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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

Sunetra Pawar’s Trial by Fire

Aug 7
4 min read

The greatest challenge before Maharashtra’s first Deputy CM is not merely to govern, but to forge a political identity that is unmistakably her own.

Politics often rewards the loudest voice. The modern political arena thrives on sharp sound bites, relentless television appearances and instant responses on social media. Yet, some leaders begin their journey not with thunder but with quiet resolve. Maharashtra’s Deputy Chief Minister Sunetra Pawar finds herself at precisely such a moment.


In recent days, she has been drawn into an avoidable political controversy after the Maharashtra Congress dubbed her as “Gungi Gudiya” (“mute doll”) following a media interaction in which she chose not to answer journalists' questions. The remark quickly snowballed into a wider debate about the language used against women occupying high constitutional office. It also revived memories of the same epithet once directed at late Congress Prime Minister Indira Gandhi before she went on to become one of India’s most formidable political figures.


Until recently, Sunetra Pawar remained largely outside the glare of frontline politics. She was better known in Baramati for her work in education, healthcare and social welfare than for fiery speeches or electoral campaigns. Her public image was that of a composed, private individual who preferred institution-building to political theatre.


Political Limelight

That changed in 2024 when she entered electoral politics, contesting the Lok Sabha election from Baramati against her sister-in-law, Supriya Sule. Though unsuccessful, she later entered Parliament through the Rajya Sabha, where she quietly focused on organisational responsibilities and social initiatives rather than cultivating a high-profile parliamentary persona.


The defining moment came in January this year with the tragic death of her husband, Ajit Pawar, one of the state’s most experienced and influential political leaders. His passing created a political vacuum within the Nationalist Congress Party. At a moment of uncertainty, Sunetra Pawar stepped forward to shoulder responsibilities that few had imagined she would inherit so soon. Within days, she became Maharashtra’s first woman Deputy Chief Minister - a milestone in the state’s political history.


But such transitions are rarely straightforward. Political parties often struggle when towering personalities disappear, and observers had predicted that the NCP might witness internal divisions. Maintaining organisational cohesion during a leadership transition is itself a considerable achievement, particularly in a state where political loyalties are often fluid and intensely personalised.


However, much of the public conversation around Sunetra Pawar continues to be framed through comparisons with Ajit Pawar. The contrast is obvious. Ajit Pawar was known for his decisiveness, administrative grip and unmistakable public presence. Sunetra Pawar, by contrast, has generally remained soft-spoken, measured and reluctant to engage in unnecessary confrontation. Her supporters see restraint, dignity and maturity but critics see hesitation and insufficient public engagement.


Neither assessment is entirely unfair. That is why the recent Beed incident acquired significance beyond a routine press interaction. When reporters sought her comments on law and order and she chose to leave without responding, the political vacuum was quickly filled by her opponents. The Congress’s “Gungi Gudiya” remark predictably provoked protests from the NCP and criticism from leaders across the ruling alliance, many of whom argued that such language diminished the dignity of a woman holding one of the state’s highest offices.


Sunetra Pawar’s own response was notably restrained. She said she would offer a “fitting reply at the appropriate time.” The remark was consistent with the temperament she has displayed since entering public life.


Leadership is ultimately judged not only by composure but also by visibility. Every major political figure eventually reaches a point where inherited legitimacy must give way to earned authority. Indira Gandhi had to step beyond Jawaharlal Nehru's towering legacy before she was recognised in her own right. Rajiv Gandhi, too, had to emerge from the shadow of Indira Gandhi while navigating extraordinary political circumstances. Their journeys were shaped by vastly different contexts, but they illustrate a universal truth: every successor must eventually become an original.


Sunetra Pawar now confronts a similar, though far more modest, challenge. She must cease to be viewed primarily as “Ajit Pawar's wife” and come into her own.


Distinct Identity

That transformation cannot be achieved through symbolism alone. After all, lasting political stature is built through decisions, administrative outcomes and public confidence. To her credit, she has remained engaged with governance, regularly attending official programmes, reviewing development projects and interacting with citizens instead of chasing daily headlines. Yet the next stage of leadership demands something more. She will need to engage more confidently with the media, articulate her government's priorities in her own voice, and establish an administrative record that reflects independent judgement rather than inherited expectations. These are demanding tasks, but they are neither unusual nor unattainable.


It is still too soon to measure Sunetra Pawar’s political legacy. She assumed responsibility at a moment when both her party and the state were adjusting to an unexpected transition, and has so far navigated that passage with composure. Yet political inheritance has a limited shelf life. While quietness, in itself, is neither a virtue nor a weakness, it acquires meaning only when it is accompanied by clarity and conviction. If Sunetra Pawar is to leave an enduring imprint on Maharashtra's politics, it will not be by echoing the style of Ajit Pawar or by answering every taunt from her opponents. It will be by developing a public voice that reflects her own instincts, her own priorities and, ultimately, her own leadership.


(The writer is a political observer. Views personal.)

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