Basic salary limit for PF increased to ₹ 25 thousand: Change after 12 years; This will increase the scope of savings and pension of employees

Now companies will have to include employees with basic salary up to Rs 25 thousand in the ambit of PF. The Union Cabinet on Wednesday increased the mandatory basic salary limit for EPF and EPS from ₹15,000 to ₹25,000 per month.

Union Minister Ashwini Vaishnav said that with this, 51 lakh employees will get direct benefit of PF savings and pension.

Understand the meaning of mandatory coverage salary limit of ₹ 25,000 in EPF in simple language.

• If the basic salary + dearness allowance (DA) of an employee is ₹ 25,000 or less, then it is mandatory for the company to include that employee in EPF. Earlier it was optional for employees with basic salary more than Rs 15 thousand.
• If basic salary + DA is more than ₹25,000, EPF is not mandatory on new joining, but only if the employee is not already an EPF member.

Note: This limit applies primarily to basic salary + DA and not to the entire CTC or gross salary.

Understand with easy examples

Example 1: within salary limit

• Rahul’s basic salary + DA = ₹12,000
• It is mandatory for the company to include Rahul in EPF.
• Employee contribution: 12% × 12,000 = ₹1,440
• Employer contribution: Almost the same (total 12%)

Example 2: right on the limit

• Priya’s basic salary + DA = ₹25,000
• EPF is necessary.
• Employee contribution: 12% × 25,000 = ₹3000
• The employer also contributes towards this.

Example 3: Above Limit (New Joining)

Amit’s basic salary + DA = ₹40,000 (Joining the job for the first time, never had EPF before)

• It is not mandatory to join EPF.
• If both the company and Amit agree then they can join.
• Mandatory contribution will be only at ₹25,000 → Only ₹3,000 will be deducted from the employee.
• If both wish, they can also deduct 12% (₹4,800) on the entire ₹40,000 – this will be voluntary.

Example 4: Already an EPF member

• Sunita’s salary was earlier ₹ 12,000, now after promotion it became Basic + DA = ₹ 50,000.
• He is already an EPF member, so EPF will continue.
• But the mandatory contribution will still remain only up to ₹25,000 (₹3,000).
• Contribution above that depends on company policy and consent.

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