Centre May Raise EPFO Salary Cap To Rs 21,000, Broaden Coverage For Employees

Centre is considering increasing the minimum salary limit for employees covered by the Employees' Provident Fund Organisation (EPFO).

Currently, the salary threshold is set at Rs 15,000 per month, but it could be raised to Rs 21,000, bringing it in line with the salary limit of the Employees' State Insurance Corporation. This change is part of efforts to expand social security coverage for employees.

Additionally, the government is contemplating reducing the minimum number of employees required for a company to be eligible for EPFO coverage, from 20 to between 10 and 15.

Discussions are currently underway within the Ministry of Labour and Employment, with input from various stakeholders. The government is keen to implement the Social Security Code, following strong recommendations from a steering committee aimed at strengthening social security measures.

The last salary revision under EPFO occurred in 2014, when the limit was increased from Rs 6,500 to Rs 15,000.

The proposed increase to Rs 21,000 would result in higher provident fund contributions, as well as higher pensions for employees.

However, there is some opposition to the proposals. Micro and small companies have expressed concerns about the potential increase in compliance burden and costs if the employee limit is reduced.

Under the EPFO scheme, both employees and employers contribute 12% each to the provident fund. The employee's entire 12% contribution goes to their PF account, while 8.33% of the employer's contribution is allocated to the Employees' Pension Scheme (EPS) and the remaining 3.67% to the PF account.