The All India Trade Union Congress (AITUC) has strongly criticized the government's decision to raise the EPF wage ceiling to ₹25,000 per month, calling it 'too little, too late' for social security benefits. In a statement released last Thursday, the trade union demanded that monthly wage ceiling for coverage under EPFO be raised to ₹30,000 to include deserving sections of employees. The AITUC characterized the Cabinet decision as 'a belated response to a long-pending demand of the trade unions', arguing that wages, prices and cost of living have risen substantially since the last ceiling increase in 2014. The trade union noted that growing demand for enhancement of the ₹15,000 ceiling was formally raised in Parliament in 2022, while employee representatives put forward a proposal for increase to ₹25,000 to the EPFO Central Board in February 2024, but the government did not heed these demands, depriving millions of workers earning above ₹15,000 of mandatory EPFO coverage.
The Union Cabinet has approved a significant increase in the Employees' Provident Fund (EPF) wage ceiling from ₹15,000 to ₹25,000 per month, effective September 17, 2026. This marks the first increase in 12 years since the previous ceiling was implemented in September 2014. The change raises the wage limit used for mandatory EPF coverage, but it does not mean every salaried worker will suddenly have PF calculated on their full gross salary. The higher ceiling could, however, affect EPF contributions for employees who fall within the revised limit, potentially increasing reducing their monthly take-home salary, according to experts from Livemint. Workers in the ₹15,000-₹25,000 monthly salary band are likely to feel the change most directly, with the employee's contribution rising to ₹3,000 a month from the previous ₹1,800, while the employer contributes the same amount. The employee would see an additional ₹1,200 deducted from salary each month, with the increased contribution adding ₹14,400 to the PF account over a full year. The impact will vary depending on an employee's salary structure, existing PF contributions and whether they were covered under EPF earlier. Employees earning ₹18,000 per month who previously remained outside mandatory EPF coverage can no longer avoid statutory enrollment, as the revised threshold now applies to all wages up to ₹25,000.
India's new labour codes are set to fundamentally change how salaried employees experience their monthly income, even when annual Cost to Company (CTC) remains unchanged. According to NDTV Business, deductions and higher taxation have resulted in lower take-home salary for employees by up to 5%. The central shift is that basic pay, dearness allowance and retaining allowance must account for at least 50% of total remuneration under the Code on Wages. Where specified allowances and excluded components exceed that threshold, the excess is added back to wages for calculating statutory benefits, directly affecting provident fund and gratuity calculations. As per OneBanc Technologies CEO Vibhore Goyal, the impact will not be identical for every employee, with those having fewer benefits or tax-efficient components seeing more noticeable effects on monthly income. The most important number on the salary slip is not the CTC - it is the amount that lands in the bank account every month, which could come under pressure as the new Labour Codes change how wages are calculated for statutory benefits.
When employers advertise annual Cost to Company (CTC) figures of ₹10 lakh, ₹12 lakh, or more, job seekers often assume this translates directly to monthly take-home salary. However, according to reports from TopNews, this is a common misconception. CTC represents the total amount an employer spends on an employee annually, including various components that don't directly reach the employee's bank account monthly. The actual take-home salary is significantly lower due to mandatory deductions and various employer contributions. The difference becomes clearer when two employers offer the same CTC - two companies offering ₹20 lakh may have substantially different monthly in-hand amounts depending on their compensation structure. As per Goyal, employees cannot change the law and employers must comply, but salaries can be restructured to offset the negative impact of tighter wage rules. The idea is relatively straightforward - instead of looking only at basic salary and cash allowances, companies can build a compensation package around benefits that employees can actually use.
According to the analysis by TopNews, an annual CTC of ₹12 lakh may result in a monthly take-home salary of only ₹75,000-82,000 after accounting for various deductions. The report uses illustrative numbers where ₹8,000-10,000 monthly deductions for PF, income tax, and other applicable deductions reduce the gross salary of ₹85,000-90,000 to the final take-home amount. Under the new wage codes, a higher wage base may mean greater contributions towards provident fund and different gratuity calculations, potentially leaving less money available as monthly cash. As per Goyal, more money could go towards long-term retirement benefits, but less may be available as monthly cash, creating a familiar trade-off for employees. The impact will vary based on individual salary structures and tax regimes, with those having fewer benefits or tax-efficient components experiencing more noticeable effects. However, recent tax-rule changes have increased the limits available under some employee benefits. For employees earning between ₹15,000 and ₹25,000 per month who have now come within the ambit of mandatory EPF coverage, monthly take-home salary reduction due to commencement of employee PF contributions should not be viewed as a loss of income, but rather a reallocation of earnings towards long-term savings and social security benefits.
The new labour codes present both challenges and opportunities for salary restructuring. Meal benefits can go up to ₹200 per meal under specified conditions, which can translate to around ₹1.05 lakh annually and are available under both old and new tax regimes. The gift and voucher exemption has been increased to ₹15,000, with higher limits available for children's education and hostel allowances under the old tax regime. Goyal describes the combination of tighter wage rules and higher benefit limits as a possible counterweight, noting that companies that have already restructured their packages may be able to offer higher in-hand pay at the same gross compensation. The idea is to build compensation packages around benefits that employees can actually use, focusing on intuitive platforms, UPI compatibility, merchant acceptance, and integration with payroll systems. However, the practical outcome depends on ease of use factors and whether benefits genuinely serve employee needs. A benefit that looks attractive on paper has little value if employees cannot use it easily.
According to TopNews, when comparing job offers, employees should evaluate more than just the CTC figure. The analysis recommends checking monthly gross salary, expected take-home salary, fixed and variable pay components, employer PF contribution, gratuity, bonuses, insurance, and other benefits. Under the new wage codes, workers may need to ask how much will be received every month, how much will go towards provident fund, which benefits are included, which of them are tax-efficient, whether they are eligible, and what their annual tax liability is likely to be. The report concludes that two companies offering the same CTC amount may provide different monthly salaries based on variable component structure and the new wage calculation requirements, making comprehensive salary breakup analysis essential for informed decision-making. For employers, compensation design could become an important part of hiring and retention, with companies having restructured packages potentially at an advantage when candidates compare actual monthly income. Employers may face the need to raise overall CTC levels rather than reduce employee wage bases to accommodate higher PF contributions, as Section 124 of the Code on Social Security prevents wages from being cut merely to offset employer's statutory contribution obligations.
