EPFO: There’s some shocking news for millions of private sector employees. The central government is seriously considering raising the wage ceiling for mandatory contributions under the Employees’ Provident Fund (EPF) from the current ₹15,000 to ₹25,000.
If this historic proposal is approved, millions of new employees will be covered by the PF and pension protections from April 1, 2026. According to the latest report from January 31, 2026, the Ministry of Labor has expedited the process following strict Supreme Court directives.
12 Years of Waiting End
According to the Employees’ Provident Fund Organization (EPFO) rules, PF contributions are currently mandatory only for employees earning a basic salary of up to ₹15,000 per month. You might be surprised to know that this limit was last set in 2014. Over the past 12 years, inflation and average wages have risen significantly, but this PF limit has remained unchanged.
This has left millions of low-skilled and mid-level employees, whose salaries have exceeded ₹15,000 over time, outside the scope of social security. The government now aims to raise this limit to ₹25,000 so that more private-sector workers can enjoy a substantial retirement corpus and the benefits of a government pension.
Supreme Court’s Deadline Directive
The Supreme Court’s decision in January 2026 has proven to be a game-changer in this entire matter. The court has clearly stated that the EPFO should review this salary limit within four months, taking into account rising inflation and wage increases. Following this firm stance, the Central Board of Trustees (CBT) is likely to finalize the decision next month. The government wants this rule to be implemented effectively across the country from the new financial year, i.e., April 1, 2026.
Know how much your in-hand salary will be
As the salary limit increases from ₹15,000 to ₹25,000, employees earning between ₹15,000 and ₹25,000 will have higher PF deductions from their salaries. Currently, the employee’s 12% contribution, i.e., ₹1,800, is deducted for the ₹15,000 limit, but with the new limit, this contribution will increase to ₹3,000. Similarly, the amount deposited by the company into your pension fund (EPS) will increase from ₹1,250 to ₹2,083.
Since PF contributions are a fixed portion of your basic salary, your monthly take-home salary could be reduced by approximately ₹1,200. However, even though this may cost you a little more money now, it’s a great investment for your future. Your company will also contribute an equal amount to your PF account, which will help your retirement corpus grow rapidly, and your monthly pension in old age become quite attractive.
Financial Burden on Companies
The biggest impact of the salary limit increase will be on companies’ salary budgets. According to regulations, companies are required to contribute an equal (12%) share of the employee’s PF contribution. Especially in sectors like manufacturing, textiles, and service sectors, where there is a large workforce, companies’ expenses will increase significantly.
Experts believe this could lead to a 2 to 3 percent increase in their cost of living (COL). Its direct impact can be seen in new recruitments or annual increments of employees in the future, because companies will try to adjust this increased burden somewhere.