New Delhi, September 16 (Daily Kiran) : Prime Minister Narendra Modi presided over a significant Cabinet meeting on September 16, where the government approved raising the salary limit for mandatory coverage under the Employees’ Provident Fund Organization (EPFO) from ₹15,000 to ₹25,000 per month.
This decision is expected to extend social security benefits to over 5.1 million additional employees under the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and Employees’ Deposit Linked Insurance Scheme (EDLI). An official statement highlighted that this move will not only strengthen social security but also promote formal employment and enhance long-term financial security for workers.
The EPFO salary cap had remained unchanged at ₹15,000 from 2014 until now, after being raised from ₹10,000. Now, nearly 12 years later, the government has decided to increase it to ₹25,000 in response to rising wage levels and formal employment in recent years. The Ministry of Labour and Employment noted that many states have minimum wages nearing the current limit, making it essential to align the EPFO framework with the prevailing economic conditions.
Previously, employees earning over ₹15,000 per month were not automatically covered under the EPF structure, leaving many without access to critical social security benefits. With the new system in place, a substantial number of employees earning between ₹15,000 and ₹25,000 will now be included under the EPFO umbrella, providing them with access to organized social security.
The increase in the salary cap brings three primary benefits: regular savings under the EPF, pension security through the EPS upon retirement, and insurance protection via the EDLI. Additionally, the pensionable salary and statutory contribution structures will better align with current wage levels.
According to the statement, this decision will encourage formal employment. With more employees included in the social security framework, job stability is expected to improve, motivating workers to remain with the same organization longer.
The government emphasizes that formal employment should not be limited to wages but should also include ensured and portable social security. This new system reinforces that principle.
The decision is seen as beneficial not only for employees but also for employers. Enhanced social security coverage is likely to boost employee morale, aid in retaining talented staff, and create a more stable workforce ready for future challenges. The Ministry of Labour believes this will also strengthen trust between companies and their employees.
The government estimates that the annual expenditure on this decision will rise to approximately ₹11,339 crore, up from the current budgetary support of around ₹10,250 crore. Over the next five years, the total expenditure related to this decision is projected to be about ₹56,696 crore.
This proposal underwent extensive discussions with various ministries, culminating in a recommendation from the Expenditure Finance Committee on June 16, 2026.
Currently, the EPFO operates one of the largest social security systems globally, with around 79.8 million contributing members and over 768,000 establishments. Additionally, approximately 8.2 million pensioners benefit from the Employees’ Pension Scheme.
The government asserts that the workforce is central to India’s development journey. As incomes rise and better employment opportunities emerge, expanding the social security framework is crucial. Raising the EPFO salary cap to ₹25,000 is viewed as a significant step in this direction.
This decision aims to provide millions of employees with access to provident fund, pension, and insurance security, contributing to a more inclusive, robust, and future-oriented social security system in India. It is also seen as a vital initiative towards achieving the goal of a ‘Developed India by 2047.’
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