From Rs 300 to Rs 25,000: How the wage ceiling under EPFO has increased over the years
EPS contributions will also increase but subsidy capped at 1.16% of Rs 15,000, higher outgo for employers, salary restructuring expected.
- Sep 16, 2026,
- Updated Sep 16, 2026 7:25 PM IST
From Rs 300 to now Rs 25,000. The wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) has increased 83 times over the last 74 years.
Addressing a long pending demand of workers, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved enhancing the wage ceiling for mandatory coverage under EPFO from Rs 15,000 to Rs 25,000 per month. The move, which is expected to benefit over 51 lakh employees, will come into effect from September 17.
The last increase in the wage ceiling was done 12 years ago and was effective September 1, 2014. In all, the wage ceiling has been increased nine times under the scheme till date.
While the wage ceiling was Rs 300 per month from 1952 to 1957, it was revised upwards to Rs 500 in June 1957 and then doubled to Rs 1,000 in December 1962. It was then increased to Rs 1,600 per month in December 1967 and further enhanced to Rs 2,500 in September 1985. It was subsequently hiked to Rs 3,500 in November 1990 and then to Rs 5,000 in October 1994. The EPFO’s wage ceiling was then revised to Rs 6,500 in June 2001 and increased to Rs 15,000 in September 2014.
Underlining the need for the revision in the wage ceiling, labour minister Mansukh Mandaviya noted that the average income of regular salaried employees is now about Rs 23,000 per month and even minimum wages in several states is above Rs 15,000. As a result, first time employees earning more than Rs 15,000 per month are not automatically covered under the EPFO or the Employees’ Pension Scheme.
The EPFO currently has 7.98 crore contributing members across about 7.68 lakh contributing establishments.
The increase in the wage ceiling is expected to marginally increase the outgo of employers but is expected to help in formalisation of the workforce and improve coverage of social security. The minimum monthly contribution to the EPFO from employees will increase to Rs 3,000 from the current Rs 1,800.
At present, all establishments with 20 workers or more are mandatorily members of the EPFO. Now, for workers earning up to Rs 25,000 per month, employers and employees contribute 12% each of the basic salary per month to the EPFO. Of the employer’s contribution, 8.33% is diverted into the Employees’ Pension Scheme, 1995 and 3.67% goes into the EPF while the entire contribution of the employee goes to the EPF.
Pension outgo:
The increase in the wage ceiling for the EPFO will also lead to a higher pension outgo with a higher contribution now going into the Employee’s Pension Scheme. However, sources said that the government subsidy of 1.16% on the basic wages of eligible employees to fund the EPS, will remain capped at the ceiling of Rs 15,000 only.
“No decision has been taken on increasing this subsidy but for employees, more contribution into the EPS will yield a higher pension corpus,” said the source.
Higher outgo for employers:
Suchita Dutta, Executive Director of Indian Staffing Federation noted that the move is a structural win for formalisation. “The decision validates the integration of formal employment that carry portable social security,” she said, adding that employers face a modest contribution increase for this band — but organised staffing can drive it transparently, an advantage informal competitors cannot match.
KE Raghunathan, National Chairman, Association of Indian Entrepreneurs and former Employer Representative on the EPFO’s Central Board of Trustees 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 said.
From Rs 300 to now Rs 25,000. The wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) has increased 83 times over the last 74 years.
Addressing a long pending demand of workers, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved enhancing the wage ceiling for mandatory coverage under EPFO from Rs 15,000 to Rs 25,000 per month. The move, which is expected to benefit over 51 lakh employees, will come into effect from September 17.
The last increase in the wage ceiling was done 12 years ago and was effective September 1, 2014. In all, the wage ceiling has been increased nine times under the scheme till date.
While the wage ceiling was Rs 300 per month from 1952 to 1957, it was revised upwards to Rs 500 in June 1957 and then doubled to Rs 1,000 in December 1962. It was then increased to Rs 1,600 per month in December 1967 and further enhanced to Rs 2,500 in September 1985. It was subsequently hiked to Rs 3,500 in November 1990 and then to Rs 5,000 in October 1994. The EPFO’s wage ceiling was then revised to Rs 6,500 in June 2001 and increased to Rs 15,000 in September 2014.
Underlining the need for the revision in the wage ceiling, labour minister Mansukh Mandaviya noted that the average income of regular salaried employees is now about Rs 23,000 per month and even minimum wages in several states is above Rs 15,000. As a result, first time employees earning more than Rs 15,000 per month are not automatically covered under the EPFO or the Employees’ Pension Scheme.
The EPFO currently has 7.98 crore contributing members across about 7.68 lakh contributing establishments.
The increase in the wage ceiling is expected to marginally increase the outgo of employers but is expected to help in formalisation of the workforce and improve coverage of social security. The minimum monthly contribution to the EPFO from employees will increase to Rs 3,000 from the current Rs 1,800.
At present, all establishments with 20 workers or more are mandatorily members of the EPFO. Now, for workers earning up to Rs 25,000 per month, employers and employees contribute 12% each of the basic salary per month to the EPFO. Of the employer’s contribution, 8.33% is diverted into the Employees’ Pension Scheme, 1995 and 3.67% goes into the EPF while the entire contribution of the employee goes to the EPF.
Pension outgo:
The increase in the wage ceiling for the EPFO will also lead to a higher pension outgo with a higher contribution now going into the Employee’s Pension Scheme. However, sources said that the government subsidy of 1.16% on the basic wages of eligible employees to fund the EPS, will remain capped at the ceiling of Rs 15,000 only.
“No decision has been taken on increasing this subsidy but for employees, more contribution into the EPS will yield a higher pension corpus,” said the source.
Higher outgo for employers:
Suchita Dutta, Executive Director of Indian Staffing Federation noted that the move is a structural win for formalisation. “The decision validates the integration of formal employment that carry portable social security,” she said, adding that employers face a modest contribution increase for this band — but organised staffing can drive it transparently, an advantage informal competitors cannot match.
KE Raghunathan, National Chairman, Association of Indian Entrepreneurs and former Employer Representative on the EPFO’s Central Board of Trustees 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 said.