EPF wage ceiling raised to ₹25,000: what payroll must change

What changed, and from which date?

The Ministry of Labour and Employment raised the EPF wage ceiling from ₹15,000 to ₹25,000 a month through Notification S.O. 5109(E) dated 17 September 2026, issued under clause (89) of section 2 of the Code on Social Security, 2020. It took effect on publication in the Gazette, on 17 September 2026.

The ceiling does two jobs. It decides who must be covered (an employee whose PF wages are at or below it cannot be left out), and it caps the wage on which statutory contributions are worked out. Raising it from ₹15,000 to ₹25,000 changes both at once.

The ESI ceiling is a separate limit and has not changed: it stays at ₹21,000 a month.

Which employees are now covered?

Anyone whose PF wages are ₹25,000 a month or less must now be a member of EPF, EPS and EDLI, unless another exclusion applies. Three groups move:

• Excluded employees earning ₹15,001 to ₹25,000. They were outside EPF because their wages were above ₹15,000 when they joined. They become members from 17 September 2026.
• EPF members who were not in EPS (often because they joined above the old ceiling) and earn up to ₹25,000. They must be enrolled in EPS from 17 September 2026, so 8.33% of the employer share now goes to the pension fund instead of their PF account.
• Existing members earning more than ₹15,000 whose contributions were capped at ₹15,000. Their statutory contribution base rises to their actual PF wages, up to ₹25,000.

Enrolment is the employer's statutory duty. EPFO's FAQs say members do not need to submit any application for the revised ceiling.

Employees already contributing on wages above ₹25,000 by choice do not have to come down to ₹25,000. Existing higher-wage arrangements continue under the scheme provisions that govern them.

How much is deducted now?

The rates have not changed: 12% from the employee, and 12% from the employer, of which 8.33% goes to EPS and 3.67% to EPF. On top of that the employer pays 0.5% for EDLI and 0.5% as administration charges. Only the wage base has moved.

For an employee whose PF wages are ₹25,000 or more and who contributes at the ceiling. EPS at 8.33% of ₹25,000 is ₹2,082.50 and is shown rounded to ₹2,083; the employer EPF share is the balance of 12%. Below the ceiling, apply the same percentages to actual PF wages: at ₹20,000 that is ₹2,400 from the employee, ₹1,666 to EPS and ₹734 to EPF.

For the employer, the extra cost for an employee who was capped at ₹15,000 and earns ₹25,000 or more is ₹1,300 a month: ₹1,200 of matching contribution plus ₹100 of EDLI and administration charges. The employee's take-home falls by ₹1,200, which goes into their own PF account.

How should September 2026 have been calculated?

EPFO's FAQs set the method. September 2026 is split into two periods inside one ECR:

• 1 to 16 September (16 days): contributions subject to the old ₹15,000 ceiling.
• 17 to 30 September (14 days): contributions subject to the new ₹25,000 ceiling.

Wages are apportioned by days (16/30 and 14/30), contributions for EPF, EPS, EDLI and administration charges are worked out on each part, and the total goes into a single ECR for September, due by 15 October 2026. EPFO said it would relax portal validations so proportionate contributions could be reported.

Worked example: an employee earning ₹20,000 a month

These are EPFO's own figures from its FAQs (Q7), for two common cases: an excluded employee who becomes a member on 17 September, and an existing member who was capped at ₹15,000.

From October 2026 the same employee contributes on the full ₹20,000: ₹2,400 from the employee and ₹2,400 from the employer (₹1,666 to EPS and ₹734 to EPF).

Could the extra deduction wait until October?

Only the deduction from the employee's salary could wait. The payment to EPFO could not.

For employees newly brought into coverage, EPFO allowed employers to recover the September employee share from the October salary without approval from the Inspector-cum-Facilitator, because most September payrolls had closed before the notification. But the September ECR still had to show the full employee and employer contributions, and the full amount had to be remitted by 15 October 2026 to avoid interest and damages.

This rules out a common shortcut: running September at the old ceiling and catching up through a supplementary return in October. EPFO's method is a split September in the September ECR.

Does this cut take-home pay under a CTC structure?

The employee share always comes out of gross pay, so take-home falls for anyone whose contribution base went up. For an employee earning ₹25,000 or more who was capped at ₹15,000, that is ₹1,200 a month.

The employer share is where companies differ. Where the offer letter defines pay as cost to company and the employer's PF is counted inside it, many employers are reworking the split so the CTC stays the same, which lowers take-home further. Before you do that, note what EPFO says in its FAQs: CTC is not a statutory concept for PF, employer and employee contributions are legally separate, and the employer's contribution cannot simply be turned into an employee deduction by calling it part of CTC. Statutory wages must not be reduced contrary to law.

In practice: you may restructure allowances within a contract that allows it, but you cannot shrink basic pay and dearness allowance below what the wage definition in the Code requires in order to keep PF low. Ask your labour law adviser to review any restructuring before you announce it.

EPFO also points employers to the Pradhan Mantri Viksit Bharat Rozgar Yojana, which pays an incentive of up to ₹3,000 a month for each additional job created. This can offset part of the cost for a growing MSME, if the new hires qualify.

What should payroll do now?

It is early November 2026. The September ECR deadline (15 October) has passed, and the October ECR is due by 15 November. If you have not yet applied the new ceiling:

1. List every employee whose PF wages are ₹25,000 or less and who is not a member of EPF, or is in EPF but not EPS. These people should have been enrolled from 17 September 2026.
2. List existing members earning more than ₹15,000 whose contributions are still capped at ₹15,000. Their base moves to actual PF wages, up to ₹25,000.
3. Recompute September 2026 using EPFO's split method (16/30 at ₹15,000, 14/30 at ₹25,000) and work out the shortfall against what you filed.
4. Pay the September shortfall now through the EPFO employer portal. Interest and damages under the Code run from the due date, so the cost grows each day it stays unpaid. Your PF consultant can confirm the correct filing route for an arrear on a past wage month.
5. Run October 2026 at the full ₹25,000 ceiling and file the October ECR by 15 November 2026. Recover any deferred September employee share in this cycle.
6. Update the payroll master: the ceiling value, EPS eligibility flags, and the Form 11 declaration and UAN details for newly enrolled employees.
7. Tell employees in writing why their take-home changed, and how much more now goes into their PF and pension accounts.

This is a summary of EPFO's published FAQs, not legal advice. If EPFO issues a circular that changes any part of this method, follow the circular.

How Ankastra handles the ceiling change

In the Ankastra payroll module (Pro plan), the PF ceiling is a dated setting, not a constant in a formula. Contributions for any wage month are worked out against the ceiling that applied on each day of it, so a mid-month change like 17 September becomes two periods automatically, and the ECR file carries both. EPS eligibility, the employer split between EPS and EPF, and EDLI and administration charges all come from the same attendance-based wage record.

If you would like to check your September and October figures against your own roster, book a walkthrough. Our team will run the numbers with you.

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