An important update has come out regarding the EPFO ​​for government employees. The government has decided to increase the salary limit under the Employee Provident Fund (EPFO) from Rs. 15,000 to Rs. 25,000 effective September 17, 2026. This will bring many employees earning salaries above Rs. 15,000 and up to Rs. 25,000 under the mandatory EPF coverage. According to the government, this decision could benefit more than 1 crore workers under the EPFO's social security scheme.

Can the company reduce your salary?

The new salary limit may increase the cost of EPF contributions for some companies. However, the Ministry of Labor has clarified that companies cannot deduct the cost of their statutory contributions from the employee's statutory salary. This means that the company must pay the employee's share.

What about the employee's 12% PF contribution?

An eligible employee's basic salary and 12% of their DA goes into the EPF. The employer also contributes 12%. Of this, 8.33% goes into the Employee Pension Scheme (EPS) and the remaining amount is deposited into the EPF. Therefore, PF deposits are essential for future savings and pension.

Can in-hand salary be reduced?

If an employee's EPF contribution increases, their in-hand salary may decrease somewhat. However, this amount is deposited into the employee's PF account. This can earn benefits such as interest, tax deductions, pension, and insurance.

Meanwhile, under the PM Developed India Employment Scheme, employers can receive up to ₹3,000 per month for eligible new employees. Companies will need to initiate the process of identifying eligible employees, verifying EPF membership, calculating contributions, and making timely deposits as per the new ₹25,000 limit.

Employees whose salary is between ₹15,000 and ₹25,000 should carefully check three things in their next salary slip – employee PF deduction, company contribution and final in-hand salary.

PC: THE TIMES OF INDIA