Govt To Defer EPFO Wage Ceiling Hike Proposal From ₹15,000 to ₹25,000 In Temporary Relief To Businesses

The Centre has deferred its proposal to increase the mandatory wage ceiling for Employees' Provident Fund Organisation (EPFO) contributions from ₹15,000 to ₹25,000 per month, delaying a move that could have expanded social security coverage for millions of additional workers.

According to a Moneycontrol report, the government has decided not to proceed with the revision immediately as it does not want to add to the financial burden on companies already facing increased compliance costs due to the implementation of new labour codes.

A senior government official said the wage ceiling will eventually be revised, but the decision will be taken only after consultations with relevant stakeholders.

"The government doesn't want to put extra financial burden on companies right now. The wage ceiling will be raised, but only after proper stakeholder consultation," the official said.

Currently, the statutory wage limit for mandatory contributions under the Employees' Provident Fund (EPF) and Employees' Pension Scheme (EPS) remains fixed at ₹15,000 per month. The limit was last revised in 2014.

Employees earning a basic salary of up to ₹15,000 are required to contribute 12% of their basic wages to EPF, while employers also contribute an equal amount.

A portion of the employer contribution is allocated towards EPS, with the remainder going into the EPF account. The maximum mandatory contribution from both sides is currently capped at ₹1,800 each.

If the proposed increase to ₹25,000 had been implemented, the maximum mandatory contribution would have risen to ₹3,000 each from employees and employers. The revision was also expected to expand compulsory EPFO coverage significantly.

An internal assessment by the Labour Ministry suggested that increasing the wage ceiling by ₹10,000 could bring more than one crore additional workers under mandatory EPF and EPS coverage.

Labour unions have long demanded the change, arguing that many low- and mid-skilled workers in urban areas now earn above the existing threshold but remain outside mandatory coverage.

However, the government believes the timing is not suitable due to increased compliance costs for businesses. Industry representatives have said the new labour codes have already raised statutory obligations by around 15-20%, with sectors such as IT facing significant additional expenses.

The proposal has not been scrapped and remains under consideration. The government plans to revisit the issue after discussions with industry bodies and other stakeholders, though no timeline has been announced.

EPFO currently manages a corpus of around ₹27-28 lakh crore and has nearly eight crore active members, making it one of the world’s largest social security organisations.