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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

Shinde recites Uddhav’s script

Nov 23, 2025
4 min read

Mumbai: Deputy Chief Minister Eknath Shinde’s recent comments, acknowledging that Shiv Sena workers in Dharashiv have expressed feelings of "betrayal" by the Bharatiya Janata Party (BJP) within the Mahayuti alliance, mark a pivotal and ironic inflection point in the state’s volatile politics. While Shinde was quick to categorise these sentiments as merely "local" and insisted that contesting independently does not make the allies "foes," the very language he used – the vocabulary of betrayal and discontent – echoes the exact rhetoric Uddhav Thackeray employed before he severed ties with the BJP in 2019.


The profound irony is inescapable. Shinde’s political identity and ascendancy to the Chief Minister’s chair were predicated entirely on his claim that Uddhav Thackeray had betrayed the legacy of Bal Thackeray and the natural Hindutva alliance with the BJP. Yet, two years into his tenure, Shinde finds himself reciting his rival’s script. This apparent contradiction is not a mistake; it is a calculated political move born of profound structural and grassroots compulsions that threaten the integrity of his own Shiv Sena faction.


Grassroots survival

The most immediate compulsion for Shinde lies in the survival of his own organisation at the grassroots level. When Shinde rebelled, he secured the legislative majority, but he did not automatically inherit the entire Shiv Sena structure or the unwavering loyalty of its local functionaries. These workers are the lifeblood of the party, responsible for mobilising votes and maintaining local dominance.


For these local workers, the transition from being the dominant regional power (under the undivided Sena) to a junior partner in the Mahayuti has often meant a palpable loss of power, influence, and access to resources. When the BJP fields its own candidate or prioritizes its local leaders over Shinde’s loyalists in areas like Dharashiv, the local Shiv Sena workers feel marginalised and "betrayed."


Shinde cannot afford to ignore these localized feelings. By publicly acknowledging the "betrayal" sentiment, he is utilising a political safety valve. He is telling his disillusioned cadres: "I hear you. Your anger is valid." This validation is crucial to prevent these cadres from migrating back to the Shiv Sena (UBT) camp, which constantly frames Shinde’s entire faction as having sold out to the BJP. If Shinde were to blindly dismiss their grievances, he would risk accelerating the internal bleeding and delegitimizing the core rationale of his rebellion.


Asserting parity

The fundamental imbalance in the Mahayuti—where the BJP is the numerically and ideologically dominant partner—creates an existential threat for the smaller allies, including Shinde’s Shiv Sena and Ajit Pawar’s Nationalist Congress Party (NCP) faction.


Historically, the BJP has always employed a 'Big Brother' approach, seeking to expand its footprint at the expense of its regional partners. This was precisely the tension that drove Uddhav Thackeray away in 2019. Now, Shinde is facing the same structural pressure. Reports of internal friction—allegations of the BJP attempting to poach Shinde’s functionaries, delays in file clearances for Shiv Sena-held ministries by the Finance Department (Ajit Pawar’s portfolio), or Devendra Fadnavis subtly overshadowing Shinde—all point to a constant, underlying power struggle.


By channelling the "betrayal" lingo, Shinde is sending a clear, diplomatic warning to the central BJP leadership. He is communicating that his political position is not guaranteed by Delhi alone; it depends on the sustained morale and active participation of his Marathi-speaking, Hindutva-aligned base. This soft critique is a necessary negotiating tool to secure better seat distribution, more influential portfolios, and, critically, respect for the political space his faction occupies. He is effectively saying: "We broke away from Uddhav to save the alliance, but don't force us into the same corner he felt pushed into."


Unavoidable reality

Perhaps the deepest compulsion is the unavoidable reality that the Shiv Sena, in any form, needs to maintain a distinct regional identity separate from the BJP’s monolithic national identity. Uddhav Thackeray’s 2019 betrayal narrative revolved around the BJP's national ambition clashing with the Sena's need to lead Maharashtra.


Shinde’s use of the same language, even if quickly qualified, suggests a recognition that the core issue—the BJP’s drive for absolute dominance—persists regardless of who leads the Shiv Sena. The need to carve out a distinct identity for his faction, based on local issues, Marathi pride, and the interests of the actual Shiv Sainik, means Shinde must occasionally stand apart from the BJP’s national agenda.


His statement that mere independent contesting doesn't make them foes is a complex political cipher - it justifies the internal dissent of his workers (by framing the BJP as a competitive force rather than an infallible patron) while simultaneously assuring Delhi that the government is stable.


In essence, Eknath Shinde is caught in a familiar Marathi political cycle. To survive the existential threat from his former party chief, Uddhav Thackeray, Shinde must protect his identity by asserting strength and independence. To assert this strength, he must occasionally use the only effective language regional parties have against a national behemoth: the language of threatened identity and betrayal. His words are less a declaration of war and more a necessary, calculated cry for equal respect within a highly asymmetrical marriage of convenience.

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