Cabinet approves raising EPFO wage ceiling from Rs 15,000 to Rs 25,000; all you need to know - The Times of India

The Union Cabinet gave its nod on Wednesday to raise the Employees’ Provident Fund Organisation (EPFO) wage ceiling from the current ₹15,000 to ₹25,000 per month, a move announced by the Ministry of Labour and Employment. The decision, reported by *The Times of India* and confirmed by Reuters, was taken as part of the government’s broader effort to modernise the social security net for the organised sector. The amendment will be incorporated into the Employees’ Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952 and is expected to come into force from the start of the next financial year, i.e., 1 April 2024.

Under the existing framework, EPF contributions – 12 % each from employee and employer – are calculated only on the portion of wages up to the ₹15,000 ceiling, leaving higher‑paid workers with a reduced share of their earnings contributing to the fund. By lifting the ceiling to ₹25,000, the government aims to broaden the contributory base, potentially increasing monthly inflows to the EPFO by an estimated ₹6,000‑₹8,000 crore annually, according to a Ministry briefing. The change will also raise the pensionable salary under the Employees’ Pension Scheme, thereby enhancing future pension benefits for millions of workers who earn between ₹15,001 and ₹25,000.

The proposal has drawn mixed reactions. Trade unions, such as the All India Trade Union Congress, welcomed the step as a long‑overdue correction that will improve retirement security for middle‑income earners. Conversely, industry bodies like the Confederation of Indian Industry (CII) cautioned that the higher employer contribution could tighten cash flows for small and medium enterprises already grappling with rising input costs. Economic analysts, however, note that the ceiling hike aligns with recent wage‑growth trends and could encourage greater formalisation of the labour market, especially as the government pushes for higher wages under the National Employment Policy.