What changed
The Ministry of Labour and Employment has notified ₹25,000 per month as the wage ceiling for Chapter III of the Code on Social Security, 2020, which covers the Employees' Provident Fund (EPF), the Employees' Pension Scheme (EPS) and Employees' Deposit Linked Insurance (EDLI).
Notification S.O. 5109(E), dated 17 September 2026, supersedes the earlier notification S.O. 2702(E) dated 29 May 2026, which had set the ceiling at ₹15,000. The revised ceiling takes effect from the date of publication in the Official Gazette, that is, 17 September 2026. This is the first revision of the ceiling since September 2014.
What changes
- The wage ceiling for PF, pension and EDLI rises from ₹15,000 to ₹25,000 per month.
- Employees earning above ₹15,000 and up to ₹25,000 come under mandatory coverage.
- The maximum employer contribution to EPS rises from ₹1,250 to ₹2,083 per month.
What does not change
- Contribution rates stay at 12% for the employee and 12% for the employer.
- The employer's 12% is still split 8.33% to EPS and 3.67% to EPF.
- The ESI wage ceiling is separate and is not affected by this notification.
Who is affected
The impact depends on each employee's PF wages and whether they are already a PF member.
| Employee group | What changes |
|---|---|
| Existing PF members whose contribution is restricted to ₹15,000 | Contribution base rises to PF wages up to ₹25,000. |
| Employees with PF wages above ₹15,000 and up to ₹25,000 who are not PF members | Now mandatorily covered under EPF, EPS and EDLI, from 17 September 2026. |
| Members on whose actual wages above ₹15,000 contributions are already paid | Total contribution does not change. The split between EPS and EPF changes. |
| Employees with PF wages of ₹15,000 or below | No change. |
| New joiners with PF wages above ₹25,000 and no prior PF membership | Continue to be excluded employees. |
PF wages means "wages" as defined under the Code on Social Security, 2020. Eligibility is tested on the monthly wage rate, not on part-month salary.
How contributions change
For a member whose contribution was restricted to the old ceiling of ₹15,000:
| PF wages | Employee PF (12%) | Employer PF (12%) | EPS (8.33%) | EPF (3.67%) | Take-home |
|---|---|---|---|---|---|
| ₹20,000 | ₹1,800 → ₹2,400 | ₹1,800 → ₹2,400 | ₹1,250 → ₹1,666 | ₹550 → ₹734 | ₹600 less |
| ₹25,000 or above | ₹1,800 → ₹3,000 | ₹1,800 → ₹3,000 | ₹1,250 → ₹2,083 | ₹550 → ₹917 | ₹1,200 less |
EPS and EPF are the two parts of the employer's 12%. Figures are monthly and rounded. EDLI contribution and administrative charges also apply on the revised base.
Newly covered employee
An employee on ₹20,000 PF wages who was not a member now contributes ₹2,400 a month, matched by ₹2,400 from the employer. That is ₹4,800 a month going into PF and pension that did not exist before.
Employer cost
For 40 employees on PF wages of ₹25,000 or above whose contribution was restricted to ₹15,000, the employer contribution rises by up to ₹1,200 each, that is up to ₹48,000 a month (₹5.76 lakh a year), before EDLI and administrative charges.
Where employer PF is part of CTC, the higher contribution comes out of the employee's gross salary unless the structure is revised. Where it sits outside CTC, it is a direct addition to employer cost. Offer letters, CTC templates and payroll masters may need revision either way.
Handling September 2026 payroll
Because the notification took effect on 17 September, September 2026 is a transition month. As of 25 September 2026, we have not found an EPFO Head Office circular prescribing how contributions should be computed for this month. Two readings are being discussed:
Split month
₹15,000 ceiling for 1 to 16 September and ₹25,000 for 17 to 30 September. On a 30-day basis, this gives a blended ceiling of about ₹19,667 for the month.
Full month
₹25,000 ceiling for the September 2026 wage month. The EPF Scheme works on a monthly wage and a monthly ceiling, and prescribes no rule for splitting a ceiling by days.
Published legal analysis (Argus Partners, 22 September 2026) prefers the full-month reading for continuing members, while noting that the question is open to interpretation. A key part of the reasoning is risk asymmetry: if contributions fall short of what is later held payable, the shortfall can attract interest and damages; contributing on the higher base cannot create a shortfall.
A defensible approach, pending EPFO direction
| Situation | September 2026 treatment |
|---|---|
| Existing PF members | Apply the ₹25,000 ceiling to the September wage month, on actual PF wages. |
| Existing employees newly covered by the revised ceiling | PF membership from 17 September 2026. Contribution on September wages, capped at ₹25,000. |
| Employees joining during September | Test eligibility on the monthly wage rate. Contribute on actual part-month wages, if eligible. |
| Arrears for periods before September 2026 | Continue on the ₹15,000 ceiling. |
This does not apply the revision retrospectively. It applies the ceiling in force during the September wage month to the monthly computation. Check for EPFO directions before filing the September ECR, and confirm the position for your establishment with your compliance advisor.
Impact on pension (EPS)
The maximum employer contribution to the Employees' Pension Scheme rises from ₹1,250 to ₹2,083 per month. Pension is calculated separately for each period of service, at the wage ceiling that applied to that period, and the parts are added together. Existing pensioners are not affected.
Under the EPS formula, monthly pension is pensionable salary multiplied by pensionable service, divided by 70. As an illustration, 10 years of service at the ₹15,000 ceiling and 15 years at the ₹25,000 ceiling give about ₹2,143 + ₹5,357 = ₹7,500 a month.
Illustrative only. Actual pension depends on eligibility, minimum service, age at exit, applicable weightage and the rules of the Employees' Pension Scheme.
Employer checklist
- 1Identify the two groups from payroll: members restricted to ₹15,000, and non-members with PF wages above ₹15,000 and up to ₹25,000.
- 2Enrol newly covered employees with effect from 17 September 2026. Collect Aadhaar, KYC and bank details for UAN generation.
- 3Re-check Form 11 exclusion declarations for employees in the revised wage band.
- 4Review every joiner from 17 September 2026 against the new ceiling, using the monthly wage rate.
- 5Decide the CTC treatment where employer PF is part of CTC, and update offer letter and CTC templates.
- 6Update payroll configuration and validate the EPS and EPF split, EDLI and administrative charges.
- 7Review Voluntary PF (VPF) elections separately. They do not change automatically with the ceiling.
- 8Review contract labour. Principal employers carry exposure for contractor employees in the revised wage band.
- 9Inform employees about the change in PF deduction before the September payslip.
- 10Check for EPFO directions and ECR updates before filing the September 2026 ECR, typically due by the 15th of the following month.
- 11Keep your workings on record: the eligibility assessment, calculation basis and any advice relied on.
What is still pending
- Consequential amendments, if any, to the EPF, EPS and EDLI Schemes, 2026.
- EPFO portal and ECR changes to support the revised ceiling.
- Any EPFO direction on the September 2026 transition.
Employers may also be eligible for incentives of up to ₹3,000 per month under the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY), subject to the scheme's eligibility conditions.
How WoCo helps
WoCo Payroll has been updated for the revised ₹25,000 ceiling. WoCo clients have received a detailed advisory on the change, along with ready-to-use employee communication templates. If you are evaluating payroll software that keeps up with statutory changes, talk to us.
Frequently asked questions
What is the new PF wage ceiling?+
₹25,000 per month, effective 17 September 2026, under notification S.O. 5109(E). It replaces the earlier ceiling of ₹15,000.
Has the PF contribution rate changed?+
No. The employee and employer each contribute 12%. Only the wage ceiling on which contributions are calculated has changed.
Do employees earning between ₹15,000 and ₹25,000 now have to join PF?+
Yes. Employees with PF wages above ₹15,000 and up to ₹25,000 are now mandatorily covered under EPF, EPS and EDLI from 17 September 2026, subject to the other provisions on excluded employees.
What about employees earning above ₹25,000?+
Existing members whose contribution was restricted to the ceiling will now contribute on up to ₹25,000. New joiners with PF wages above ₹25,000 and no prior PF membership continue to be excluded employees.
How should September 2026 contributions be calculated?+
EPFO has not yet prescribed a method for the transition month. Published legal analysis prefers applying the ₹25,000 ceiling to the full September wage month for existing members, with membership from 17 September 2026 for newly covered employees. Confirm the position with your compliance advisor and check for EPFO directions before filing.
Will take-home pay reduce?+
Yes, for employees whose contribution was restricted to ₹15,000. At PF wages of ₹20,000, take-home falls by ₹600 a month. At ₹25,000 or above, it falls by ₹1,200 a month. The full amount goes into the employee's PF, matched by the employer.
Does this change ESI?+
No. ESI has its own wage ceiling, which this notification does not change.
What happens to pension?+
The maximum employer contribution to EPS rises from ₹1,250 to ₹2,083 per month. Pension is calculated separately for service at each ceiling, so service from 17 September 2026 counts at the higher ceiling, subject to EPS rules.
Does Voluntary PF change?+
No. VPF elections continue as they are. The statutory ceiling increase does not change an employee's voluntary contribution.
Sources
- Gazette of India, Ministry of Labour and Employment, Notification S.O. 5109(E) dated 17 September 2026
- PIB: Cabinet approves enhancement of EPFO wage ceiling (16 September 2026)
- PIB: EPFO raises wage ceiling from ₹15,000 to ₹25,000 (23 September 2026)
- Argus Partners: Revision to EPF Wage Ceiling, the September Transition (22 September 2026)
- BDO India: New EPF Ceiling Hiked (21 September 2026)
This article is for general information, based on the notification and published guidance available as of 25 September 2026. It does not constitute legal advice. Statutory compliance decisions rest with the employer. Please consult your compliance advisor for an assessment specific to your establishment.