The government is considering raising the wage ceiling for mandatory Employees’ Provident Fund (EPF) contributions from the current ₹15,000 per month to ₹25,000 per month.
This change aims to bring more workers under the social security net and strengthen retirement savings.
If approved, the proposal could be discussed in the EPFO Central Board of Trustees meeting next month and may come into effect from April 1.
Who Will Be Impacted?
Currently, only employees earning up to ₹15,000 a month are required to contribute to EPF.
Since this limit hasn’t been revised since 2014, many low- and mid-skilled workers whose salaries have grown over the years are outside compulsory EPF coverage.
Raising the limit to ₹25,000 would include a larger section of the workforce, ensuring more employees benefit from retirement savings, pension, and insurance coverage.
What Changes for Employees and Employers?
For Employees:
Those earning between ₹15,000 and ₹25,000 will now have mandatory EPF deductions.
Take-home salary will reduce slightly due to the higher contributions, but long-term retirement savings will increase.
For Employers:
Employers must match the EPF contribution, which could increase payroll costs.
This may affect businesses in labour-intensive sectors more significantly.
Impact on PF-Linked Benefits
If the proposal is implemented, all EPFO-linked benefits—including provident fund accumulation, pension contributions, and insurance cover—will be recalculated based on the new wage ceiling.
This ensures employees receive enhanced social security benefits over their careers.
Why Is the Change Happening Now?
The move comes after the Supreme Court directed EPFO to revise the wage ceiling within four months.
Rising salaries and inflation have left many workers outside the social security framework.
The current ₹15,000 limit has remained unchanged for over a decade, despite significant wage growth.
Increasing the ceiling to ₹25,000 is seen as a step to modernize the EPF system and extend coverage to more employees.
