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EPF Limit

  • Employers contribute towards their Employees’ Provident Fund (EPF) at the rate of 12% of the basic salary from which 8.33% of their individual monthly salaries goes into the Employees’ Pension Scheme (EPS). However, this contribution cannot exceed Rs 1,250 i.e. 8.33% of Rs. 15,000 per month in the EPS Scheme.
  • 0.5% of the total income of an employee, up to a maximum of Rs. 15,000 monthly salary, has to be contributed by his/her employer every month against the Employees' Deposit Linked Insurance (EDLI) Scheme.
  • Annually, the employer’s contribution towards Employees' Deposit Linked Insurance Scheme (EDLI) cannot exceed a maximum of 0.5% of Rs. 15,000 monthly salary
  • 12% of Rs. 15,000, or 12% of (Basic Income + Daily Allowance, if applicable), not exceeding Rs. 15,000 in a month, has to be paid by the employer and the employee as EPF contribution.

New Revision in Employees Provident Fund (EPF) Limit

EPF interest rate witnessed a raise from 8.55% for FY 2017-18 to 8.65% for the FY 2018-19, post the proposal being approved by the Ministry of Finance.

  • EPF limit has been substantially increased from Rs. 6,500 to Rs. 15,000
  • Provision for pension, starting from a minimum of Rs, 1,000
  • Administration charges was reduced from 1.10% to 0.85%

Initially, there were talks of the EPF limit being raised from Rs. 6,500 to Rs. 10,000 in the first phase, and then further increase it to Rs. 15,000 later. The reason behind this was to control the sudden sharp rise in the EPF limit. One of the reasons cited for the resistance is that the sudden rise in EPF limits and the provision for pension is a labour and time-intensive initiative. It also requires improvement in infrastructure that is cost-intensive.

There were also some reservations expressed by Micro, Small and Medium Establishments (MSMEs) as they were of the opinion that such a move would adversely affect their business. However, the decision to introduce a pension of Rs. 1,000 was well accepted by all.

FAQs on EPF Limit

What is the contribution limit for EPF?

The contribution limit for employers towards Employees’ Deposit Linked Insurance (EDLI) Scheme is 0.5% on a maximum of Rs. 15,000 monthly salary.

Can we contribute more than 12% in EPF?

Yes, one can pay at a higher rate; however, the employer is under no obligation to contribute more than 12% towards Employees’ Provident Fund.

Is it mandatory to deduct more than 12% of Rs. 15,000 from the monthly salary of an employee?

No, it is not mandatory to deduct more than 12% of Rs. 15,000 from an employee’s salary every month. The EPF contribution is either 12% of Rs. 15,000 or 12% of (Basic Salary + Dearness Allowance, if applicable). The upper limit of EPF contribution every month is 12% of Rs. 15,000.

What is the age limit for EPF contribution?

Contributions towards EPF can be made till 58 years of age, while the upper age limit for vesting of pension is 60 years.