New PF Rules 2026: EPF Wage Ceiling Hiked to ₹25,000

Businesses need to understand the new PF wage ceiling, contribution changes and payroll compliance requirements. Chhota CFO helps businesses manage payroll compliance and related financial requirements.

Need Help Understanding the New PF Rules?
Get expert guidance on the ₹25,000 PF wage ceiling, employee contributions, and payroll compliance.

Talk to Chhota CFO Today

What changed in PF rules in 2026?

2026 is the biggest reset of India’s provident fund law since 1952. Three changes matter most.

• 21 November 2025: The four Labour Codes came into force. The Code on Social Security, 2020 replaced the EPF and MP Act, 1952.
• 29 June 2026: The Ministry of Labour and Employment notified the EPF Scheme, 2026 (G.S.R. 525(E)), the EPS, 2026 and the EDLI Scheme, 2026. These replaced the 1952, 1995 and 1976 schemes.
• 17 September 2026: The PF wage ceiling rose from ₹15,000 to ₹25,000 per month (S.O. 5109(E)). The Union Cabinet approved it on 16 September 2026.

The ceiling had stayed at ₹15,000 for 12 years. In January 2026, the Supreme Court directed the Centre and EPFO to decide on a revision within four months. Labour Minister Dr. Mansukh Mandaviya noted the average regular salaried income is now around ₹23,000 a month, and minimum wages in several states have crossed ₹15,000.

What is the PF ceiling limit as on September 2026?

The PF wage ceiling is ₹25,000 per month of basic wages plus dearness allowance. It applies to EPF, EPS and EDLI. Here is the full picture.

Figures are monthly, for an employee with PF wages at or above the ceiling. EDLI and admin rates are current rates. Establishments notified at the 10% rate apply 10% in place of 12%.

Who is now covered under mandatory PF?

• Every employee in a covered establishment (20 or more employees) with PF wages up to ₹25,000.
• Employees earning ₹15,001 to ₹25,000 who were earlier “excluded employees”. They now need a UAN and monthly deductions.
• Existing PF members at any salary. Once a member, always a member.
• International workers, on full salary with no ceiling.

New joiners with PF wages above ₹25,000 who were never PF members stay outside mandatory coverage. They may join by mutual consent with the employer.

How is “wages” defined for PF under the Code?

Section 2(88) of the Code on Social Security, 2020 defines wages as basic pay, dearness allowance and retaining allowance. Allowances such as HRA, conveyance, bonus, overtime and commission are excluded. The catch: excluded items cannot exceed 50% of total remuneration. Any excess is added back to wages.

Worked example: the 50% rule

Before the Code, many employers kept basic at 30% to 35% of gross. That structure no longer lowers PF cost. Review every CTC template now.

For a detailed explanation of how the 50% wage rule affects salary structures and take-home pay, see our guide on new Labour Code salary structure.

What does the ₹25,000 ceiling mean for pension (EPS)?

EPS pension equals pensionable salary multiplied by pensionable service, divided by 70. Pensionable salary is the average of the last 60 months, capped at the ceiling.

• Old maximum: ₹15,000 x 35 / 70 = ₹7,500 per month.
• New maximum: ₹25,000 x 35 / 70 = ₹12,500 per month.
• Minimum EPS pension stays at ₹1,000 per month.

When the ceiling rose from ₹6,500 to ₹15,000 in 2014, EPFO valued earlier service on the old ceiling. Expect a similar pro-rata method this time. The Central Government continues its 1.16% EPS subsidy on wages up to the ceiling. Its annual outgo rises from ₹10,250 crore to ₹11,339 crore.

What are the new PF withdrawal rules in 2026?

The EPF Scheme, 2026 merges more than a dozen withdrawal purpose into three categories and uses a balance-based limit.

What are the new compliance rules for employers?

• Due date: Deposit PF and file the ECR by the 15th of the following month.
• Graded damages:25% per month for delays under 2 months, 0.50% for 2 to 4 months, 1% beyond 4 months.
• Late return fee: ₹500 per day for delayed statutory returns.
• Digital records: Enrolment, exits and employee data must be filed on the EPFO portal. UAN, Aadhaar, PAN and an Aadhaar-seeded bank account are mandatory.
• Contract labour: The principal employer deposits both shares for workers of unregistered contractors, within 15 days of month end.
• e-Nomination: Paper Form 2 is being phased out.

Businesses that need support with PF, ESI, payroll processing and statutory compliance can also explore our payroll services in Bangalore.

Relief windows open now

• Employees’ Enrolment Campaign, 2026: Declare unenrolled employees. Damages capped at ₹100. Closes 31 October 2026.
• VISHWAS, 2026: Settles legacy PF defaults up to 14 June 2024. Six-month window from 29 June 2026, extendable by six months.
• AMNESTY, 2026: Regularises private PF trusts running without formal exemption. Six-month window.

Impact on a 50-employee MSME: a worked example

Take a Bengaluru firm with 50 employees. 20 employees earn PF wages of ₹20,000 and were earlier excluded. 30 employees earn PF wages above ₹25,000 and were capped at ₹15,000.

Employer cost includes 12% contribution plus EDLI and admin charges at 0.50% each. Employees will also see a lower take-home. Plan your communication before the October payroll.

Is the New PF Ceiling Increasing Your Payroll Cost?

Chhota CFO can help you calculate the impact, update salary structures, and ensure your PF compliance is on track.

Get Payroll Compliance Support

Action checklist before your October 2026 payroll

• Map every employee’s PF wage using the Code’s 50% rule.
• Identify employees between ₹15,001 and ₹25,000 and generate UANs.
• Update the PF wage cap to ₹25,000 in your payroll software.
• Fix and record your method for the 17 to 30 September 2026 period.
• Collect PF registration and challans from every contractor.
• File pending enrolments under the Employees’ Enrolment Campaign before 31 October 2026.
• Revise offer letters, CTC templates and HR policies that cite the 1952 Act.
• Brief employees on take-home, pension and insurance impact.

How Chhota CFO helps

Chhota CFO, through CLAAT Corporate Advisors LLP, advises MSMEs and startups on payroll compliance, Labour Code transition and Virtual CFO support. We restructure salary templates under the 50% rule, compute your PF cost impact and file enrolment campaign declarations.

Our accounting and bookkeeping services can also help businesses maintain accurate payroll records, reconciliations and financial reports.

Write to [email protected] or call +91 97397 36999.

H2: Prepare Your Business for the New PF Rules 2026

From PF calculations and CTC restructuring to employee enrolment and compliance, Chhota CFO can support your business.

Contact Chhota CFO for Expert Assistance