Potential Changes to EPF! PF Coverage May Become Mandatory for Salaries Up to ₹25,000 – Here’s What Will Change

The government is preparing to raise the mandatory salary threshold for EPF coverage from ₹15,000 to ₹25,000. Find out which employees will benefit and when the new rule might come into effect.

A significant change may soon be in store for millions of private-sector employees. The Ministry of Finance has approved a proposal to increase the mandatory salary limit for the Employees' Provident Fund (EPF) from ₹15,000 to ₹25,000 per month. The final decision on this proposal now rests with the Union Cabinet. If approved, the mandatory EPF limit will change for the first time in nearly 12 years, extending PF and pension benefits to a larger number of employees.

Who will benefit from the new ₹25,000 limit?

Currently, participation in the EPF and the Employees' Pension Scheme (EPS) is mandatory for employees with a basic salary of ₹15,000 or less. If the new limit is implemented, employees earning a basic salary between ₹15,000 and ₹25,000 will also be brought under the ambit of EPF and EPS. This means employees in this salary bracket will gain access to retirement savings and pension benefits.

What do the current rules say?

Under the existing system, employees earning a basic salary above ₹15,000 join the EPF only if both the employee and the company agree to it. In such cases, it is not legally mandatory for the company to register them for EPF. Once the new limit is implemented, this option will no longer exist, and EPF participation will become mandatory for employees falling within the specified salary limit.

What will be the impact on companies and the government?

The implementation of the new system will increase the responsibility of organized private-sector companies to deposit PF and pension contributions for a larger number of employees.

Under current rules:

The employer deposits 8.33% of the employee's basic salary into the Employees' Pension Scheme (EPS). The Central Government contributes 1.16%.
As more employees come under the ambit of EPF and EPS, the government's expenditure will also rise. A provision of ₹11,144 crore has been made for the Employees' Pension Scheme in the Union Budget for 2026-27.

When might this change come into effect?

This rule will apply to establishments employing 20 or more workers. Smaller establishments may choose to register for EPF voluntarily. However, Central Government employees will remain unaffected, as they are covered by a separate pension system.

The new rule will not come into force immediately upon Cabinet approval; companies will be given time to modify their payroll systems and other processes. Currently, implementation is expected to begin on April 1, 2027, though the final date will be determined only after Cabinet approval.