The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a proposal to raise the wage ceiling for mandatory coverage under the Employees' Provident Fund (EPF) from Rs 15,000 to Rs 25,000 per month. This means that employees earning up to Rs 25,000 will now be covered by the EPFO, which previously excluded them from mandatory EPFO coverage because their monthly salaries exceeded Rs 15,000.
Currently, an employee earning more than Rs 15,000 a month is not automatically required to come under the EPF framework. With the government increasing the ceiling, employees earning between Rs 15,000 and Rs 25,000 a month will be brought within the mandatory social security framework, subject to the applicable rules.
Sharing the information, Union Minister Ashwini Vaishnaw said the decision could bring more than 5.1 million additional employees under mandatory EPFO coverage. This decision will increase monthly contributions to employees' provident fund and pension accounts, significantly strengthening their retirement funds. The government will bear an additional expenditure of Rs 11,339 crore to implement this scheme. The estimated expenditure over five years is approximately Rs 56,696 crore.
Vaishnaw said that the EPFO salary limit had remained unchanged for a long time. It remained unchanged between 2004 and 2014, and it was raised to Rs 15,000 per month in September 2014. Now, nearly 12 years later, the government has decided to raise it to Rs 25,000. The government said it made this change in light of higher wages, income growth, and the expansion of formal employment over the past few years.
Commenting on the development, Union Minister Mansukh Mandaviya said that the changes will be implemented from September 17, 2026.
"EPFO wage ceiling was Rs 15000, now this wage ceiling has increased to Rs 25,000. In private sector average salary is Rs 23,000. From Vishwakarma Jayanti (17 September) wage ceiling of Rs 25,000 will be implemented," he said.
The decision carries forward this approach by raising the ceiling to Rs 25,000 to reflect sustained wage growth, rising incomes, and continued expansion of formal employment over the intervening years, an official release said.
According to the government, this change could also foster employment formalisation. When employees join systems like the EPFO, their savings, pensions, and insurance coverage are managed more systematically. For companies, expanded social security coverage can help retain employees over the long term and build a stable workforce.
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