The Union Cabinet has approved raising the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs 15,000 to Rs 25,000 per month, bringing a larger number of workers into the formal social security system. The decision, approved on September 16, will take effect from 17th September 2026. More than 51 lakh additional employees are expected to come under mandatory EPFO coverage.
Wage Ceiling Was Unchanged Since 2014
The Rs 15,000 ceiling had remained unchanged since September 2014. The Labour Ministry said the revision was considered in view of wage growth, rising incomes and changes in minimum wages over the past 12 years. Under the earlier rule, employees joining a job with wages above Rs 15,000 were not automatically required to be covered under EPFO. The new ceiling brings employees in the Rs 15,000-Rs 25,000 wage band within mandatory coverage, subject to the applicable EPF provisions.
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PF, Pension and Insurance Cover to Widen
The change will extend access to EPFO linked social security benefits, including provident fund savings, pension under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI). The EPF interest rate for FY2025-26 has been retained at 8.25%, but that rate is separate from the wage-ceiling decision and may change for future financial years.
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Contribution Will Rise for Many Employees
For workers whose basic wages fall between Rs 15,000 and Rs 25,000 and who become covered under the revised ceiling, the statutory contribution can rise from the earlier ceiling-based amount. At 12%, the employee contribution on Rs 25,000 works out to Rs 3,000 a month, compared with Rs 1,800 on Rs 15,000. The corresponding employer contribution also rises under the applicable rules. This means the combined employee and employer contribution can increase by up to Rs 2,400 a month in cases where the full difference is applicable.
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Government Outgo Estimated at Rs 11,339 Crore
The Government estimates that the decision will add about Rs 11,339 crore to its annual financial burden, against existing annual budgetary support of around Rs 10,250 crore. The proposal had undergone inter-ministerial consultations and was recommended by the Expenditure Finance Committee in June. With the revised ceiling now coming into force, the Labour Ministry and EPFO will undertake the required administrative and legal steps to implement the expanded coverage.
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