If the government approves this new proposal, thousands of new employees in the organized sector will also be covered by the EPFO. This will increase employees' monthly provident fund (PF) contributions and increase their retirement benefits. However, this will likely result in a reduction of a few percent in the employee's monthly salary.

Important news regarding pensions has emerged for members of the Employee Provident Fund Organization (EPFO). The central government is considering increasing the salary limit for the Employee Provident Fund (EPF). If this proposal is approved, the current limit of ₹15,000 could rise to ₹25,000. This could pave the way for millions of employees to receive the benefits of EPF and the Employee Pension Scheme (EPS). However, no final decision has been made on this proposal yet.

Government's decision to increase the EPF salary limit:
According to media reports, the Finance Ministry's Department of Expenditure has approved a proposal to increase the EPF salary limit from ₹15,000 to ₹25,000. This proposal will now be sent to the Union Cabinet for final approval. The date of implementation of the new limit will be determined only after Cabinet approval.

If this new proposal is implemented and the salary limit is raised, employees with a basic salary between ₹15,000 and ₹25,000 could also be covered by EPF and EPS. This would increase employees' retirement savings and allow them to benefit from pension schemes in the future.

What will be the impact on employers?

If the new salary limits are implemented, companies will be required to contribute to EPF and EPS for more employees. This could increase their salary costs. Furthermore, companies may need to make changes to their payroll systems, software, and other necessary processes to comply with the new rules.

Currently, in organizations with 20 or more employees, employees earning a basic salary of up to ₹15,000 are required to join EPF and EPS. Under this scheme, both the employee and employer contribute 12% of their contribution. 8.33% of the employer's contribution (depending on the salary limit) is deposited in the Employee Pension Scheme (EPS). Meanwhile, employees earning a basic salary of more than ₹15,000 can voluntarily join EPF through a joint declaration.

PC: Rochak Khabre