Proposal To Raise EPF Wage Ceiling Back On Table, May Be Increased To Rs 25,00030,000

(MENAFN- KNN India) New Delhi, Jan 8 (KNN) A bid to raise the monthly wage ceiling for mandatory coverage under the Employees' Provident Fund Organisation (EPFO) is under consideration. This could significantly expand India's social security net, according to a report by The Times of India.

The wage ceiling, currently set at Rs 15,000 per month, may be increased to Rs 25,000–30,000, the report said. The ceiling determines the salary level up to which employees in EPFO-covered establishments are required to make mandatory provident fund contributions.

Earlier Resistance from Employers

The government had earlier considered raising the wage threshold to Rs 25,000 but dropped the proposal amid employer opposition over higher compliance costs, with some seeking lower contribution rates.

In contrast, trade unions have pushed for a higher cut-off of Rs 30,000, arguing the current limit is outdated.

Outdated Ceiling Leaves Many Workers Excluded

The EPF wage ceiling was last revised in September 2014, when it was raised from Rs 6,500 to Rs 15,000. Since then, wages, particularly in urban areas, have increased sharply. Minimum monthly wages in several states, even for unskilled workers, now exceed the existing ceiling.

As a result, a large number of low-income and minimum-wage earners remain outside the ambit of mandatory EPF coverage, limiting their access to formal retirement savings and pension benefits.

Supreme Court Directs Review

The Supreme Court earlier this week directed the labour ministry to review the EPF wage ceiling within a four-month timeframe. The court's direction is expected to accelerate deliberations on revising the threshold.

According to the report, raising the ceiling could help substantially widen the EPFO subscriber base and bring more workers, particularly from the unorganised and semi-formal sectors, under the retirement fund body's coverage.

Linked to Labour Code Rollout

The renewed push to revise the EPF ceiling also comes amid the gradual implementation of the new labour codes, which aim to streamline social security provisions and expand coverage across employment categories.

Any final decision on the revision is expected to involve consultations with key stakeholders, including employers, trade unions and state governments, given its implications for take-home pay, hiring costs and long-term worker security.

(KNN Bureau)

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