EPF to be binding if income Rs 25,000 per month

NEW DELHI: The Employees Provident Fund Organisation ( EPFO) is set to increase the wage ceiling for employees, making it mandatory for those earning up to Rs 25,000 a month to contribute towards the social security scheme.

Currently, the ceiling is pegged at Rs 15,000 a month and is being increased in the wake of the pay commission award for government employees, which has resulted in higher salaries for several in the private sector too. The revision is expected to help EPFO add nearly one crore subscribers to its existing base of 8.5 crore.

The issue is to be discussed at the next board meeting of EPFO, scheduled for later in the month. While only those earning up to Rs 25,000 a month have to mandatorily contribute 12% of their basic salary towards EPFO and Employees Pension Scheme (with a matching contribution coming from the employer), a majority of the corpus comes from those who are above the wage limit. For those above the wage cap, it is not mandatory to contribute to EPFO, but they prefer to do it since the returns are higher those on offer in other instruments and remain tax-free at all stages.

Sources said that the proposal was on the agenda for the last meeting of the central board of trustees but could not be taken up. Almost all TU representatives as well as the government nominees are going to back the move. The revision in the wage ceiling this time will be amongst the quickest coming just three years after it was last raised. The last enhancement -- from Rs 6,500 to Rs 15,000 came after a gap of 15 years.