Key Takeaways

• Union Cabinet approved raising the mandatory coverage limit to ₹25,000 from ₹15,000.
• New rules take effect on September 17, expanding coverage to over 51 lakh additional workers.
• Trade unions label the move “too little, too late,” citing inflation and prior delays.
• Employers request government support to manage increased contributions, particularly for MSMEs.
• Annual government outgo for the scheme is estimated at ₹11,339 crore against previous budget.

The Union Cabinet on Wednesday, September 16, 2026, officially approved raising the wage ceiling for mandatory coverage under the Employees' Provident Fund Organisation to ₹25,000 a month. Previously, the limit stood at ₹15,000. Information and Broadcasting Minister Ashwini Vaishnaw confirmed the decision while briefing reporters after the Cabinet meeting.

This structural change aims to bring more than 51 lakh additional employees into the formal social security net. The move expands access to provident fund savings, pension protection under the Employees’ Pension Scheme (EPS), and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI). The new ceiling will be implemented from September 17, coinciding with Vishwakarma Jayanti.

Industry and Union Reactions

The announcement elicited contrasting responses from various stakeholders. Employers’ organizations welcomed the announcement but sought the Union Government’s help to implement it smoothly. Conversely, trade unions described the increase as “too little and too late.”

All India Trade Union Congress general secretary Amarjeet Kaur criticized the timing and magnitude of the hike. She noted that the last ceiling increase occurred in 2014. “Considering the inflation, it should have been at least ₹30,000,” she stated. Kaur also raised concerns about take-home salaries, urging the government to ensure employers pay their share transparently rather than shifting the burden to employees.

National chairman of the Association of Indian Entrepreneurs (AIE), K.E. Raghunathan, highlighted operational challenges. He warned that employers, especially MSMEs, would find it tough to absorb the additional strain on their outflow. “Most of them are struggling to make any profit,” he said. Raghunathan suggested the government must absorb this increase for two years for MSMEs to prevent them from avoiding formal employment in favor of gig working arrangements.