After 12 years, Centre hikes EPFO wage ceiling to ₹25,000 a month

The Union Cabinet on Wednesday (September 16, 2026) approved raising the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) to ₹25,000 a month from ₹15,000, Information and Broadcasting Minister Ashwini Vaishnaw said while briefing reporters after a Cabinet meeting.

The new ceiling will be implemented from September 17, coinciding with Vishwakarma Jayanti. The employers’ organisations welcomed the announcement and sought the Union Government’s help to implement it, while the trade unions described the increase as “too little and too late”.

In a press release, the Union government said the decision is expected to bring more than 51 lakh additional employees within the ambit of mandatory EPFO coverage. The decision will also expand access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), the statement further read.

The annual government outgo is estimated at ₹11,339 crore, against the existing annual budgetary support of about ₹10,250 crore. The contributions of the employees and employers towards the EPS will also increase as per the new wage ceiling.

Later, speaking to reporters at his official residence, Union Labour Minister Mansukh Mandaviya said ₹23,000 is the average salary in private establishments, according to a government survey.

“More workers will get benefits of pension, death insurance and better interest for their savings as the EPFO expands its coverage,” he said. Mr. Mandaviya said the employers’ contribution will increase by ₹600 per employee, while the employees’ contribution towards the EPS will also increase to about ₹ 2082.5 a month—8.33% of the new ₹25,000 ceiling— from the present amount of ₹ 1,250. He added that from 51 lakh to up to one crore workers will get the benefit of the decision.

“Too little, too late”

All India Trade Union Congress general secretary Amarjeet Kaur said the decision is too little and too late. “The last time the ceiling was increased was in 2014. Considering the inflation, it should have been at least ₹30,000. The employees may see that their take-home salary will decrease. So the government must ensure that the employers are paying their share in a transparent manner, rather than making it part of the cost of the company and shifting the burden to employees,” she said.

National chairman of the Association of Indian Entrepreneurs (AIE), K.E. Raghunathan, said the EPFO’s software must be upgraded to handle the additional volume of subscribers. “Employers, especially MSMEs, would find it very tough to absorb the additional strain on their outflow, especially when most of them are struggling to make any profit. This should not discourage them from formal employment and instead go for gig working arrangements. The Government of India must absorb this increase for two years in the case of MSMEs,” he said. .

He said the reform was long overdue. “There could be some increase in operating costs, particularly for manufacturing and MSMEs, in the short term. But in the long run, stronger social security for workers is an important investment in India’s workforce,” he added.

Indian Staffing Federation executive director Suchita Dutta said the decision is a structural gain for formalisation. “Raising the threshold narrows the cost arbitrage that unorganised players exploit, rewarding compliant employers and accelerating the informal-to-formal shift,” she said, adding that employers face a modest increase in contribution for this wage band. “The decision validates the integration of formal employment that carries portable social security. It reaffirms staffing as India’s primary engine for converting an informal workforce into a formally covered, secure one,” she said. contribution.

Indian Staffing Federation is an apex body for the flexi-staffing industry.