EPF wage ceiling now ₹25,000: what it costs employers and employees

The Ministry of Labour and Employment has raised the wage ceiling that decides mandatory EPF, EPS and EDLI coverage from ₹15,000 to ₹25,000 a month. Notification S.O. 5109(E), published in the Gazette of India on 17 September 2026, applies from that date. According to EPFO’s FAQs on the change, the ceiling had not moved since September 2014, and the revision is estimated to bring more than 51 lakh additional employees under mandatory coverage.

The change reaches payroll in two ways. Employees whose PF wages are above ₹15,000 and up to ₹25,000, and who were outside PF, must now be enrolled. Existing members whose contributions were capped at ₹15,000 now contribute on their PF wages up to ₹25,000. Either way the employer pays more, and more of the employee’s pay goes into their PF account, through their own 12% share, instead of take-home pay.

The bottom line: from the October 2026 wage month, a newly covered employee with PF wages of ₹20,000 costs the employer ₹2,600 a month more, and a member capped at ₹15,000 whose PF wages are ₹25,000 or more costs ₹1,300 a month more. September 2026 is a split month.

What changed

The notification is a single sentence. Using its powers under clause (89) of section 2 of the Code on Social Security, 2020, the Central Government notifies ₹25,000 per month as the wage ceiling for the purposes of Chapter III of the Code, from the date of publication in the Official Gazette. It supersedes notification S.O. 2702(E) dated 29 May 2026. The Union Cabinet approved the increase on 16 September 2026, and EPFO’s head office circulated the notification to its offices on 25 September 2026.

In EPFO’s illustrations the rates are the same at both ceilings; what moves is the wage they apply to. For one employee at the ceiling:

Per employee a month, at the ceiling	₹15,000 ceiling (before)	₹25,000 ceiling (from 17 September 2026)
Employee share to EPF (12%)	₹1,800	₹3,000
Employer share to EPS (8.33%)	₹1,250	₹2,083
Employer share to EPF (3.67%)	₹550	₹917
EDLI (0.5%)	₹75	₹125
EPF admin charges (0.5%)	₹75	₹125
Employer cost	₹1,950	₹3,250

The minimum admin charge is ₹500 a month for an establishment with at least one contributing member, and ₹75 if it has none. Some things do not change: the Government’s EPS contribution stays at 1.16% of wages up to ₹15,000 (₹174 a month per member), the maximum EDLI assurance benefit stays at ₹7 lakh, and the effective date is not being moved to 1 October 2026.

How EPS works at the new ceiling

The employee contributes 12% of PF wages. The employer also contributes 12%, of which 8.33% goes to the Employees’ Pension Scheme (EPS) and the rest to EPF. EPS is worked out on wages up to the ceiling, so the largest monthly EPS contribution rises from ₹1,250 to ₹2,083.

According to the FAQs, an existing EPF member outside EPS whose wages are between ₹15,000 and ₹25,000 must be made an EPS member from 17 September 2026, and newly covered employees join EPS along with EPF and EDLI. EPS membership is available only to employees whose wages on joining, or on 17 September 2026, do not exceed ₹25,000. In EPFO’s example of PF wages of ₹35,000 outside EPS, the employee contributes ₹3,000 and the whole employer share of ₹3,000 goes to EPF.

In practice, for a member already contributing on full PF wages, the higher ceiling only reshuffles the employer’s 12%: more goes to EPS and less to EPF.

Who is affected

• Employees newly covered. PF wages above ₹15,000 and up to ₹25,000, not members before. Those in service on 17 September 2026 must be made members of EPF, EPS and EDLI from that date. They need not apply: the FAQs make enrolment the employer’s statutory responsibility. New joiners at these wages must be enrolled too.
• Members capped at ₹15,000. Where actual PF wages were higher, EPF, EPS, EDLI and admin charges rise. Above ₹25,000, the statutory contribution may generally be restricted to ₹25,000 unless the employee contributes on higher wages.
• EPF-only members in the ₹15,000 to ₹25,000 band. They join EPS from 17 September 2026.
• Members already contributing on higher wages. The higher ceiling does not by itself require them to cut their contribution to ₹25,000.
• Employers using contract labour. EPFO asks them to review contractor compliance.

Employees with PF wages of ₹15,000 or less are not affected; they were already inside the old ceiling. Employees with PF wages above ₹25,000 who are not members still need not be covered, though the FAQs say they can join voluntarily with the employer’s consent.

The test is PF wages, not gross salary. The FAQs apply the ceiling to wages as defined in section 2(88) of the Code on Social Security, 2020. In their examples, an employee with gross pay of ₹60,000 and EPF wages (basic, DA and retaining allowance) of ₹30,000 need not be covered, while one with gross pay of ₹50,000 and EPF wages of ₹25,000 must be a member of all three schemes.

Worked example

A startup has two affected groups. Group B’s admin charges alone were ₹600 a month before the change, so the ₹500 minimum does not come into play.

• Group A: 10 employees with PF wages of ₹20,000 a month, not enrolled in PF before 17 September 2026.
• Group B: 8 employees with PF wages of ₹40,000 a month, members of EPF and EPS contributing on the ₹15,000 cap.

As in EPFO’s figures, each amount is rounded to the nearest rupee per employee, and the employer’s EPF share is the employee share less EPS. That is why 8.33% of ₹25,000, which is ₹2,082.50, appears as ₹2,083.

Group A: newly covered

1. Before 17 September 2026, nothing was payable.
2. From October 2026, per employee: employee share 12% of ₹20,000 = ₹2,400; EPS 8.33% = ₹1,666; employer EPF share ₹2,400 − ₹1,666 = ₹734; EDLI 0.5% = ₹100; admin charges 0.5% = ₹100.
3. Employer cost: ₹734 + ₹1,666 + ₹100 + ₹100 = ₹2,600 per employee, or ₹26,000 a month for 10 employees.
4. Each employee’s take-home pay falls by ₹2,400 a month. Their EPF account receives ₹3,134 a month (₹2,400 + ₹734), and EPS ₹1,666.

Group B: members capped at ₹15,000

1. Before, on ₹15,000: employee share ₹1,800; EPS ₹1,250; employer EPF share ₹550; EDLI ₹75; admin charges ₹75. Employer cost ₹1,950 per employee, or ₹15,600 for the group.
2. From October 2026, on ₹25,000: employee share ₹3,000; EPS ₹2,083; employer EPF share ₹917; EDLI ₹125; admin charges ₹125. Employer cost ₹3,250 per employee, or ₹26,000 for the group.
3. Extra employer cost: ₹1,300 per employee, or ₹10,400 a month for the group.
4. Each employee’s take-home pay falls by ₹1,200 a month. Their EPF account receives ₹1,567 more a month, and EPS ₹833 more.

Employer cost	Group A	Group B	Total
A month, before 17 September 2026	₹0	₹15,600	₹15,600
A month, from October 2026	₹26,000	₹26,000	₹52,000
Extra a month	₹26,000	₹10,400	₹36,400
Extra a year	₹3,12,000	₹1,24,800	₹4,36,800
Take-home change per employee a month	−₹2,400	−₹1,200

The startup’s PF cost rises by ₹4,36,800 a year. The FAQs say the PMVBRY incentive of up to ₹3,000 a month for every additional employment created can partly offset such costs.

How September 2026 works

The FAQs split the September 2026 wage month in two: 1 to 16 September at the ₹15,000 ceiling and 17 to 30 September at ₹25,000, with wages taken pro rata over 30 days. Both periods go in a single ECR, which the FAQs say is ordinarily due by 15 October 2026. Full-month contributions on the new ceiling start with the October 2026 wage month. EPFO’s illustration for wages of ₹20,000:

Employee’s position	September wages for EPF	September wages for EPS	Total remittance
Excluded until 16 September, member from 17 September	₹9,333.33	₹9,333.33	₹2,333.34
EPF and EDLI member contributing on ₹20,000, joins EPS from 17 September	₹20,000.00	₹9,333.33	₹5,000.00
EPF, EPS and EDLI member on the ₹15,000 cap	₹17,333.33	₹17,333.33	₹4,333.34

In the worked example, Group A’s September remittance is the first line, ₹2,333.34 per employee. For Group B, September wages are ₹8,000 (₹15,000 × 16/30) plus ₹11,666.67 (₹25,000 × 14/30), or ₹19,666.67, and the remittance is ₹4,916.66 per employee.

Where the employee share could not be deducted from September pay for newly covered employees, the employer may recover it in the next payroll cycle without prior approval from the Inspector-cum-Facilitator. That deferral applies only to the payroll: the September ECR, with both shares in full, still had to be filed and paid by the due date. EPFO also said it would relax portal validations so that proportionate contributions can be reported. Our earlier update on the FAQs covers these points.

Calculate what the new ceiling costs you

Enter the monthly PF wages of one group of employees (basic pay, DA and retaining allowance, not gross salary), how many are in the group, and their PF position before 17 September 2026: not enrolled, capped at ₹15,000, or contributing on full PF wages. For members, say whether they were in EPS. The calculator shows the employer’s cost before and after, the EPS and EPF split, the extra cost a month and a year, the change in take-home pay and the September 2026 remittance. Run it once for each group.

What it means for employees

An affected employee’s take-home pay falls by the increase in their own 12% share: ₹2,400 a month for a newly covered employee on ₹20,000, and up to ₹1,200 a month for a member moving from ₹15,000 to ₹25,000. Members already contributing on full PF wages see no change. EPFO’s FAQs describe the deduction as a move from the “take home pocket” to the “PF account pocket”.

The FAQs list what the employee gets in return. The employer matches the contribution. EPF interest was 8.25% a year for 2025-26, compounded on the monthly running balance. Up to 75% of the eligible PF balance can be withdrawn in specified circumstances. EPS pays a pension for life on retirement and pensions to the family if the member dies in service, with pensionable wages now considered up to ₹25,000, subject to the EPS formula and conditions. EDLI provides life cover of up to ₹7 lakh, paid for by the employer.

In practice, the change swaps some current cash for savings and cover. The FAQs ask employers to explain the change and its benefits to employees.

What to do now

1. Enrol employees with PF wages above ₹15,000 and up to ₹25,000 who are not members in EPF, EPS and EDLI from 17 September 2026.
2. Move members capped at ₹15,000 to their PF wages, up to ₹25,000.
3. Check EPS status: EPF-only members in the ₹15,000 to ₹25,000 band join EPS from 17 September 2026.
4. Confirm which pay components count as wages under section 2(88) of the Code. Take advice before changing salary structures: the FAQs say the employer’s contribution cannot be treated as an employee deduction by calling it part of CTC, and statutory wages must not be reduced contrary to law.
5. If the September 2026 ECR has not been filed and paid, do it now using the split-month method, and check the employer portal for instructions. The FAQs ask employers to remit on time to avoid interest and penalty.
6. Recover any deferred September employee share in the next payroll cycle.
7. Review contractor compliance wherever you engage contract labour.
8. Update payroll software, offer letters, budgets and employee communication.
9. Check whether new hires qualify for the PMVBRY incentive.
10. If the review turns up employees left out of PF between 1 April 2009 and 31 March 2026, the Employees’ Enrolment Campaign, 2026 is open until 31 October 2026, according to PIB.
11. Keep an audit trail of the calculations, and watch EPFO circulars.

Key dates

Date	What happens
16 September 2026	Union Cabinet approves the ₹25,000 ceiling
17 September 2026	S.O. 5109(E) published; the new ceiling applies
1 to 16 September 2026	Old ₹15,000 ceiling for this part of the September wage month
17 to 30 September 2026	New ₹25,000 ceiling for the rest of the September wage month
25 September 2026	EPFO head office circulates the notification
15 October 2026	September 2026 ECR ordinarily due
October 2026 wage month	First full month at the new ceiling
31 October 2026	Employees’ Enrolment Campaign, 2026 closes

What the rules don’t say yet

• Existing EPS members above ₹25,000. The FAQs limit EPS membership to employees whose wages did not exceed ₹25,000 on joining or on 17 September 2026, but do not say directly how this applies to existing EPS members already above ₹25,000. The calculator lets you set their EPS status.
• EDLI for members on higher wages. EPFO’s note on present contribution rates, which predates the Code and still refers to the ₹15,000 ceiling, says EDLI is paid only on wages up to the ceiling even if PF is paid on higher wages. The FAQs’ September example for a member contributing on ₹20,000 charges EDLI on the full ₹20,000. The calculator follows the note.
• Which pay counts. The FAQs cite section 2(88) of the Code but describe PF wages only as basic pay, DA and retaining allowance.
• The deferred employee share. The FAQs say EPFO is issuing instructions on this, and give no due date for the September ECR other than 15 October 2026.
• EDLI benefits. An actuarial valuation of the EDLI fund will be undertaken, and benefits may be decided in future.
• PMVBRY. The FAQs mention the incentive but not its conditions.

Frequently asked questions

An employee’s gross pay is ₹45,000, but basic pay and DA total ₹22,000. Must we enrol them?

Yes, if ₹22,000 is their PF wages under the Code’s definition. The FAQs test the ceiling against wages as defined in section 2(88), not gross salary. Their own example is an employee with gross pay of ₹50,000 and EPF wages of ₹25,000, who must be a member of EPF, EPS and EDLI.

Can we offset the cost by treating the employer share as part of CTC?

The FAQs say the employer’s statutory contribution cannot be treated as an employee deduction merely by describing it as part of CTC, and that employees’ statutory wages must not be reduced contrary to applicable law. Any change to salary structures needs advice on the facts.

An employee in EPS already contributes on full PF wages of ₹22,000. What changes?

Both 12% shares stay at ₹2,640, so take-home pay does not change. EPS is now worked out on ₹22,000 instead of ₹15,000, rising from ₹1,250 to ₹1,833, and the employer’s EPF share falls by the same ₹583. EDLI, which EPFO’s contribution-rate note charges on wages up to the ceiling, rises from ₹75 to ₹110, so the employer pays ₹35 more a month.

Do employees have to apply to be enrolled?

No. The FAQs say no separate application is needed, and that enrolling newly eligible employees, including in EPS, is the employer’s statutory responsibility.

We have not yet paid the September 2026 dues. Does VISHWAS, 2026 help?

No. According to PIB’s release of 3 September 2026, VISHWAS, 2026 deals with delayed PF payments before 14 June 2024. The FAQs ask employers to remit on time to avoid interest and penalty, so file and pay as soon as possible and check the employer portal.

Does the maximum EDLI cover go up?

No. The FAQs say the wage-linked part of the EDLI calculation can rise, but the maximum assurance benefit remains ₹7 lakh under the present EDLI Scheme 2026.