The Government of India is considering raising the salary limit for employees covered under the Employees’ Provident Fund Organisation (EPFO) to ₹21,000 and reducing the minimum number of employees for mandatory enrollment from 20 to 10 to 15. The aim is to expand social security coverage for workers in line with the upcoming Social Security Code.
Government’s Proposal to Increase EPFO Salary Limit
The Government of India may soon increase the salary limit and reduce the number of employees required for mandatory enrollment under the Employees’ Provident Fund Organisation (EPFO). This move aims to expand and strengthen social security coverage for workers.
Proposed Changes to EPFO Salary Limit
Currently, the EPFO salary limit is ₹15,000 per month, but it may be raised to ₹21,000, aligning it with the salary limit of the Employees’ State Insurance Corporation. Additionally, the mandatory employee threshold for organizations to enrol in EPFO could be reduced from 20 to 10-15 employees.
Ongoing Discussions on Social Security Measures
According to some media reports, the Ministry of Labor and Employment is in discussions with businessmen regarding the proposal. The government is keen on advancing welfare measures as part of the preparations for implementing the upcoming Social Security Code.
Previous and Proposed Changes to EPFO
The last revision of the EPFO salary limit took place in 2014 when it increased from ₹6,500 to ₹15,000. A senior government official stated that the government believes the wage ceiling revision is long overdue, and the new ₹21,000 limit would boost provident fund contributions and pensions for employees.
Contributions Under EPFO
Under the EPFO scheme, both the employee and employer contribute 12% each to the employee’s EPF account. While the employee’s full 12% goes to the provident fund, the employer’s 8.33% is allocated to the Employees’ Pension Scheme (EPS), with the remaining 3.67% going to the provident fund.
Concerns from Small Businesses
Micro and small establishments have expressed concerns over the proposal, particularly regarding the reduced employee threshold, which they believe could increase their compliance burden and costs. Despite this, the government is determined to proceed with the proposal to ensure broader social security coverage for the workforce.