A company with more than 20 employees needs to be registered with EPFO, now the salary limit of 15 thousand is applicable, on the basis of this contribution to PF is done. The last change in the salary limit was in 2014
It is proposed to increase the salary limit for Employees’ Provident Fund (EPF) to Rs.21 thousand. At present, the salary limit for EPF is Rs 15,000. A high level committee has suggested this to the government. Sources related to the matter have given information about this. Experts, however, also say that the increase in the wage ceiling for EPF may increase the contribution to EPF, but it may reduce the take home salary. Despite this, it will ultimately benefit the employees.
Relief to employers
The proposal, once implemented, will also adjust for the increase in pay as last amended in 2014. However, the committee has said that the government can implement the increase with retrospective effect after considering all the proposals. Sources familiar with the matter said that if the suggestion is accepted by the central board of trustees of EPFO, it will give relief to employers who are not in a position to immediately bear any additional financial burden.
Employers in their advisory have sought more time to implement the proposed hike citing pressure on their exchequer due to the outbreak of the pandemic. Experts associated with EPFO say that there is a general consensus within the EPFO that the same norms should be followed for providing social security under both EPFO and ESIC.
Preparation to bring ESIC under purview : The committee has suggested to implement the increase in salary limit for EPFO on other social security schemes including Employees State Insurance Corporation (ESIC). That is, in ESIC also, there can be a salary limit of Rs 21 thousand.
What is the situation at present
The central government currently pays around Rs 6,750 crore every year for the Employees’ Pension Scheme of EPFO. The government contributes 1.16 per cent of the total basic salary of EPFO subscribers for this scheme. Under the existing rules, any company with more than 20 employees must be registered with the EPFO and the EPF scheme is mandatory for all employees with an income of Rs 15,000.
