The Finance Ministry has approved a proposal to increase the wage ceiling for mandatory EPF and EPS coverage from ₹15,000 to ₹25,000 per month, according to a report.
The proposal will now be sent to the Union Cabinet for final approval.
The new limit will come into effect only after the Cabinet gives its nod, and the implementation date will be announced later.
If approved, the change could bring lakhs of additional private sector employees under the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS).
What Will Change Under the New Proposal?
At present, employees with a basic monthly salary of up to ₹15,000 must be enrolled in EPF and EPS.
Employees earning above this limit can join the schemes voluntarily, and employers are not legally required to enroll them.
If the wage ceiling is increased to ₹25,000, employees earning between ₹15,000 and ₹25,000 in basic salary will also come under mandatory EPF and EPS coverage.
This would expand social security benefits to a much larger number of employees in the organised private sector.
Government Reduced the Proposed Limit
According to reports, the government had initially considered increasing the wage ceiling to ₹30,000.
However, after discussions, the Finance Ministry approved a revised proposal to raise the limit to ₹25,000 instead.
The proposal will now be placed before the Union Cabinet for final approval.
Employers May Have to Spend More
If the new wage limit is approved, employers will have to enroll more employees in EPF and EPS, increasing their compliance costs.
Under the Employees’ Pension Scheme (EPS), employers contribute 8.33% of the employee’s basic salary, while the government contributes 1.16%.
The government has allocated ₹11,144 crore for the Employees’ Pension Scheme in the Union Budget 2026-27.
Who Will Be Affected?
The proposed change will apply to establishments with 20 or more employees, where EPF and EPS enrollment is mandatory.
Smaller establishments can still join the scheme voluntarily but are not required to do so.
The proposal mainly affects employees working in the organised private sector.
Central government employees are covered under separate retirement benefit systems and are not part of EPS.
When Will the New Rule Be Implemented?
Even if the Union Cabinet approves the proposal, the revised wage ceiling is not expected to come into effect immediately.
According to reports, employers will need time to update payroll systems and complete other compliance-related changes.
As of now, the revised wage limit is expected to be implemented from April 1, 2027, although the final date will be announced only after Cabinet approval.