- The Union Cabinet approved raising the PF wage ceiling from Rs 15,000 to Rs 25,000 per month
- This change will include over 51 lakh additional employees under mandatory EPFO coverage
- Employees earning above Rs 15,000 were previously not automatically covered under EPF schemes
The Union Cabinet has approved to increase wage ceiling for PF deduction from Rs 15,000 to Rs 25,000 per month, Ministry of Labour and Employment said in a release on Wednesday, September 16.
The decision is expected to bring more than 51 lakh additional employees within the ambit of mandatory EPFO coverage, significantly widening social security protection for workers, the Ministry noted.
Currenlty, a fresh employee joining employment at a salary more than Rs.15,000 per month is not automatically covered under the EPF framework and may remain outside mandatory provident fund, pension and associated insurance protection. Increasing the ceiling to Rs.25,000 is expected to bring a major segment of employees in the Rs.15,000– Rs.25,000 wage band within the statutory social security framework.
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As per the present framework, the statutory employee and employer contribution is 12% of EPF wages up to the Rs 15,000 ceiling, translating into a mandatory employee contribution of Rs 1,800 a month. The EPF Scheme, 2026 has retained the Rs 15,000 ceiling and clarified the treatment of contributions above it.
What does Rs 25,000 Ceiling Mean?
Based on 12% contribution rate, the mandatory employee contribution would rise to Rs 3,000 a month, up from Rs 1,800. That means a potential increase of Rs 1,200 per month, or Rs 14,400 a year, in the employee's PF contribution.
The impact would depend on how the new ceiling is implemented and whether employers currently contribute only up to the statutory limit or on the employee's full eligible salary. Contributions above the statutory ceiling have historically also been possible on a voluntary basis.
The Rs 15,000 ceiling was notified in 2014, meaning it has remained unchanged for more than a decade despite changes in wages and employment patterns. The proposed increase could bring more employees under mandatory social-security coverage.
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