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...

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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

Mob Rule

Correspondent

Apr 3

2 min read

The shocking events in Malda, West Bengal, where seven judicial officers were held hostage for hours during a Special Intensive Revision (SIR) exercise while being denied basic amenities, are the logical outcome of a political ecosystem nurtured under the state’s mercurial Chief Minister Mamata Banerjee.

The officers, acting under court orders were gheraoed, deprived of food and water, and released only after a late-night rescue involving central forces. The Supreme Court of India called it a “complete breakdown of law and order” and an “abdication of duty” by the West Bengal government. Even more damning was the court’s observation that the episode was a targeted attempt to intimidate officers executing a judicial mandate.

But the Malda case is hardly an aberration. Going by events in recent years, it would seem that there exists no line between state authority and street coercion in West Bengal as rule under the TMC regime has steadily eroded institutional authority while empowering partisan impunity.

In the infamous 2024 Sandeshkhali case, enforcement officials were attacked, media personnel assaulted and a TMC strongman form the minority community remained at large for weeks after allegations ranging from corruption to sexual violence surfaced.

The chilling episode at the R. G. Kar Medical College and Hospital concerning the rape and murder of a trainee doctor in 2024 had triggered nationwide outrage owing to the brutality of the crime as well as what followed. Allegations emerged of delayed FIRs, tampered evidence and institutional complicity. The arrest of senior officials linked to the hospital only reinforced the perception that accountability under Banerjee’s TMC government was an afterthought, not a priority.

Some romantic defenders of the Mamata regime will argue that West Bengal has always had a turbulent political culture. Nothing could be more irrelevant, reductive and nonsensical. The purpose of governance is not to inherit chaos, but to contain it. After more than a decade in power, the Trinamool Congress can no longer plead the chaotic legacy of the erstwhile Communist regime. It not only owns the present but is responsible for amplifying the damage done by the previous regime.

Banerjee has built her political persona on resistance against the Narendra Modi-led-BJP government at the Centre. Pandering to her minority votebank, she has long cast aspersions on the SIR, repeatedly questioning its legitimacy and amplifying fears of exclusion with the sole objective of keeping her vote base intact. Publicly, her position is framed as a defence of vulnerable voters against arbitrary disenfranchisement. Politically, it has consolidated a core support base that has become central to the TMC’s electoral survival in the coming Assembly contest.

If Sandeshkhali showed how authority can be captured, R. G. Kar revealed how it can be compromised. Malda demonstrates how it can be openly defied.

In such a system, the question is no longer whether law and order has broken down. It is whether it still exists in any meaningful sense.

EPFO’s Big Wage-Band Reset

Mob Rule

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