Govt Approves Proposal to Raise EPF Wage Ceiling to Rs 25,000, Cabinet Nod Awaited

The Department of Expenditure has approved a proposal to increase the EPF wage ceiling for mandatory coverage under the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS) from Rs 15,000 to Rs 25,000 per month, according to a government source.

Advertisement

The proposal will now be placed before the Union Cabinet for final approval. The revised wage ceiling will come into effect from a date to be notified after the Cabinet clears the proposal.

If approved, the move will bring more salaried employees under the country’s social security system and mark the first revision in the EPF wage ceiling in more than a decade.

More Employees to Come Under EPF and EPS

At present, employees earning up to Rs 15,000 per month in basic wages are required to be enrolled under the EPF and EPS schemes. Employees earning above this limit can opt out, and employers are not legally required to provide EPF coverage to them.

Advertisement

With the proposed increase, employees earning up to Rs 25,000 per month in basic pay will also come under mandatory EPF and EPS coverage. This means employees in the Rs 15,000 to Rs 25,000 salary range, who were earlier outside compulsory coverage, will now be covered under the government-run retirement and pension schemes.

The proposal is expected to improve social security benefits for thousands of employees working in the organised private sector by helping them build long-term retirement savings and providing pension benefits.

Higher Cost for Employers

The increase in the wage ceiling is also expected to raise compliance costs for employers. Companies will have to make EPF contributions for a larger number of employees, increasing their payroll expenses. The government’s pension-related financial responsibility is also likely to go up.

Also Read: Accenture Wins Multi-Year AI Transformation Deal with Dabur India

Advertisement

According to the report, the Department of Expenditure had examined increasing the wage ceiling to Rs 30,000 per month before deciding on Rs 25,000.

First Revision Since 2014

The current EPF wage ceiling of Rs 15,000 came into effect in September 2014 and has remained unchanged since then, despite rising wages and inflation.

Industry experts have long called for an increase in the limit to match current salary levels and expand social security coverage. Once the Cabinet approves the proposal, the government is expected to issue a notification announcing the implementation date.

The revised ceiling is expected to bring a larger section of salaried employees under mandatory provident fund and pension coverage, strengthening retirement savings and extending social security benefits to more workers across the organised sector.

Advertisement

Note: We are also on WhatsApp, LinkedIn, and YouTube to get the latest news updates. Subscribe to our Channels. WhatsApp– Click Here, YouTube – Click Here, and LinkedIn– Click Here.