Provident Fund Withdrawal Limit Increased By The Govt; Check Latest Update

The Employees' Provident Fund Organisation (EPFO) has increased the withdrawal limit to Rs 1 lakh from Rs 50,000. Union Labour Minister Mansukh Mandaviya announced the changes on Tuesday, suggesting a significant turn toward increasing customer financial independence.

The labour ministry has introduced several changes to enhance the EPFO’s operations. A new digital framework and updated guidelines have been implemented to improve the system’s responsiveness and minimize subscriber inconvenience. Additionally, the restriction on withdrawing funds within the first six months of a new job has been lifted, allowing new employees immediate access to their provident fund.

Mandaviya highlighted that the previous withdrawal cap had become outdated due to rising living costs. “People often rely on their EPFO savings for major expenses like weddings and medical treatments. We have raised the withdrawal limit to Rs 1 lakh to better meet these needs,” he said within the first 100 days of the new government’s term.

Currently, contributions to the EPFO are based on a maximum wage ceiling of Rs 15,000 with pension contributions set at 8.33 per cent of this ceiling. Mandaviya mentioned that there are ongoing efforts to increase this limit, with suggestions already under review. Additionally, the ministry is considering increasing the minimum pension under the Employees’ Pension Scheme (EPS).

In a notable policy change, the government is also allowing companies that currently manage their own private retirement schemes to switch to the EPFO. These businesses, which were established before the EPFO’s creation in 1954 and are exempt from its regulations, can now opt to join the state-run fund. “There are 17 such companies with a combined workforce of 100,000 and a corpus of Rs 1000 crore. They can transition to the EPFO if they choose,” Mandaviya explained.

Furthermore, the government is working on increasing the income thresholds for mandatory provident fund contributions and Employees’ State Insurance. The current ceiling of Rs 15,000 for EPFO contributions and Rs 21,000 for ESIC is set to be raised, expanding the social security net for formal sector workers.

Companies with twenty or more workers must make provident fund contributions under the Employees Provident Funds and Miscellaneous Provisions Act of 1952. This includes a mandatory deduction of at least 12 per cent of an employee’s salary, with the employer also contributing an additional 12 per cent. This regulatory framework ensures that both employees and employers contribute equally to the provident fund, thereby supporting long-term financial security for workers.