Aug 05, 2026, 03:50:05 PM IST

According to a Moneycontrol report, the Department of Expenditure under the Ministry of Finance has approved a proposal to raise the EPF wage ceiling from Rs 15,000 to Rs 25,000. The report, citing a government source, says the proposal will now go to the Union Cabinet for final approval, after which the implementation date will be announced.

ET Online

If the wage ceiling is increased to Rs 25,000, employees earning basic pay between Rs 15,000 and Rs 25,000 per month could come under mandatory EPF and EPS coverage, according to the report. This would bring a new category of salaried employees under the provident fund and pension framework.

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The report says employers would have to contribute towards EPF and EPS for a larger section of their workforce, increasing payroll costs. Businesses may also need to update their payroll systems and compliance processes if the proposal is approved.

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The report says the proposal is unlikely to be implemented immediately, even after Cabinet approval. Employers may be given a transition period to modify payroll systems, compliance procedures and operational arrangements before the revised wage ceiling comes into effect.

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At present, mandatory EPF and EPS coverage applies to employees earning basic wages of up to Rs 15,000 per month in eligible establishments with 20 or more employees. Employees earning above this limit can opt out or join voluntarily through a joint declaration. Under the current rules, both the employee and employer contribute 12%, with 8.33% of the employer's contribution (subject to the wage ceiling) going to the Employees' Pension Scheme (EPS).

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If the proposal receives Cabinet approval, the mandatory EPF and EPS net could expand to include employees earning basic pay up to Rs 25,000 per month. While this could strengthen retirement savings and pension coverage for more employees, employers may face higher payroll costs and will likely need time to implement the revised compliance requirements. The proposal is yet to receive final government approval.

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