The Union Cabinet has approved increasing the mandatory wage ceiling for Employees’ Provident Fund Organisation to Rs 25,000, potentially bringing millions more workers under formal social security schemes from September 2026.
The Union Cabinet has approved a rise in the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation to Rs 25,000 a month from Rs 15,000, a move the government says will bring more than 51 lakh additional workers into the social security net. Reuters-style reporting on the decision said the revision was cleared on Wednesday and is intended to reflect higher wages, stronger incomes and the continued spread of formal employment. The threshold was last lifted in September 2014, after remaining unchanged for a decade.
The change means more employees in the lower- and middle-income formal sector will be required to contribute to, and benefit from, provident fund, pension and insurance schemes linked to the EPFO. According to reports from multiple Indian outlets, labour minister Mansukh Mandaviya said the higher ceiling would significantly broaden statutory protection for workers. Some reports also said the revised limit is expected to take effect from Vishwakarma Day, on September 17, 2026.
The decision will also add to the government’s bill. The official estimate cited by Indian media puts annual expenditure at about Rs 11,339 crore, against existing budgetary support of around Rs 10,250 crore, with five-year spending projected at roughly Rs 56,696 crore. Financial Express reported that the higher ceiling could also increase compulsory deductions for some employees, which may trim take-home pay, even as it expands long-term retirement savings and coverage.
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