The Union Cabinet has approved raising the mandatory EPFO wage ceiling from ₹15,000 to ₹25,000 per month, effective from September 17, 2026. This increase, the first in 12 years, aims to extend formal social security to a larger segment of India’s workforce.
The government estimates that up to one crore additional workers could join the EPFO, gaining provident fund savings, pension protection through the Employees’ Pension Scheme (EPS), and insurance coverage under EDLI. The higher wage ceiling will also raise contribution amounts.
Employee contributions to EPS could rise to ₹2,082.50 monthly, up from ₹1,250, while the employer’s contribution will increase by ₹600 per employee. The Centre estimates its annual expenditure at ₹11,339 crore, compared to about ₹10,250 crore currently.
The government stated this move will strengthen retirement savings, pension protection, and social security as wages have increased over the past decade.
Employer groups have supported the decision but expressed concerns about higher costs, especially for MSMEs, and the need to upgrade EPFO’s software systems to manage increased subscriber volume.
Trade unions criticized the raise as “too little, too late”, contending the ceiling should have been increased to ₹30,000 due to inflation. The reform significantly expands EPFO coverage while adding contribution costs for employers and employees.
