On 17 September 2026 — Vishwakarma Jayanti — the Union Cabinet raised the wage ceiling for mandatory coverage under the Employees' Provident Fund from ₹15,000 to ₹25,000 per month. The Labour Ministry's gazette notification followed within days and the change is already in force. The last revision was in 2014, and the government estimates about 51 lakh additional employees now fall under compulsory PF.
If you run payroll for anyone earning between ₹15,000 and ₹25,000 in basic + DA, this changes your September/October payroll.
What the ceiling does
The ceiling decides two things:
- Who must be enrolled. Employees whose basic + DA is at or below ₹25,000 must be covered under EPF in any establishment with 20+ employees (or fewer if voluntarily covered). Above the ceiling, enrolment is optional (though most employers cover everyone).
- The wage on which the employer's pension share is computed. Of the employer's 12%, 8.33% goes to EPS on wages up to the ceiling — now ₹25,000 (₹2,082.50/month, up from ₹1,250) — and the balance 3.67% goes to the EPF account. The Centre adds 1.16% to EPS on the same base.
Many employers also cap their own 12% at the ceiling. Those caps now move from ₹1,800 to ₹3,000 a month.
What employers must do this month
| Step | Detail |
|---|---|
| Enrol newly covered staff | Everyone with basic + DA ≤ ₹25,000 who was outside PF — generate UANs (Aadhaar-based, via the employer portal or the employee's UMANG app) |
| Update payroll software | PF wage ceiling, EPS ceiling and any employer cap to ₹25,000 |
| Recompute CTC | Employer PF on higher wages; where the employer capped at ₹15,000, the extra outgo is ₹1,560/month per employee (13% × ₹12,000 incl. admin) |
| Restructure offers | Under the Labour Codes basic + DA must already be ≥ 50% of CTC; combine with the new ceiling when issuing letters |
| File ECR | The first return with the new ceiling is for September 2026, due 15 October |
| Communicate | Tell affected staff their take-home falls by up to ₹1,200/month because 12% of a larger wage goes to their PF — and that it is their money, plus an equal employer share |
The employee cost calculator and team payroll calculator have been updated to the ₹25,000 ceiling; run your roster through them.
What employees will see
Example: basic + DA ₹22,000, previously outside PF (or capped at ₹15,000).
| Before | After | |
|---|---|---|
| Employee PF (12%) | ₹1,800 (on ₹15,000 cap) | ₹2,640 |
| Employer EPF (3.67%) | ₹550 | ₹807 |
| Employer EPS (8.33%) | ₹1,250 | ₹1,833 |
| Take-home change | — | −₹840/month |
| Retirement corpus at 8.25% over 25 years | ≈ ₹22 lakh | ≈ ₹33 lakh |
The in-hand salary calculator applies the new ceiling; the EPF calculator shows the long-run corpus difference.
Employees also gain:
- EDLI life cover (linked to wages, currently up to ₹7 lakh) — higher wages mean a higher assured benefit.
- Higher EPS pension because pensionable salary is now computed on up to ₹25,000.
- Access to EPFO 3.0's UPI withdrawals and auto-settlement.
Who is not affected
- Employees already earning above ₹25,000 basic + DA and enrolled voluntarily — nothing changes unless the employer capped at ₹15,000, in which case contributions rise.
- Establishments with fewer than 20 employees not voluntarily covered.
- ESI: the ESI wage limit remains ₹21,000 gross; it was not revised in this decision.
Common questions from employers
"Can I reduce basic to keep PF outgo down?" No — the Code on Wages requires basic + DA to be at least 50% of total remuneration. See the Labour Codes changes.
"Is this retrospective?" No. It applies to wages for periods from 17 September 2026. September's ECR will have a part-month effect; most payroll software pro-rates automatically.
"What if an employee doesn't want PF deducted?" Coverage below the ceiling is mandatory; the employee cannot opt out. Above ₹25,000, a new joiner who has never been a PF member can opt out with Form 11.
FAQ
From which month does the ₹25,000 ceiling apply?
Wages from 17 September 2026 onward — so the September 2026 payroll, filed in the October ECR.
Does the EPS pension ceiling also move to ₹25,000?
Yes — the employer's 8.33% EPS share is computed on wages up to the new ceiling.
Does the employer have to contribute 12% on full basic above ₹25,000?
Not mandatorily; the statutory obligation is on wages up to the ceiling. Contributing on full basic is a policy choice many employers make.
Will the ₹15,000 ESI limit also rise?
Not in this decision. ESI remains at ₹21,000 gross unless separately notified.