EPFO to Raise Monthly Wage Ceiling to ₹21,000

The Employees’ Provident Fund Organization (EPFO) is planning to increase the wage ceiling to ₹21,000 per month from the existing ₹15,000 per month. A high-level committee of the EPFO has backed the proposal to increase the monthly salary ceiling to ₹21,000. The high-committee suggested that the central govt. implement the new ceiling of ₹21,000 per month at a later date after considering all factors and inputs involved in the change. The implementation of the proposal will add an additional 75 lakh employees eligible to be covered by the EPF scheme.

The previous revision to increase the monthly salary ceiling was done in 2014. A senior government official said “The ad-hoc committee on EPFO coverage has agreed to enhance the EPF Act to align with ESI establishment.” The delay in implementation could help employers who would have faced higher cost & compliance burden due to a sudden increase in the monthly salary ceiling. The govt. will also not be required to make additional provision under the EPS and employees earning more than ₹15,000 can choose to not be covered by the EPFO.

If the suggestion of the high-committee is accepted by the Central Board of Trustees (CBT) of EPFO, then the employers will get some time to plan their finances as they were reluctant to immediately increase the financial burden caused by employer’s contribution to employees’ EPF fund. The Centre currently pays around ₹6,750 crores every to the Employees’ Pension Scheme (EPS) of the EPFO which means the government contributes 1.16% of the total basic wage  of EPFO subscribers towards the EPS.

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