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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

Maximum city braces for maximum governance

Quaid Najmi
Dec 16, 2025
4 min read

Asia’s richest civic body remains a critical pillar for the administration of Mumbai and its financial powerhouse

A man arranges scarves of political parties ahead of BMC elections, at a shop in Lalbaug, Mumbai, on Monday. | Pic: Bhushan Koyande
A man arranges scarves of political parties ahead of BMC elections, at a shop in Lalbaug, Mumbai, on Monday. | Pic: Bhushan Koyande

Mumbai: After a historic 45-month long tenure under an Administrator, Asia’s richest and India’s biggest civic body, the Brihanmumbai Municipal Corporation (BMC) is slated to return to democratic governance from January 2026.

 

This was only the second time in its 160-year-old history that BMC was governed by an Administrator – the first being for 13 months, from April 1984-May 1985. The last elected body was in power from 2017-2022.

 

As the countdown and the cacophony of the elections start, national attention is again riveted on the country’s commercial capital that makes billions and billionaires – though its streets may not be paved with ‘gold’, to borrow a phrase from the classic tale of ‘Dick Whittington and his Cat’.

 

Yet, the BMC remains a critical pillar for the administration of Mumbai and its financial powerhouse, enjoying a massive clout both domestically and internationally. It is virtually regarded as a ‘trophy’ for the party ruling it – since 1948 by the Congress with its allies and after 1985 by the (undivided) Shiv Sena, and later with its ex-ally, Bharatiya Janata Party (BJP).

 

The same groups, with different political permutations-combinations are now vying to grab the ‘key to the treasury’ – after eyeing it hungrily for nearly four years when the Administrator flaunted it. The BMC elects 227 Municipal Corporators, making it one of the largest civic corporations in the country.

 

Staggering Budget

After all, the BMC boasts of a staggering annual budget – almost Rs. 75,000-cr in 2025-2026, a 14 per cent hike over the previous fiscal – bigger than several states and higher than the combined budgets of many smaller states.

 

It is widely perceived that the group or party which controls the BMC’s coffers ultimately has a Big Voice at the state-level or even in Assembly elections.

 

These massive finances are collected from the city and its denizens through taxes and non-tax revenues, and more than half – around Rs 43,000-cr this year - is ploughed back to create world-class, often precedent-setting, infrastructure, public amenities and wide-ranging services.

 

Besides, it also saves in the form of accumulated reserves of over Rs 75,000-cr., which makes politicians drool, as the BMC serves nearly 1.50 cr. souls inhabiting it. Nearly 50 pc of the population is concentrated in some 2,400 congested slum pockets like Dharavi, to plush exclusive skyscrapers or a few in exclusive but iconic buildings like Antilia, and a few private bungalows dotting the city.

 

The public-oriented services provided by the BMC ranging from transportation (BEST), water supply, sanitation, public health, education, a roads network, gardens-playgrounds, et al, and through an Administrator, the state has been pulling the strings of the civic body as the elected representatives remained outside for long…

 

All eye and vie for the BMC pie

With so many plum pies up for grabs, the control of the richie-rich BMC is ranked as a ‘must item’ in the bucket-wish list of all political parties, either separately or jointly, albeit with the tokenism of a ‘Marathi Mayor’ thrown in to soothe the Maharashtrian majority population.

 

Even now, the main contenders for the BMC’s ‘gold key’ are Bharatiya Janata Party-Shiv Sena though the third ally Nationalist Congress Party is in a limbo; Congress, besides the Shiv Sena (UBT)-Maharashtra Navnirman Sena-Nationalist Congress Party (SP).

 

The Opposition Maha Vikas Aghadi (MVA) which contested the 2024 Lok Sabha elections (spectacularly) and the Assembly polls (miserably), may fight the polls in a different formation that could again prove trumps for the saffron-led alliance.

 

Mumbai ‘fast-tracks’ the future

Nailing the importance of the coastal metropolis, Maharashtra Minister for FDI Jaykumar Rawal said at the CII Mumbai International Summit-2025 today that Mumbai is a rare global city where capital, talent and ambition converge daily but still find room to grow.

 

“Mumbai does not wait for the future; it fast-tracks it and confidently invites the world to keep pace,” he said, underscoring the city’s role as a gateway for global trade, innovation and sustainable growth, as CII bigwigs like Rishi Kumar Bagla, Vaibhav Vohra, Vir S Advani, plus foreign diplomats smiled and concurred.

 


“There is no problem in announcing the alliance (between Shiv Sena-UBT and MNS) in the coming week. Both the brothers, Uddhav Thackeray and Raj Thackeray, will be seen on stage for the announcement. I don't see Congress coming together at this point in time. They should have been with us. I spoke to the party high command, but they have left this matter to be decided at the local level. Our appeal to the local unit of the Congress is not to do anything that will help the BJP.”

Sanjay Raut, MP, Shiv Sena (UBT)


“We will contest seats in Nanded, Mumbai and Solapur, among other civic bodies apart from Chhatrapati Sambhaji Maharaj Nagar. We may not contest all seats, but we will definitely be contesting in most of the corporations. We are still open for an alliance, but it should be a state-wide alliance. We are also open for an alliance with the MVA.”

Imtiaz Jaleel, Leader, AIMIM



“Congress will fight the elections for Mumbai's development and the future of its citizens. The BMC's treasury was misused. The BJP is attempting to polarise voters on religious lines.”

Varsha Gaikwad, President, Mumbai Congress



"We will sit again in the next couple of days to take these discussions forward. We will not form any alliance with Nawab Malik, and I have conveyed this clearly to NCP leaders.”

Ashish Shelar, Leader, BJP

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