For twelve years, ₹15,000 was the number every payroll team in India knew by heart. It decided who had to be enrolled in the Employees' Provident Fund and, for most employers, the wage on which PF was calculated. That number changed on 17 September 2026. The Ministry of Labour and Employment has notified ₹25,000 per month as the new wage ceiling for the provident fund chapter of the Code on Social Security, 2020.
The headline is simple. The payroll work is not. The change took effect in the middle of a wage month, the September return is due by 15 October 2026, and the impact is very different for an employee earning ₹18,000, one earning ₹40,000 with PF capped, and one whose employer already pays PF on full basic. This guide works through each case with numbers, and is clear about what is settled and what is still being clarified.
What exactly has changed
The Central Government issued notification S.O. 5109(E) dated 17 September 2026 under Section 2(89) of the Code on Social Security, 2020. It fixes ₹25,000 per month as the wage ceiling for Chapter III of the Code (the chapter that covers EPF, EPS and EDLI), effective from the date of publication in the Gazette, which is 17 September 2026. It supersedes the earlier notification S.O. 2702(E) of 29 May 2026, which had kept the ceiling at ₹15,000.
The Union Cabinet approved the change on 16 September 2026. In its official press release, the Labour Ministry said employees drawing wages between ₹15,000 and ₹25,000 a month will now come under mandatory coverage, with access to EPF, EPS and EDLI under the applicable scheme provisions. The ceiling had not moved since September 2014.
A second notification followed. On 25 September 2026, the Ministry amended the Employees' Pension Scheme, 2026, with effect from 17 September 2026, so that EPF members who were not in the pension scheme become eligible for EPS membership if their wages are at or below the notified ceiling.
| Item | Before 17 September 2026 | From 17 September 2026 |
|---|---|---|
| Statutory wage ceiling (EPF, EPS, EDLI) | ₹15,000 per month | ₹25,000 per month |
| Mandatory PF coverage | Wages up to ₹15,000 | Wages up to ₹25,000 |
| Employee contribution rate | 12% | 12% (unchanged) |
| Employer contribution rate | 12% | 12% (unchanged) |
| Employer share diverted to EPS | 8.33%, capped at 8.33% of ₹15,000 = ₹1,250 | 8.33%, capped at 8.33% of ₹25,000 = ₹2,083 (rounded) |
| ESI wage limit | Not affected by this notification | |
Note what has not changed: the contribution rates. Employee and employer still contribute 12% each. What moves is the wage on which those rates are applied, and who must be covered at all.
Remember: "wages" means PF wages, not gross salary
Every comparison against ₹25,000 is a comparison of wages as defined under the Code, not CTC and not gross pay. Under the labour codes, wages broadly mean basic pay, dearness allowance and retaining allowance, with specified exclusions added back where they exceed half of total remuneration. If you have not yet reworked salary structures for this definition, read our explainer on the Code on Wages and the 50% wage rule first, because it decides which employees fall above or below the new ceiling.
An employee with a gross salary of ₹38,000 and basic plus DA of ₹19,000 has PF wages of ₹19,000 (assuming the 50% test is met). For PF purposes, that employee is now inside the ceiling.
Who is affected, and how
The same notification lands very differently depending on how an employee's PF was being handled before 17 September. Four groups cover almost every case.
| Employee situation before 17 Sept 2026 | What changes | Effect on take-home |
|---|---|---|
| PF wages up to ₹15,000, already a member | Nothing. Contribution was already on actual wages. | No change |
| PF wages ₹15,001–₹25,000, not a PF member (joined above the old ceiling and treated as an excluded employee) | Ceases to be excluded. Must be enrolled from 17 September 2026, with EPF, EPS and EDLI. | New PF deduction starts |
| PF member with wages above ₹15,000, employer restricting PF to the ceiling | Contribution base rises to actual PF wages or ₹25,000, whichever is lower. | PF deduction rises |
| PF member, employer already paying 12% on full PF wages above ₹25,000 | Total PF stays the same. Only the split changes: more of the employer share goes to EPS, less to EPF. | No change |
Employees whose PF wages exceed ₹25,000 and who were never members remain outside mandatory coverage. The notification also does not disturb existing voluntary members who already draw wages above the ceiling.
The September 2026 problem: a ceiling that changed mid-month
Because the ceiling took effect on the 17th, September's wage month sits under two ceilings. The law itself does not prescribe how to split a month, and there are three possible readings: apply ₹15,000 for the whole month, apply ₹25,000 for the whole month, or split the month proportionately.
A detailed FAQ document attributed to EPFO has been widely circulated among employers and was summarised in a KPMG flash note on 26 September 2026. It takes the third approach:
- 1 to 16 September: contributions on the old ceiling of ₹15,000, pro-rated for 16 days.
- 17 to 30 September: contributions on the revised ceiling of ₹25,000, pro-rated for 14 days.
- One single ECR for September 2026, filed by the usual due date of 15 October 2026.
- Additional contribution arising from 17 September belongs to the September wage month and should be reported and remitted through the September ECR.
An important caution. At least one compliance firm has said it could not locate this FAQ as an officially published EPFO document on the EPFO website or employer portal, and some law firms have argued that the full ₹25,000 ceiling should apply to September. Until EPFO's own circular or portal instructions confirm the method, treat the split approach as the most widely followed interpretation rather than settled law. Check the EPFO employer portal for ECR validation changes before you file.
How the split works in numbers
September has 30 days. Under the split approach, the ceiling-capped base for September is:
(₹15,000 × 16 ÷ 30) + (₹25,000 × 14 ÷ 30) = ₹8,000 + ₹11,667 = ₹19,667
That ₹19,667 is the maximum September base for an employee whose PF is restricted to the ceiling. For an employee whose PF wages fall between ₹15,000 and ₹25,000, the second half uses actual wages instead of ₹25,000.
Worked examples: old ceiling, September split and October onwards
The examples below use the split method for September, a full 30-day month with no loss of pay, and contributions rounded to the nearest rupee. Employer EPF is the employer's 12% minus the EPS share. EDLI and administrative charges are paid by the employer on top and are not shown. These are illustrations; your payroll software or the ECR utility may round differently by a rupee.
Example 1: PF wages ₹20,000, member, PF capped at the ceiling
| Component | Old ceiling (₹15,000) | September 2026 (split) | October 2026 onwards |
|---|---|---|---|
| Contribution base | ₹15,000 | ₹8,000 + ₹9,333 = ₹17,333 | ₹20,000 |
| Employee PF (12%) | ₹1,800 | ₹2,080 | ₹2,400 |
| Employer to EPS (8.33%) | ₹1,250 | ₹1,444 | ₹1,666 |
| Employer to EPF (balance) | ₹550 | ₹636 | ₹734 |
This employee's monthly PF deduction rises by ₹600 from October. The second half of September uses actual wages (₹20,000 × 14 ÷ 30 = ₹9,333), not ₹25,000, because the employee earns less than the new ceiling.
Example 2: PF wages ₹40,000, member, PF capped at the ceiling
| Component | Old ceiling (₹15,000) | September 2026 (split) | October 2026 onwards |
|---|---|---|---|
| Contribution base | ₹15,000 | ₹19,667 | ₹25,000 |
| Employee PF (12%) | ₹1,800 | ₹2,360 | ₹3,000 |
| Employer to EPS (8.33%) | ₹1,250 | ₹1,638 | ₹2,083 |
| Employer to EPF (balance) | ₹550 | ₹722 | ₹917 |
This is the group most likely to notice the change. The employee's deduction rises by ₹1,200 a month from October, and so does the employer's cost.
Example 3: PF wages ₹40,000, employer already paying PF on full wages
| Component | Old ceiling (₹15,000) | September 2026 (split) | October 2026 onwards |
|---|---|---|---|
| Employee PF (12% of ₹40,000) | ₹4,800 | ₹4,800 | ₹4,800 |
| Employer to EPS | ₹1,250 | ₹1,638 | ₹2,083 |
| Employer to EPF (balance) | ₹3,550 | ₹3,162 | ₹2,717 |
Take-home and employer cost stay the same. What changes is the destination: ₹833 a month moves from the employee's EPF account (which earns interest and can be withdrawn under EPF rules) into the pension fund. For a long-service employee that increases the pensionable salary base; for someone likely to leave PF-covered employment early, it means a smaller EPF balance. HR should be ready to explain this when the October payslip arrives.
Example 4: PF wages ₹22,000, previously excluded, now newly covered
| Component | Before 17 Sept | September 2026 (17–30 Sept only) | October 2026 onwards |
|---|---|---|---|
| Contribution base | Not covered | ₹22,000 × 14 ÷ 30 = ₹10,267 | ₹22,000 |
| Employee PF (12%) | Nil | ₹1,232 | ₹2,640 |
| Employer to EPS (8.33%) | Nil | ₹855 | ₹1,833 |
| Employer to EPF (balance) | Nil | ₹377 | ₹807 |
For a newly covered employee, coverage starts on 17 September, so only the last 14 days of September attract contribution. From October, the full month counts. You can test other salary levels with the HR Calcy EPF calculator, and see the effect on take-home with the CTC to in-hand salary calculator.
Can the September employee share be recovered late?
In many organisations, September salaries were finalised before the notification, so the employee's additional share for 17 to 30 September was not deducted. The circulating FAQ indicates that the additional contribution still belongs to the September wage month and should go into the September ECR, with the employee share recovered through payroll. Whether a later recovery from salary is permitted, and how, is a point to confirm against the EPF Scheme, 2026 and any EPFO instruction rather than assume. What is clear is the cost of filing late: delayed remittance attracts interest and damages, so the safer course is to remit the full September amount by 15 October 2026 and settle the employee recovery internally.
What HR and payroll should do before 15 October 2026
- Pull a PF wage band report. List every employee with PF wages between ₹15,001 and ₹25,000, and every employee above ₹15,000 whose PF is capped at the ceiling.
- Identify previously excluded employees. Anyone in the ₹15,001–₹25,000 band who is not a PF member must be enrolled from 17 September. Generate a UAN or link the existing one, and collect a fresh declaration form.
- Check EPS status separately. Members who were in EPF but not EPS, and whose wages are within ₹25,000, are covered by the 25 September EPS amendment. Update their EPS flag in the payroll master.
- Update the ceiling in payroll software. Change the statutory cap to ₹25,000 effective 17 September, and set up the September split if you are following it.
- Prepare one September ECR. Do not file two returns for September. Reconcile the ECR against the payroll register before uploading.
- Recheck CTC structures. Where employer PF sits inside CTC, a higher employer contribution can reduce gross pay for the same CTC. Decide whether to absorb the cost or restructure, and document the decision. Our guide to PF deduction from salary covers how PF sits within CTC.
- Tell employees before the October payslip. A short note explaining why the PF line has gone up, and that the money goes into their own EPF and EPS accounts, prevents a wave of queries. The salary slip explainer can help employees read the revised payslip.
- Cover contractors. Principal employers should ask contractors to confirm that contract workers in the new band have been enrolled, since coverage failures in the contract workforce can come back to the principal employer.
What employees should check
- Your PF wages, not your gross salary, decide whether you are affected. Ask HR what figure is used.
- If your PF deduction goes up, the employee share goes into your EPF account, and your employer adds a matching contribution. It is a change in savings, not a tax.
- If you earn between ₹15,000 and ₹25,000 in PF wages and were not in PF before, you should now be enrolled. Check that contributions appear in your passbook after the September and October returns are filed.
- If you were enrolled in PF but not EPS, check whether your employer has updated your pension membership.
- Use the salary breakup calculator to see how your in-hand pay changes at your PF wage level.
What remains uncertain
- The September method. The split approach is the widely followed interpretation, but its source document had not been independently confirmed as an official EPFO publication at the time of writing. Watch for an EPFO circular.
- Late recovery of the employee share for 17 to 30 September where salaries were already paid.
- EDLI benefit limits. Some advisers have pointed out that the overall maximum assurance under the EDLI Scheme, 2026 was not raised alongside the ceiling, which may limit the gain from a higher wage base. This needs confirmation from the scheme text.
- Future revisions. The ceiling was revised twice in four months in 2026. Payroll teams should not hard-code ₹25,000 as permanent.
This article will be updated when EPFO publishes its operational circular. For the wider framework behind these schemes, see our Social Security Code 2020 guide.
Frequently asked questions
What is the new PF wage ceiling in 2026?
₹25,000 per month, notified under S.O. 5109(E) dated 17 September 2026 and effective from that date. It replaces the ₹15,000 ceiling that applied since September 2014.
Will PF be deducted on my full salary now?
No. The ceiling applies to PF wages (broadly basic plus DA, adjusted under the 50% rule), not gross salary. If your employer restricts PF to the statutory ceiling, the maximum employee contribution becomes ₹3,000 a month (12% of ₹25,000).
Is PF mandatory for someone earning ₹22,000 a month?
If ₹22,000 is the employee's PF wage and the establishment is covered, yes. From 17 September 2026, employees with PF wages up to ₹25,000 fall within mandatory coverage, subject to the scheme's membership conditions.
How much goes to EPS under the new ceiling?
The employer's 8.33% EPS share is calculated on wages up to the ceiling, so the maximum monthly EPS contribution rises from ₹1,250 to about ₹2,083. The rest of the employer's 12% goes to EPF.
Do employers need to file two ECRs for September 2026?
The widely circulated guidance says no: one ECR for September 2026, due by 15 October 2026, reflecting both ceiling periods. Confirm against EPFO's portal instructions before filing.
Does the new ceiling change the ESI wage limit?
No. The notification applies only to Chapter III of the Code on Social Security, which covers EPF, EPS and EDLI. ESI coverage is unaffected by it.
This article explains statutory provisions and current guidance for general information. It is not legal advice. Confirm the treatment of your own establishment with EPFO's official circulars or a qualified compliance professional.