A proposal to raise the mandatory EPF salary limit from Rs 15,000 to Rs 25,000 a month has received approval from the Finance Ministry’s Department of ExpenditureThe move could impact both employee savings and employer expenses — here’s what you need to know.
Published: August 4, 2026, 10:22 PM IST
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Employees whose basic pay and DA are Rs 15,000 or less per month are mandatorily covered under the EPF and EPS schemesRepresentational Image
In a major boost for salaried workers, the Department of Expenditure has cleared a proposal to increase the monthly wage limit for mandatory EPF coverage from Rs 15,000 to Rs 25,000The move is expected to benefit both existing employees and those entering the workforce.
This would be the first revision to the EPF wage ceiling in almost 12 yearsThe last hike came in September 2014, when the limit was increased from Rs 6,500 to Rs 15,000The proposal has now cleared the Finance Ministry and awaits final approval from the Union Cabinet.
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Why is this needed?
At present, employees whose basic pay and DA are Rs 15,000 or less per month are mandatorily covered under the EPF and EPS schemesHowever, if an employee earns more than Rs 15,000, the employer is not obligated to provide EPF coverage unless both sides agree.
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Why did this change happen?
Over the past decade, both entry-level wages and the cost of living have gone up significantlyAs a result, many employees with starting salaries above Rs 15,000 are no longer covered under the mandatory EPF schemeAlthough a Rs 30,000 limit was discussed, the proposed ceiling has been fixed at Rs 25,000.
What will be the impact on employees and companies?
Raising the EPF salary ceiling will bring major changes for employees as well as companiesWorkers earning between Rs 15,000 and Rs 25,000 a month will be covered under the PF and pension schemes, ensuring greater retirement savingsHowever, their take-home salary may see a small reduction due to mandatory deductionsEmployers, meanwhile, will have to bear higher costs as they contribute their share towards EPF and pension for more employees.
Impact on the government treasury
Under the current system, 8.33 per cent of an employee’s contribution goes towards the pension fund from the employer’s share, while the Centre contributes an additional 1.16 per centAs the number of covered employees increases, the government’s financial commitment to EPS will also growThe 2026-27 Union Budget has allocated Rs 11,144 crore for the scheme.
The revised EPF wage ceiling will not be implemented overnight, even after receiving Cabinet clearanceEmployers will be provided adequate time to make necessary changes to their payroll and HR systemsAccording to reports, the new limit is expected to take effect from April 1, 2027, but the official implementation date will be announced only after the Cabinet’s final approval.
