Last updated: 20 October 2026
From 17 September 2026, EPF (the Employees' Provident Fund, India's mandatory retirement savings scheme) is mandatory on EPF wages up to INR 25,000 a month, up from INR 15,000. EPF wages are basic pay plus dearness allowance, the cost-of-living top-up to basic pay. The 12% employer and 12% employee rates did not change, so the base grew, not the rate.
That means up to INR 1,200 more a month from each side for a person who was already contributing at the old base. It also brings in people on EPF wages between INR 15,000 and INR 25,000 who were not covered before.
Reading this for your own payslip? Jump to why your payslip may differ from your contract.
This page is for the employer: the company that has, or is about to have, an employee on an Indian payroll. It shows the new ceiling, what it costs at four levels of pay, who bears the extra cost under two common ways of writing CTC (cost to company), and what to ask your payroll provider about September. Every statutory figure comes from a government notification, a ministry release or the Code on Social Security, linked where it appears.
What changed on 17 September 2026?
The Ministry of Labour and Employment raised the wage ceiling for provident fund coverage from INR 15,000 to INR 25,000 a month. The notification is S.O. 5109(E), published in the Gazette of India on 17 September 2026 (Gazette of India, 17 September 2026).
It takes effect “from the date of publication” in the Gazette, which is 17 September. The notification gives no later start date, so nothing in it moves the change to 1 October. It replaces the earlier ceiling notification, S.O. 2702(E) of 29 May 2026, and it is issued under section 2(89) of the Code on Social Security, 2020, for the purposes of the Code’s Chapter III on provident fund. The Union Cabinet approved the change on 16 September (PIB, 16 September 2026).
The rates stayed where they were. An ordinary private establishment pays 12% and so does its employee (S.O. 3582(E), 1 July 2026). Of the employer’s 12%, 8.33% goes to the Employees’ Pension Scheme and the rest, 3.67%, to the member’s EPF account (S.O. 3580(E), 1 July 2026). The most the pension share can reach rises from INR 1,250 to INR 2,083 a month (PIB, 23 September 2026).
Who is covered by the new ceiling?
Two groups, according to regional offices of the Employees’ Provident Fund Organisation (EPFO) (PIB, 23 September 2026). The first is people who were not enrolled only because their wages were above INR 15,000. They become eligible where their wages do not exceed INR 25,000 and they meet the other conditions.
The second is people who were already contributing at the old ceiling. Their monthly contribution now runs on INR 25,000 or their actual wages, whichever is lower. The Ministry estimates more than 51 lakh (5.1 million) additional employees will come into mandatory coverage (PIB, 16 September 2026).
Above INR 25,000, mandatory contributions stop at the ceiling. Contributing on more is voluntary. Our India payroll records say it needs the employer and the employee to agree, but we could not re-read the EPF Scheme text this month, so confirm it with your payroll provider.
What counts as EPF wages?
In the Code’s definition of wages, EPF wages are basic pay, dearness allowance and any retaining allowance, not gross pay. House rent allowance, conveyance and overtime sit outside the definition, with one exception. Where those excluded payments come to more than half of total remuneration, the excess is added back into wages (Code on Social Security, 2020, section 2(88)).
On that definition the ceiling is worked out on EPF wages, so confirm with your payroll provider that it reads the Scheme the same way. For example, a person on INR 60,000 gross whose EPF wages come to INR 30,000 is above the ceiling, and a person on INR 50,000 gross with EPF wages of INR 25,000 is at it. The labour codes insight covers the 50% rule in full, including when it applies.
What does the new ceiling cost at four levels of EPF wages?
The table shows one month of contributions at the 12% rates. The last column is the extra employer cost for a person who was already a member at the old INR 15,000 base. The EPF wages are example figures, not quotes, and the table leaves out the separate insurance and administration charges.
| EPF wages a month | Wages the contribution runs on from 17 September | Employee 12% | Employer 12% | Extra employer cost for an existing member |
|---|---|---|---|---|
| INR 15,000 | INR 15,000 | INR 1,800 | INR 1,800 | INR 0 |
| INR 20,000 | INR 20,000 | INR 2,400 | INR 2,400 | INR 600 |
| INR 25,000 | INR 25,000 | INR 3,000 | INR 3,000 | INR 1,200 |
| INR 40,000 | INR 25,000 | INR 3,000 | INR 3,000 | INR 1,200 |
Sources: S.O. 5109(E) for the ceiling and S.O. 3582(E) for the 12% rates. The arithmetic is 12% of the contribution wage, and the old base is INR 15,000.
The INR 40,000 row is the ceiling at work. It applies to a person who is already a member or who opts in. Contributions stop at INR 25,000 of wages, so the cost is the same as at INR 25,000. The sources we read do not make a new joiner above the ceiling a mandatory member, so confirm that case with your payroll provider. A person newly brought in at INR 20,000 costs the full INR 2,400 from the employer, because there was no contribution before. At the maximum, the extra is INR 1,200 a month, or INR 14,400 a year, per employee on each side.
Who pays the extra, you or the employee?
The notification does not decide that. Your employment contract and the way you wrote CTC (cost to company) do. The two cases below are illustrations, not quotes. Both assume EPF wages of INR 25,000, so contributions rise from INR 1,800 to INR 3,000 on each side.
Case 1, CTC includes the employer’s PF. The employer’s INR 1,200 increase comes out of the same CTC, so something else in the package has to fall by INR 1,200 or the employer has to raise CTC. If the package is held, gross pay falls by INR 1,200 and the employee’s own 12% rises by INR 1,200 on top. Take-home falls by INR 2,400 a month before income tax.
Case 2, CTC excludes the employer’s PF. The employer pays the extra INR 1,200 on top of CTC, so employer cost rises by that amount. The employee’s own 12% still rises by INR 1,200, so take-home falls by INR 1,200 a month before income tax, unless gross pay is raised.
Holding CTC by cutting pay changes the contract, so agree it with the employee and check it with your legal adviser before you do it. In both cases the employee’s share comes out of their pay, so the conversation about take-home is needed even where the employer bears its own increase.
Why can the payslip differ from the contract after 17 September?
Four common reasons. Check them in this order.
- The contract names the old figure. A clause that says “PF on INR 15,000” describes the old ceiling. The ceiling that applies by law is now INR 25,000.
- EPF wages are not basic pay. The base includes dearness allowance and anything added back under the 50% test, so the contribution can run on more than the basic pay line.
- The employee was newly brought in. A deduction that did not exist in August now shows in the payslip.
- September straddles the change. The ceiling changed on the 17th, partway through the wage month, and the notification does not say how that month is treated.
How should September’s contribution be split?
The notification does not say. It takes effect on 17 September, and it does not set out how to compute a wage month that straddles the old and new ceilings. We have not found an EPFO or Labour Ministry text that states a method, so this page does not state one.
Ask your payroll provider three things, and get the answers in writing. Which ceiling did it apply to September wages: the old one, the new one, or each for part of the month? If it split the month, how did it work out the split? What did it file for September, and on what wages? And has it checked that method against the notification and EPFO’s current guidance? If EPFO later publishes a method that differs, EPFO’s version governs and the September filing may need correcting.
What should an employer do now?
- List each India employee’s EPF wages, and flag anyone between INR 15,000 and INR 25,000.
- Re-run the monthly employer cost with the contribution at 12% of wages up to INR 25,000.
- Check each contract and offer letter for a fixed PF figure or the old ceiling, and decide which of the two cases above you are in.
- Get the September method from your payroll provider in writing.
The India tax and payroll guide has the full contribution stack and the monthly filings, and the India cost breakdown shows what a hire costs in total. The provident fund glossary entry compares India with Singapore, Malaysia and Hong Kong.
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