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EPFO Wage Ceiling: The central government may soon increase the salary limit under the Employees' Provident Fund Organization (EPFO). Besides, the limit on the number of employees can also be reduced. Its objective is to increase and broaden the coverage to strengthen social security for employees. The current salary limit under EPFO is Rs 15 thousand per month. This can be increased up to Rs 21 thousand as per the salary limit under Employees' State Insurance Corporation. That means it can be increased up to Rs 6 thousand. Apart from this, the mandatory employee limit in a company to join EPFO can be reduced from the current 20 to 10 to 15 employees.
ongoing discussions in the ministry
People familiar with the matter told The Economic Times that the Labor and Employment Ministry is discussing the matter with stakeholders. He said that the government is keen to implement the Social Security Code.
The talks follow strong recommendations from the steering committee set up to widen and deepen social security measures for employees.
The last pay revision was done in the year 2014
A senior government official said the minister is evaluating all the pending proposals. The government feels that the salary cap and ceiling revision under EPFO is long pending.
The last time the salary limit was revised was in the year 2014, when it was increased from Rs 6500 to Rs 15 thousand. There will be an increase in PF due to the increased salary limit of Rs 21 thousand. Besides, the pension of the employees will also be higher.
but there is opposition here
Another person familiar with the proposal said micro and small companies are opposing reducing the limit of 20 employees. This is because it may increase their compliance burden and costs.
How much is the contribution?
Under EPFO, both the employee and the company have to contribute 12-12 percent to the EPF account. The entire 12 percent of the employee's contribution goes into the PF account. Whereas 8.33 percent of the company's contribution goes to the Employee Pension Scheme (EPS) and the remaining 3.67 percent goes to the PF account.