The central government may soon increase the salary limit under the Employees’ Provident Fund Organization (EPFO). Also, the limit on the number of employees can also be reduced. Its purpose is to increase and broaden the coverage to strengthen social security for employees.
At present, the salary limit under EPFO is Rs 15,000 per month, which can be increased to Rs 21,000. Thus, the salary limit for employees can increase by up to Rs 6,000.
Along with this, the minimum limit of number of employees in a company to join EPFO can be reduced from 20 to between 10 to 15 employees.
Discussion going on in the ministry
People aware of the matter said the Ministry of Labour and Employment is currently discussing the matter with stakeholders. They said the government is keen to implement the Social Security Code. The talks are taking place following strong recommendations from a steering committee formed to broaden and deepen social security measures for employees.
The last salary revision was done in the year 2014
A senior government official said that the minister is evaluating all the pending proposals. The government feels that the salary ceiling and ceiling revision under EPFO is long overdue. The last salary ceiling revision was in 2014, when it was increased from Rs 6,500 to Rs 15,000. The higher salary ceiling of Rs 21,000 will increase the PF. Also, the pension of employees will be higher.
Another person familiar with the proposal said micro and small companies are opposed to lowering the limit to 20 employees as it could increase their compliance burden and costs.
How much is the contribution?
Under EPFO, both the employee and the company are required to contribute 12% each to the EPF account. The entire 12% of the employee’s contribution goes to the PF account. Whereas 8.33% of the company’s contribution goes to the Employee Pension Scheme (EPS) and the remaining 3.67% goes to the PF account.
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