Wage ceiling for employees’ provident fund contribution may be hiked to Rs 21,000

The Ministry of Labour and Employment has proposed to the Union Ministry of Finance to consider raising the wage ceiling from Rs 15,000 to Rs 21,000 for calculating employees’ provident fund, according to sources.

Since September 1, 2014, the Centre has kept the maximum wage limit for provident fund deduction for employees fixed at Rs 15,000 under the Employees’ Provident Fund Organisation (EPFO). Earlier, the wage ceiling for employee contributions under EPFO was Rs 6,500.

Sources said the labour ministry finalised the proposal after considering various recommendations and after the April meeting of the Central Board of Trustees (CBT), EPF. The CBT is a statutory body constituted by the central government. The proposal was, however, sent to the finance ministry in July after the Lok Sabha polls were over and the new government at the Centre was formed.

Under EPFO rules, PF contributions are based on an employee’s basic salary. Both the employee and employer are required to contribute 12% each to the EPF account. The full amount of the employee’s contribution goes into the provident fund account, while 8.33% of the employer’s contribution is allocated to the Employees’ Pension Scheme (EPS), with the remaining 3.67% going into the provident fund account.