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The government is likely to increase the ceiling of the Employees’ Provident Fund (EPF) framework from Rs 15,000 to Rs 25,000 per month.

Following the implementation, it will bring a larger number of workers under the formal social security system.

After receiving initial approval, it may be presented before the Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) in the upcoming meeting which is scheduled for next month.

Once cleared, the revised wage ceiling could come into effect from April 1.

Why wage limit is being revised

Currently, EPF contributions are mandatory only for employees earning up to Rs 15,000 per month. It was not updated since 2014 though, the salary levels for many low- and mid-skilled workers have increased.

As it was not update for the past over 11 years, a large segment of the workforce now falls outside compulsory provident fund coverage.

By raising the ceiling to Rs 25,000, the government aims to include more employees within the EPF system and ensure better long-term financial security.

Once new wage limit comes into effect, employees earning between Rs 15,000 and Rs 25,000 will be required to start making EPF contributions.

As the contributions are calculated as a percentage of wages, it will lead to higher monthly deductions from salaries. It will reduce take-home salary.

Though, it will improve retirement savings and long-term financial stability for workers, employers will also be affected by the proposed change.

Under EPF rules, employers must contribute an amount equal to the employee’s contribution. With a higher wage ceiling, companies will face increased payroll expenses.

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