project and the upcoming 126-kms long Virar-Alibaug Multimodal Corridor, besides the network of Metro Rail networks spanning the entire MMRDA.


It will streamline and boost transportation with improved access to major residential, commercial and industrial zones in the MMR, plus strengthen economic ties with neighbouring states through connectivity to logistical hubs and facilitating smoother movement of goods and people.


The UVSL is expected to attract substantial investments, pave the way for development of industrial clusters and commercial centres and contribute to sustainable and balanced regional economic growth.


Extensive direct and indirect employment opportunities will be created, uplift income levels among the local population, improve emergency responses, boost infrastructure development, local municipal revenues, reduce pollution levels plus boost tourism and cultural exchanges through the UVSL.

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