Government Plans to Raise EPFO Wage Ceiling to ₹21,000

The government is considering raising the wage ceiling for the Employees’ Provident Fund Organisation (EPFO) from ₹15,000 to at least ₹21,000 to extend social security coverage. This move aims to achieve universal social security for more workers across India.

This proposal, which has been under consideration for several years, is being revisited by the government.

“We are evaluating all options, and a decision could be made by the new government,” said an official. The government believes that the strong financial position of Indian companies will help absorb the additional cost burden for enterprises due to the increased wage ceiling.

Raising the wage ceiling will have significant financial implications for both the government and the private sector. However, the government sees this as a necessary step to expand social security coverage to a larger workforce.

Millions of workers are expected to benefit from the increased wage ceiling, as minimum wages in many states range from ₹18,000 to ₹25,000, leaving them without social security benefits.

The EPFO wage ceiling was last raised in 2014, from ₹6,500 to ₹15,000. The Employees’ State Insurance Corporation (ESIC) has maintained a higher wage ceiling of ₹21,000 since 2017, leading to government consensus on aligning the wage ceilings of both social security schemes.

Under the EPF Act, both employees and employers contribute 12% of basic salary, dearness allowance, and retaining allowance (if any) to the EPF account. While the employee’s entire contribution goes to the provident fund account, 8.33% of the employer’s contribution is allocated to the Employees’ Pension Scheme, and the remaining 3.67% is deposited in the PF account.

EPFO subscribers are entitled to provident fund, pension, and insurance benefits under the EPF & MP Act, 1952. The proposed increase in the EPFO wage ceiling reflects the government’s commitment to enhancing social security coverage for Indian workers.