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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

Raj steals thunder; Uddhav repeats taunts

Quaid Najmi
Jan 11
3 min read
Pic: Bhushan Koyande
Pic: Bhushan Koyande

Mumbai: Sounding a loud alarm for Mumbai, the Maharashtra Vikas Aghadi (MVA) launched a blistering attack on the Bharatiya Janata Party and the Adani Group, alleging a systematic attempt to capture Mumbai’s assets and wealth, marginalize the Marathi population and weaken Maharashtra.

 

The Shiv Sena (UBT) President Uddhav Thackeray, Maharashtra Navnirman Sena (MNS) chief Raj Thackeray, Nationalist Congress Party (SP) leader Jayant R. Patil, besides Aditya Thackeray and other speakers made a desperate appeal to the voters to ‘choose wisely’ in the January 15 BMC elections.

 

Stealing the thunder, Raj said that last year’s compulsory Hindi push was a “test”, intended to check whether Maharashtra’s people were still alert. “That experiment proved why we needed to come together. No squabble is bigger than Maharashtra,” Raj said, referring to his reunion with Uddhav Thackeray after two decades.

 

Painting  a grim picture of present-day rulers and previous regimes, Raj said that despite Congress and other parties ruling for years, fear never dominated public life.

“Today, 66 corporators have been elected unopposed. People are being deprived of their right to vote, and this number will only rise,” he warned.

 

Both Raj and Uddhav slammed the BJP for increasingly giving tickets to criminals, drug peddlers and rape accused, eroding democracy at its roots.


Mumbai For Sale

Claiming that Mumbai is ‘up for sale’, Raj cited data collected by his research team to highlight the dramatic expansion of Gautam Adani’s business empire after 2014 – when Narendra Modi became Prime Minister.

 

Pointing to Maharashtra specifically, Raj claimed that Adani Group had just one unit here in 2014, which has since multiplied rapidly, listing multiple mega-projects in the Mumbai Metropolitan Region being handled by the Gautam Adani-led conglomerate.

 

He spoke of a long-term strategy to “break Mumbai away” from Maharashtra by dividing districts, voters and civic bodies, while bringing in outsiders at the cost of locals. “Marathis are being pushed into a minority in their own city - without homes, jobs or identity,” he warned.

 

Explaining the intense fight for civic bodies, Raj said control of local governments prevents the sale of land and public wealth without local consent, and called upon the voters to make the right choice.

 

Mewa-bhau

Terming it as a decisive final battle for Mumbai and MMR, Uddhav took a potshot at Chief Minister Devendra Fadnavis, calling him a “Mewa-bhau”. He accused the BJP of dividing Mumbai and the Marathi community while hollowing out the city’s institutions and finances.

 

“They say they want a ‘Hindu Marathi Mayor’. We said we will give a Marathi Mayor. The BJP is deliberately fragmenting Marathis by mixing religion into civic politics.

 

“We (Thackeray cousins) have come together only for Maharashtra, Mumbai and Marathis. These civic elections will decide our future. If we don’t act now, it will be too late,” he urged.

 

“We have fought many elections. We’ve won many, lost some. The BJP can ally with anyone all over India, but now they don’t want Shiv Sena,” he said.

 

Lashing out at the BJP for its repeated attacks on the ‘Thackeray brand’, Uddhav said sharply: “You question us, but you are nothing more than ‘band-masters’ of Modi.”

 

Both cousins vowed to move forward guided by Balasaheb Thackeray’s teachings, and dismissed the BJP’s claims of nationalism and concern for the poor as ‘fake Hindutva’, with Uddhav declaring: “I kick such patriotism.”

 

He even dared Fadnavis to have a public debate with him or Aditya Thackeray on Mumbai’s issues. “They ask what Shiv Sena did for Mumbai. Look around – and our work is visible in healthcare, education, infrastructure, water supply, sewerage,” he said.

 

The cousins attacked the BJP for emptying the coffers of Mumbai and Navi Mumbai, and diverting public attention from real civic issues to keep filling up Adani’s coffers.

 

Accusing the BJP of promoting criminals, goons, rapists and drug peddlers while fuelling caste and religious divisions, the duo said they ‘reject’ such politics, and exhorted  the people to decide as its final call for the future of Mumbai, Marathis and Maharashtra.

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