EPFO Wage Ceiling Raised to ₹25,000: What It Means for Salaried Employees and Employers
October 4, 2026: Salaried workers earning up to ₹25,000 a month are now within the ambit of mandatory Employees' Provident Fund Organisation (EPFO) coverage, after the Union Cabinet approved raising the statutory wage ceiling from ₹15,000 to ₹25,000 per month. The Ministry of Labour & Employment notified September 17, 2026 as the effective date.
What Changed
- Old ceiling: ₹15,000 per month (set in September 2014)
- New ceiling: ₹25,000 per month
- Effective from: September 17, 2026 (Vishwakarma Jayanti)
- Expected impact: More than 51 lakh additional employees brought under mandatory coverage, according to the government
This is the first revision since 2014, when the ceiling was raised from ₹6,500 to ₹15,000.
What the Wage Ceiling Means
The wage ceiling determines who must be enrolled in EPF when they join a covered establishment. Previously, a new employee whose wages exceeded ₹15,000 was not automatically required to join. Now, employees earning up to ₹25,000 must be covered.
The ceiling is also used in calculating certain statutory contributions, including pension contributions under the Employees' Pension Scheme (EPS). Exact changes to contribution calculations will follow from EPFO's implementing circulars, so employers should watch for official guidance.
What Employees Get
- Provident fund savings with employer contributions and annually declared interest
- Pension under the Employees' Pension Scheme
- Life insurance under the Employees' Deposit Linked Insurance (EDLI) scheme
- Portability through the Universal Account Number (UAN)
What Employers Need to Do
- Identify employees earning between ₹15,000 and ₹25,000 who are not yet enrolled.
- Register them with UANs and start contributions as per EPFO guidance.
- Update payroll systems and cost projections, since employer contributions will rise for newly covered staff.
KPMG noted that the change may increase contribution costs for affected employers and employees, while widening social security.
Why the Government Made the Change
The government said wages, minimum wages and living costs have risen significantly since 2014, leaving many lower-middle-income workers outside mandatory coverage. The proposal was recommended by the Expenditure Finance Committee on June 16, 2026, and the Cabinet approved it on September 16. Labour Minister Mansukh Mandaviya announced the decision.
Key Considerations
- Take-home pay: Newly covered employees will see a PF deduction, lowering take-home salary but building long-term savings.
- Formalisation: The change supports the shift toward formal employment with social security.
FAQ
Is PF now mandatory for everyone earning up to ₹25,000?
For employees in establishments covered under the EPF Act, mandatory coverage now extends to wages up to ₹25,000 a month.
Can employees earning more than ₹25,000 join EPF?
Yes. Higher earners can continue to be covered voluntarily, as before, subject to the rules.