EPFO Salary Limit: Big news for EPFO members. The Ministry of Labor and Employment is reconsidering a long-pending proposal to increase salaries for provident fund coverage. Recent salary increases threaten to exclude a large number of workers from the social security net. Under the Employees’ Provident Fund Organization (EPFO), the salary limit could be raised from the current Rs 15,000 per month to Rs 25,000 and Rs 30,000 per month.
Key Takeaways
Quick Read- ESIC is also considering increasing the limit
- Pressure will increase on employers
- The Supreme Court also warned
This reconsideration is needed following the significant salary increases of industrial workers in the National Capital Region (NCR). As a result, many skilled workers could be excluded from mandatory EPFO coverage, undermining the government’s goal of universal social security.
ESIC is also considering increasing the limit
Officials are also considering raising the salary limit under the Employees’ State Insurance Corporation (ESIC) to align the two schemes for better compliance and ease of doing business. The current salary limit under ESIC is Rs 21,000 per month. A senior government official told that the ministry has taken note of recent salary increases in some states and is assessing their impact on social security coverage for these employees.
The official said the matter is being discussed internally, and the ministry will soon obtain the necessary approvals before initiating extensive consultations with all stakeholders to finalize the new salary limit.
Pressure will increase on employers
Increasing the salary limit for mandatory contributions under the EPFO will expand its coverage, bring more employees into the formal workforce, and increase their retirement funds. However, this may put some financial pressure on employers’ balance sheets. The official explained that raising the salary limit will have a significant financial impact on employers, and therefore the government wants all stakeholders to be involved in the process before submitting a formal proposal to the EPFO’s Central Board of Trustees for approval.
The Supreme Court also warned
The government has previously considered raising the salary threshold under the EPFO to match that of the ESIC. The EPFO’s salary limit was last revised in 2014, when it was raised from Rs 6,500 per month to Rs 15,000 per month. This salary limit initiative has gained further momentum after the Supreme Court recently stressed the need to update the threshold to reflect rising wage rates and inflation. The court warned that the current threshold was leaving a growing segment of the workforce outside the scope of social security.
