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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

Mahayuti struggles with seat-sharing formula

Writer: Abhijit Mulye
Abhijit Mulye
May 25
3 min read

Mumbai: The ruling Mahayuti alliance is currently navigating a treacherous political minefield. With the crucial Legislative Council elections rapidly approaching, deep-seated differences over seat-sharing have surfaced. Chief Minister Devendra Fadnavis on Monday offered a candid admission of these unresolved disputes. His statements underscore the immense pressure on the coalition partners.


The state is preparing to vote for sixteen council seats and one bypoll seat in Nagpur. Voting is scheduled for June 18, with the all-important counting set for June 22.


Addressing the media after inaugurating the Jawahar Balbhavan in Mumbai, Fadnavis sought to project a calm exterior. He emphasised that detailed discussions are still ongoing to evaluate various aspects of the electoral battle. He expressed confidence that the alliance would soon reach an amicable solution. However, the specific geographies he mentioned reveal the exact fault lines. Negotiations with the Shiv Sena are heavily concentrated on Chhatrapati Sambhaji Nagar and Nashik. Meanwhile, talks with the Nationalist Congress Party are focused squarely on Pune.


Alliance Arithmatic

The arithmetic of the alliance is proving incredibly difficult to balance. The Shiv Sena had firmly demanded seven seats even as the BJP was offering only 3. They justify this claim by pointing to their strong support bases in Mumbai, Thane, Raigad, Sambhajinagar, Ratnagiri, Nashik, and Yavatmal. The Bharatiya Janata Party has a vastly different calculation. The BJP plans to assert its dominance by contesting twelve seats. This aggressive stance would leave only three seats for the Sena and a mere two seats for the Sunetra Pawar-led NCP. With the nomination process already underway, the clock is ticking loudly for the Mahayuti leadership.


This intense internal friction prompted a sudden political maneuver by Deputy Chief Minister and Shiv Sena chief Eknath Shinde. He flew to New Delhi over the weekend amid the escalating deadlock. Sena sources indicated that Shinde sought the intervention of the BJP’s central leadership. A Sena minister, however, quickly tried to downplay the optics of the trip. He insisted that Shinde travelled for an unscheduled programme before heading to Bengaluru for a planned event. Despite these official denials, the timing strongly suggests a high-stakes crisis intervention.


Bitter Conflict

The most bitter conflict within the alliance centers on the Thane local authorities constituency. Both the BJP and the Shinde-led Sena are fiercely staking their claims. A BJP legislator recently argued that political tickets should be distributed based strictly on numerical strength. He pointed out that the BJP commands 444 corporators in the region. In stark contrast, the Shinde-led Sena and the allied Jijau organisation possess a combined total of only 346 corporators.


However, political reality in Maharashtra is rarely dictated by numbers alone. The Shinde faction views Thane as its emotional and traditional stronghold. Surrendering this territory to their alliance partner is considered politically unthinkable. This local dispute is already threatening to severely damage the broader coalition. A Sena Member of Parliament recently issued a stark warning regarding the upcoming Thane Zilla Parishad elections. He boldly asserted that Sena workers are fully prepared to fight alone and hoist their saffron flag, regardless of the alliance’s survival.


The battle lines are extending further across the state map. The Sena is demanding the Jalgaon seat, which the BJP is equally determined to contest. Furthermore, reports suggest the Sena is preparing to unilaterally field a candidate in Raigad. This would further complicate the already delicate negotiations. Despite these mounting tensions, BJP minister Girish Mahajan has publicly maintained that the deadlock will be resolved shortly. A final decision now rests on an impending high-level meeting between Fadnavis, Shinde, and Sunetra Pawar.


MVA Crisis

Meanwhile, the political turbulence is not restricted to the Mahayuti alliance. The opposition Maharashtra Vikas Aghadi is dealing with its own severe crisis in the Vidarbha region. The Chandrapur-Gadchiroli council seat has triggered frantic political poaching. As many as sixty corporators and Zilla Parishad members from the Congress party reportedly went missing recently. Congress leaders have directly accused BJP legislator Banti Bhangadiya of orchestrating this disappearance. They allege he has shifted the corporators to an undisclosed location to manipulate the voting outcome.


The Congress has responded with an aggressive counter-narrative. Senior Congress leader Vijay Wadettiwar made a startling claim that over one hundred BJP corporators are secretly in contact with him. While Wadettiwar strategically hid their exact whereabouts, his statement highlighted a critical vulnerability. He suggested that the BJP is also suffering from severe internal factionalism. Wadettiwar warned that these hidden rifts will ultimately cost the ruling party dearly in the forthcoming elections.

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