The Union Cabinet has approved a major change in the Employees’ Provident Fund Organisation (EPFO) salary limit. The mandatory EPFO coverage threshold will now be increased from Rs 15,000 to Rs 25,000 per month. The decision was taken by the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday. Union Minister Ashwini Vaishnaw announced the decision.
According to the government, the new limit could bring more than 51 lakh additional employees under mandatory EPFO coverage. The change comes after several years without a revision in the wage ceiling.
Why Has The EPFO Limit Been Increased?
Ashwini Vaishnaw said the EPFO salary limit had remained unchanged for a long period. The limit was not revised between 2004 and 2014. It was later increased to Rs 15,000 per month in September 2014. Nearly 12 years later, the government has now approved another increase. The government said the decision takes into account rising wages, higher incomes and the expansion of formal employment in recent years.
Who Will Benefit From The New EPFO Rule?
The change will mainly affect employees earning between Rs 15,000 and Rs 25,000 a month. Under the existing threshold, workers joining a job with wages above Rs 15,000 were not automatically covered under mandatory EPF rules.
With the new ceiling, more workers in this salary range are expected to enter the formal social security system. This means eligible employees can build retirement savings while also getting other benefits linked to EPF coverage.
Pension And Insurance Benefits
The wider EPFO coverage will also expand access to related social security benefits. Under the applicable schemes, employees can get retirement savings through EPF, pension protection under the Employees’ Pension Scheme (EPS) and insurance cover under the Employees’ Deposit Linked Insurance Scheme (EDLI).
Government Spending To Rise
The decision will also increase the government’s financial commitment. According to official information, the estimated additional government expenditure will be around Rs 11,339 crore annually. The government currently provides about Rs 10,250 crore in budgetary support each year. Over five years, the total expenditure is estimated at around Rs 56,696 crore.
Nearly 8 Crore EPFO Contributors
EPFO is among the world’s largest social security organisations. The latest figures show around 7.98 crore contributing members and nearly 7.68 lakh contributing establishments under EPFO. Around 82 lakh pensioners receive benefits through EPS, while EDLI provides insurance protection to eligible EPF members.
What Happens Next?
Following Cabinet approval, the Ministry of Labour and Employment and EPFO will complete the required statutory and administrative procedures. The new salary threshold will take effect after these processes are completed.
Sudeep Singh Rawat is a Copy Editor at NewsX Digital with over five years of experience in digital journalism. He covers national and international news, with a focus on politics, crime, technology, public affairs, and trending topics. Before joining NewsX Digital, he worked with Business Standard, The Sunday Guardian, and other digital media organisations. His reporting focuses on breaking news, enterprise stories, and explainers that inform readers through accurate, balanced, and context-driven journalism.
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