FinMin approves EPFO proposal to raise basic salary cap

The Finance ministry has cleared the Employees' Provident Fund Organsiation's (EPFO) proposal to raise the monthly basic salary cap to Rs 15,000.

At present, the cap is at Rs 6,500.

All employees with up to Rs 15,000 basic monthly salary will mandatorily have to contribute at least 12 per cent of their salary towards the employee provident fund (EPF) and the employer will also have to make an equal contribution.

Provident fund commissioner KK Jalan said now the proposal will go to Central Board of Trustees (CBT), which will notify it and send it to the Labour Ministry.

He said the CBT in its February 5 meeting will discuss how to implement this proposal.

"With elections due in May and model code likely to come into force next month, if the proposal has to be implemented, it has to be done within a month," he said.

The Finance Ministry had earlier also cleared the proposal of minimum pension of Rs 1,000 a month to pensioners. At present, they are receiving an average Rs 562. According to EPFO, there are 2.8 million pensioner who are receiving less than Rs 1,000 a month as pension.