“We estimate that between 50 lakh and 1 crore new beneficiaries will gain from this,” Mandaviya said.
The minister said the revised wage ceiling will be implemented from Thursday, September 17, which marks Vishwakarma Jayanti.
Also Read: Cabinet raises EPFO wage ceiling to Rs 25,000 from Rs 15,000
The higher ceiling will bring more employees earning between Rs 15,000 and Rs 25,000 per month under mandatory coverage of the Employees’ Provident Fund Organisation (EPFO). The move will expand access to provident fund savings, pension benefits under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), subject to applicable provisions.
“This will extend the benefits of social security to countless new employees who currently fall outside the EPFO’s coverage,” Mandaviya told ANI.
The EPFO wage ceiling was last revised in September 2014, when it was raised to Rs 15,000 per month.Also Read: EPF wage ceiling hiked to Rs 25,000: How much employees gain and what it costs the government
The change will also have cost implications for employers and employees in the affected salary bracket, according to Puneet Gupta, Partner, People Advisory Services-Tax at EY India.
“Mandatory EPF contributions will correspondingly apply on wages up to Rs 25,000 per month instead of Rs 15,000. This is expected to enhance retirement savings and social security coverage for employees,” Gupta said.
Employers could face higher PF, pension and EDLI contributions for employees earning between Rs 15,000 and Rs 25,000, particularly where contributions are currently restricted to the statutory ceiling.
“Employees in the affected salary bracket are also likely to witness a reduction in take-home pay due to the higher employee PF contribution,” Gupta said.
Gupta added that employers should await the formal notification and detailed implementation provisions before assessing the full impact of the revised wage ceiling.