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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

Too Many Cooks in Pune

Writer: Rajendra Pandharpure
Rajendra Pandharpure
Jan 5
3 min read

The city’s civic poll contest has turned into a free-for-all, exposing how Maharashtra’s once-stable alliances have unravelled owing to selfish ambition

Pune: Pune’s municipal election was once a relatively orderly affair, governed by predictable coalitions and familiar rivalries. This time it resembles a crowded roundabout with no right of way. The collapse of both the ruling Mahayuti and the Opposition Maharashtra Vikas Aghadi (MVA) has produced a four-cornered contest in almost every ward, transforming what should have been a referendum on civic governance into a stress test for Maharashtra’s splintered politics.


The Bharatiya Janata Party (BJP), opting for muscular self-reliance, is contesting 157 of the 165 seats in the Pune Municipal Corporation (PMC) on its own, supplemented by eight allotted to the Republican Party and one sponsored candidate. Both factions of the Nationalist Congress Party (NCP) are fielding more than 100 candidates each, most under the familiar clock symbol that once unified them. Eknath Shinde’s Shiv Sena faction has nominated 111 candidates, while the Congress has put up 90, Shiv Sena (Uddhav Balasaheb Thackeray) 70, and the Maharashtra Navnirman Sena (MNS) 44. Even within nominal alliances, ‘friendly contests’ abound with the Congress and the Sena (UBT) facing each other in around 20 wards.


Political Unravelling

Behind this arithmetic lies a deeper political unravelling. The uneasy coexistence of uncle Sharad Pawar and his usurper nephew Ajit Pawar has finally snapped, taking down both the BJP-led Mahayuti and the opposition MVA with it. In their place has emerged a latticework of tactical understandings that vary by city and convenience. In Pune, the Congress has tied up with Sena (UBT) and the MNS, while Ajit Pawar’s NCP has drawn closer to a faction of the Republican Party led by Sachin Kharat. The Prakash Ambedkar-led Vanchit Bahujan Aghadi (VBA), which has aligned with the Congress in Mumbai, is going it alone in Pune. The Aam Aadmi Party, the Bahujan Samaj Party and a scattering of smaller outfits complete the picture.


For voters, the result is bewilderment while opportunistic politicians make hay. In many wards the real contest has narrowed to a straight fight between the BJP and one or the other NCP faction, despite the apparent multiplicity of players. The churn has been accelerated by defections on an industrial scale. As the BJP denied tickets to 42 sitting corporators, a procession of disappointed aspirants crossed the aisle to secure nominations elsewhere. Former BJP corporators such as Amol Balwadkar, Dhananjay Jadhav, Prakash Dhore, Archana Musale and Shankar Pawar have resurfaced as NCP or Shiv Sena candidates, often pitted against their former colleagues.


Dynastic politics, far from fading, has adapted neatly to the chaos. Surendra Pathare, son of Sharad Pawar-aligned MLA Bapusaheb Pathare, has joined the BJP and received tickets for both himself and his wife. Prithviraj Sutar, son of former minister Shashikant Sutar, has defected from Sena (UBT) to the BJP and been duly rewarded. Abhijeet Shivarkar, son of former Congress minister Balasaheb Shivarkar, has made a similar journey. Elsewhere, Sunny Nimhan, son of ex-MLA Vinayak Nimhan, is contesting on a BJP ticket, while the son of former Congress minister Ramesh Bagwe remains with his father’s party.


Senior Figures

The organisational churn has drawn senior figures into the fray. City chiefs of almost every major party - the BJP’s Dhiraj Ghate, Congress’s Arvind Shinde, Ajit Pawar NCP’s Subhash Jagtap, Sena (UBT)’s Sanjay More, Shinde Sena’s Nana Bhangire, MNS’s Sainath Babar and AAP’s Sudarshan Jagdale - are contesting, as is the mercurial Dhananjay Benkar. Their presence underlines both the stakes involved and the absence of clear command structures.


If there is any leader who is emblematic of this confusion, it is Prashant Jagtap. The city president of Sharad Pawar’s NCP, he resigned in protest against any accommodation with Ajit Pawar’s faction, joined the Congress and is now contesting from Wanwadi. His move encapsulates the moral fatigue of cadre caught between loyalty and viability.


Uncertainty had reigned until the final day of withdrawals as candidate lists were delayed and alliances were revised. Only the BJP moved swiftly to declare its slate, a small but telling advantage in a contest where clarity itself has become a political asset.


For Pune, the danger is that pressing civic problems like water supply, transport and planning will be drowned out by the din of factional warfare. The four-way contest in Pune is a preview of a political order in which everyone runs, but no one quite leads.

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