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EPFO wage ceiling likely to be raised from Rs 15,000 per month to Rs 21,000

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The wage ceiling for the Employees’ Organisation’s (EPFO) saving scheme is likely to be raised by the Centre soon. The current ceiling of Rs 15,000 per month is likely to be revised to Rs 21,000 per month, a report by the Economic Times (ET) said.



The ceiling was last revised in 2014 from Rs 6,500 per month to Rs 15,000. However, it is applicable only to enterprises that have more than 20 workers.


With the hike in the ceiling, the government is expecting the mandatory contribution to go up for both employees and . This will help the employees to save more for their . It will also bring more people under the coverage of EPFO’s scheme.



According to the ET report, 7.5 million more workers are expected to come under the ambit of after the hike in the ceiling. Currently, there are about 68 million workers registered under .



Moreover, with the new ceiling, the two schemes run by the labour ministry will achieve parity, and it would ease the compliance burden on the establishment.



How does the ceiling work?



The ceiling serves two purposes.



One, the employees and the both have to mandatorily make contributions at 12 per cent on Rs 15,000 maximum wage. Two, the workers in the organised sector who earn less than Rs 15,000 per month have to become members of the EPF.



The can pay a higher towards the fund, but the employer is under no such obligation.



Experts, however, said that the move should be analysed as it would impact small-scale industries.

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