New Delhi, India – The Union Cabinet on Wednesday approved raising the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) to ₹25,000 a month from ₹15,000, Information and Broadcasting Minister Ashwini Vaishnaw said while briefing reporters after a Cabinet meeting. The new ceiling will be implemented from September 17, coinciding with Vishwakarma Jayanti. Employers’ organisations welcomed the announcement and sought the Union Government’s help to implement it, while trade unions described the increase as “too little and too late.”
In a press release, the Union government said the decision is expected to bring more than 51 lakh additional employees within the ambit of mandatory EPFO coverage, expanding access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS), and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI). The annual government outgo is estimated at ₹11,339 crore, against the existing annual budgetary support of about ₹10,250 crore.
Union Labour Minister Mansukh Mandaviya said ₹23,000 is the average salary in private establishments, according to a government survey. “More workers will get benefits of pension, death insurance and better interest for their savings as the EPFO expands its coverage,” he said. Mandaviya added that the employers’ contribution will increase by ₹600 per employee, while the employees’ contribution towards the EPS will increase to about ₹2,082.5 a month—8.33% of the new ₹25,000 ceiling—from the present ₹1,250. He added that from 51 lakh to up to one crore workers will benefit.
Must Read: Merchants to Be Charged 0.4% MDR for UPI Transactions Over ₹2,000; Small Vendors Exempt
All India Trade Union Congress general secretary Amarjeet Kaur said the decision is too little and too late. “The last time the ceiling was increased was in 2014. Considering the inflation, it should have been at least ₹30,000,” she said. National chairman of the Association of Indian Entrepreneurs, K.E. Raghunathan, said the EPFO’s software must be upgraded to handle the additional volume of subscribers, and urged the government to absorb the increase for two years for MSMEs. Indian Staffing Federation executive director Suchita Dutta called the decision a structural gain for formalisation, noting that raising the threshold narrows the cost arbitrage that unorganised players exploit and accelerates the informal-to-formal shift.
