EPFO Rule Change: PF Wage Limit May Rise to ₹25,000

New Delhi: The Employees’ Provident Fund Organisation (EPFO) is considering a major change that could impact the salaries, provident fund contributions and pension benefits of millions of employees in the organised sector.

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According to reports, the mandatory wage ceiling for EPF and Employees’ Pension Scheme (EPS) contributions could be increased from the existing ₹15,000 per month to ₹25,000 per month. If implemented, employees with basic wages of up to ₹25,000 could come under mandatory PF and pension coverage.

The existing wage ceiling was fixed in September 2014 and has remained unchanged for nearly 12 years. The proposed increase is aimed at expanding EPFO’s PF and pension coverage to a larger section of salaried employees.

According to a report by Moneycontrol, the Finance Ministry has approved a proposal to increase the mandatory wage ceiling under the Employees’ Provident Fund and Employees’ Pension Scheme from ₹15,000 to ₹25,000 per month. The proposal will now be sent to the Union Cabinet for consideration.

The proposed change would apply to registered establishments employing 20 or more workers, subject to the final rules and government approval.

What Is the Mandatory Wage Ceiling?

The mandatory wage ceiling generally refers to the wage component used for calculating mandatory EPF and EPS contributions, including basic wages and applicable dearness allowance.

At present, the ceiling is ₹15,000 per month. Under the proposed change, this limit could rise to ₹25,000 per month.

Currently, employees earning above the prescribed wage ceiling may have provisions to opt out of mandatory coverage in certain circumstances, while employers generally calculate their mandatory contribution based on the prescribed wage ceiling.

Earlier Proposal Was for ₹30,000

According to the Moneycontrol report, the Labour Ministry and EPFO had earlier proposed increasing the wage ceiling to ₹30,000 per month. After discussions, the Finance Ministry is reported to have settled on a proposed ceiling of ₹25,000 per month.

If approved and implemented, the change could significantly increase the number of employees covered under EPF and EPS.

Companies May Face Higher Payroll Costs

The proposed increase could also put additional financial pressure on employers. With a higher wage ceiling, companies may have to contribute 12% towards PF on a larger eligible wage base, potentially increasing their overall payroll costs.

The government’s financial burden could also rise as its contribution towards the pension system may increase with broader coverage.

The change could therefore have a dual impact — expanding social security benefits for employees while increasing contribution-related costs for employers and the government.

However, the ₹25,000 wage ceiling is currently a proposal and will require final approval from the Union Cabinet and implementation through the applicable EPFO rules.

Translated Quotes / Main Points (As Is)

“The mandatory wage ceiling for EPF and EPS contributions may increase from ₹15,000 to ₹25,000 per month.”

“The existing wage ceiling was fixed in September 2014 and has not been revised for nearly 12 years.”

“The proposal aims to expand PF and pension coverage to more salaried employees.”

“The Labour Ministry and EPFO had earlier proposed a ₹30,000 wage ceiling.”

“The proposed increase could raise payroll costs for companies and increase the government’s pension-related contribution.”

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