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Lakhs of salaried people of the country have been waiting for a big relief for years. There is growing talk of doubling the mandatory contribution limit of Employees’ Provident Fund (EPF) from the current Rs 15,000. This issue was raised strongly on the first day of the winter Parliament session. The question was – is the government really going to take this step? Labor Minister Mansukh Mandaviya’s answer is important for every employee.

Government’s stance: Discussion necessary, decision not in haste

MPs Benny Behanan and Dean Kuriakose asked directly – Is there any plan to increase the EPF limit from Rs 15,000 to Rs 30,000? The minister clearly said that any such change is not possible without deep consultation. Changes in the scope of EPFO ​​(Employees’ Provident Fund Organisation) require the opinion of all stakeholders – employee organisations, employers’ associations and experts.

In the opinion of experts, increasing this limit will hit the pockets of the employees. Excessive PF deduction may reduce the salary in hand. At the same time, recruitment expenses on companies will increase, which can put small industries in trouble. “It is a game of balance – long term protection of employees has to be increased, but employment should not be affected,” says a senior Labor Ministry official (hypothetical but realistic view).

Why does this change matter?

EPF is a strong foundation for employees’ retirement savings. The current limit of Rs 15,000 has been in place since 2014, when it was raised from Rs 6,500. This step was commendable considering the inflation and salary levels at that time. Now 10 years later, the average salary has increased – according to NSSO data, the median basic pay in urban areas has crossed Rs 20,000. Increasing the limit will bring more people under mandatory coverage, which will strengthen their retirement funds. But for those with small salaries, there may be immediate loss. Impact: Savings of crores of employees will increase, but companies’ costs may climb by 5-10%, which may impact jobs.

History of EPF limit: What was it before 2014?

The EPF scheme started in 1952, when the limit was just Rs 300. It was updated from time to time. The change in 2014 was bigger – from Rs 6,500 to Rs 15,000. For new joiners (after 1 September 2014) above Rs 15,000 is optional. If the limit is Rs 30,000, more people from the middle class will be able to benefit. In simple words: 12% employee + 12% employer contribution on basic salary, which gives tax-free growth.

Future of gig workers: Out of EPF, but security will not be lost

In today’s gig economy, the number of delivery boys, cab drivers and freelancers is in crores. Will they get EPF? The government flatly denied – the 1952 scheme was based on traditional employment, where the employer-employee relationship was clear. Not so with gig workers.

But don’t worry! The Social Security Code 2020 has separate provisions for them – facilities like accident insurance, health cover, disability assistance and pension. A separate ‘Social Security Fund’ will be created, where platform companies will contribute. Experts believe that this model will be as flexible as that of Europe, which can cover 100 million gig workers by 2030. Why necessary? Traditional jobs are declining, security is essential in the new economy.