The Ministry of Finance has cleared a proposal to increase the wage ceiling for mandatory coverage under the Employees’ Provident Fund (EPF) from ₹15,000 to ₹25,000 per month. The proposal is awaiting Cabinet approval and, if approved, is expected to take effect from 1 April 2027.
Under the current rules, employees earning a basic monthly salary of up to ₹15,000 must be enrolled in the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS). Employees earning above that threshold may join the schemes voluntarily, but employers are not required to enrol them.
If the proposed revision is implemented, employees earning between ₹15,000 and ₹25,000 in basic salary would also come under mandatory EPF and EPS coverage. The change is expected to expand social security coverage for workers in the organised private sector by increasing access to retirement savings and pension benefits.
The EPF wage ceiling was last revised in 2014, when it was increased from ₹6,500 to ₹15,000 per month. According to reports, the government had considered raising the ceiling to ₹30,000 before finalising the proposal for ₹25,000.
The proposed increase would also raise employer contributions, as businesses would be required to contribute provident fund and pension benefits for a larger number of employees. Under the existing framework, employers contribute 8.33% of the applicable basic salary towards the pension scheme, while the Central Government contributes 1.16%.
Expanding mandatory coverage is also expected to increase government expenditure on the Employees’ Pension Scheme. The Union Budget 2026–27 has allocated ₹11,144 crore towards the scheme.
The EPF provisions apply to establishments employing 20 or more workers, while smaller organisations may opt to join the scheme voluntarily. Central government employees are covered under separate pension arrangements and are not included in the EPF framework.
If the proposal receives Cabinet approval, employers are expected to be given time to update payroll systems and compliance processes before the revised wage ceiling comes into effect.
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