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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

Thackeray cousins unite after 20 years

Quaid Najmi
Dec 23, 2025
3 min read

Shiv Sena (UBT)-MNS to announce tie-up today

Mumbai: In a significant development ending six months of speculation and weeks of negotiations, the Thackeray cousins - Uddhav and Raj - are all set to announce their first formal electoral alliance on Wednesday noon, ahead of the upcoming civic elections across Maharashtra.

 

The Shiv Sena (UBT), led by former Chief Minister Uddhav Thackeray, and the Maharashtra Navnirman Sena (MNS), headed by Raj Thackeray, are expected to formally declare a seat-sharing arrangement for key civic corporations in the Mumbai Metropolitan Region (MMR) and elsewhere.

 

These include the BrihanMumbai Municipal Corporation (BMC), Thane, Mira-Bhayander, Navi Mumbai, Kalyan-Dombivli (all in MMR), plus Pune and Nashik.

 

“Tomorrow… 12 noon,” Shiv Sena (UBT) Rajya Sabha MP Sanjay Raut posted a date with the media, sharing a photograph of the Thackeray cousins. Later, he later reiterated the same to media-persons.

 

Dismissing political guesswork, Raut said the seat-sharing talks between the two parties progressed smoothly and were finalised amicably over the past few days.

 

Among the 29 civic corporations slated to go to the polls next month, the BMC - India’s richest municipal body running the country’s financial capital - is the most coveted trophy.

 

The undivided Shiv Sena had controlled the BMC for 25 consecutive years, making it a key political prize, eyed by the Thackeray cousins and other major contenders.

 

At loggerheads for nearly two decades following a bitter political split, Uddhav and Raj were thrown together earlier this year for the common cause of ‘Marathi manoos’.

 

In July, the Maharashtra government issued two government resolutions (GRs) under the National Education Policy’s three-language formula, proposing Hindi as a compulsory third language in Marathi and English medium primary schools (Classes I to V).

 

A combined agitation led by the Thackeray cousins - with support from the Congress, Nationalist Congress Party(SP) and others - forced the state government to yank off the proposal.

 

However, the growing proximity between Uddhav and Raj caused discomfort within the Maha Vikas Aghadi (MVA) allies.

 

The Congress, citing the MNS’ aggressive anti-migrant rhetoric, opposed its induction into the MVA. Failing to block the MNS, last month the Congress decided to go solo in the BMC elections, but kept the door open for tie-ups in other civic bodies.

 

Congress out, NCP (SP) mum

The state Congress has reiterated that it will contest the BrihanMumbai Municipal Corporation (BMC) elections independently, while hammering out an alliance with the Prakash Ambedkar-led Vanchit Bahujan Aghadi (VBA).

 

“We have made it clear that the Congress will go alone in Mumbai, and that position remains unchanged,” said Maharashtra Congress senior spokesperson Sachin Sawant.

 

The Sharad Pawar-led Nationalist Congress Party (SP), however, has yet to spell out its stand on whether it will align with the Congress or side with the Thackeray cousins in the Mumbai civic polls.

 

Amid speculation over a possible rapprochement between the NCP (SP) and the Ajit Pawar-led NCP - reportedly to be formally announced this weekend – SS (UBT) MP Sanjay Raut launched a sharp attack on Ajit Pawar, questioning his status in the ruling MahaYuti alliance.

 

“Ajit Pawar’s real leaders are BJP’s Devendra Fadnavis, Amit Shah and Narendra Modi. If he is contemplating an alliance with the NCP (SP), then he has no moral right to remain in the MahaYuti government,” Raut said.

 

He further warned that any understanding between the two NCP factions in Pune would have repercussions for opposition unity. “If the NCP (SP) and NCP come together in Pune, then we will not align with Sharad Pawar’s party there,” Raut asserted.


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