New Delhi: In a major development, the Union Cabinet on Wednesday cleared the proposal to enhance the wage ceiling for coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs.15,000 to Rs.25,000 per month. The decision will bring over 51 lakh employees under the mandatory EPFO coverage.
Importantly, the wage ceiling remained unchanged from 2004 to 2014, before the decision was taken to enhance it to Rs.15,000 in September 2014. The cabinet decision on Wednesday carries forward the ceiling from Rs 15,000 to Rs 25,000.
Increase to help a substantial number of employees
“At present, a fresh employee joining employment at a wage above Rs.15,000 per month is not automatically covered under the EPF framework and may remain outside mandatory provident fund, pension and associated insurance protection. Raising the ceiling to Rs.25,000 will bring a substantial segment of employees in the Rs.15,000– Rs.25,000 wage band within the statutory social security framework,” the Centre said in a press release.
Pointing out that India has witnessed a major wage growth since the ceiling was revised in 2014, the Centre added, “In several States and occupations, minimum wages have also moved closer to the existing threshold. The enhancement to Rs.25,000 therefore updates the EPFO framework in line with rising wage levels and extends the benefits of formal social security to a wider segment of the workforce”.
Centre looking to further enhance formalisation of employment
With this step, the Centre is looking to further enhance formalisation of employment, worker retention and long-term retirement security. The decision has also strengthened the principle that formal employment should be accompanied by portable and assured social security protection.
Earlier, the proposal went through inter-ministerial consultations. It was recommended by the Expenditure Finance Committee on June 16, 2026. “The annual Government outgo is estimated at Rs.11,339 crore, against the existing annual budgetary support of about Rs.10,250 crore. The estimated expenditure over five years is approximately Rs.56,696 crore,” the Centre added.
