EPFO Testing UPI Withdrawals, Wage Ceiling Raised to ₹25,000

The Employees’ Provident Fund Organisation (EPFO) has begun testing a new UPI withdrawal facility with banks, aiming to simplify how subscribers access their provident fund money. An official informed Moneycontrol that the launch is anticipated by the end of December. This proposed system will connect the UAN portal directly with subscribers’ UPI accounts, offering a more convenient withdrawal process compared to the current online claim submission via the UAN portal, followed by a bank transfer.

EPFO is also expected to introduce a new app, which Moneycontrol previously reported would link with BHIM and other UPI applications, further integrating and streamlining the withdrawal experience. While the facility aims for ease, withdrawals will be subject to conditions, allowing subscribers to access up to 75% of their eligible balance through UPI. At least 25% of the balance must remain in the PF account, continuing to earn tax-free interest, and withdrawals are typically for specific short-term needs like education, marriage, and housing expenses. This clarifies that the new system is not intended for unrestricted access to funds.

In a separate significant development, the Cabinet has raised the wage ceiling for mandatory provident fund contributions from ₹15,000 to ₹25,000. This marks the first revision in 12 years, with the previous ceiling set in 2014. Union minister Ashwini Vaishnaw attributed this increase to wage growth and the expansion of formal employment, bringing an additional 51 lakh employees under mandatory provident fund coverage. For employees whose contributions were previously capped at ₹15,000, their monthly deduction will now increase from ₹1,800 to ₹3,000, based on a 12% contribution rate. This translates to an extra ₹1,200 per month, or ₹14,400 annually, with a corresponding increase in the employer’s statutory contribution.

EPFO currently serves about 30 crore subscribers, including approximately 7.5 crore contributing members, managing a total fund close to ₹26 lakh crore, according to Moneycontrol sources. The impact on an individual's take-home pay will depend on their specific salary structure and how employers calculate contributions. This change is expected to enhance long-term savings for many employees while also expanding the reach of the provident fund scheme.

What to watch: The official rollout of the UPI withdrawal facility and the full impact of the new wage ceiling on employee contributions.

Editor's note: The draft covers both the UPI withdrawal testing and the wage ceiling hike, correctly attributing the figures and context.