Effective 17 September 2026, the statutory wage threshold for mandatory coverage under the Employees' Provident Fund Organization (EPFO) has increased from INR 15,000 to INR 25,000 per month. This is the first revision in 12 years (since September 2014) and will extend EPF, EPS, and EDLI coverage to more than 51 lakh additional employees.
For an employee with basic wage of INR 15,000, both employers and employees were required to contribute 12% (i.e., INR 1,800) towards EPFO schemes. With the higher wage ceiling, the mandatory EPF contribution will increase to INR 3,000 (i.e., 12% of INR 25,000).
This increase in the wage ceiling will also expand access to provident fund savings, pension protection under the Employees' Pension Scheme (EPS) and insurance protection under the Employees' Deposit Linked Insurance Scheme (EDLI).
| Impact of the increase in wage ceiling
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For Employers - Higher compliance costs and payroll restructuring
For employers with a workforce in the INR 15,000 to INR 25,000 salary bracket, overall payroll costs will increase materially, including higher PF contributions, additional PF administrative charges and EDLI charges.
Employers will have to redesign salary structures and review employment contracts to remain compliant with the wage definition under the new labour code and the increase in PF contributions.
For Employees - Expanded Social Security and Lower Take-Home Pay
In cost-to-company (CTC) employment models where the employer's statutory PF contribution is included in the employee's salary package, an employee moving from excluded status to mandatory contribution will see a net drop in monthly take-home cash pay. This will shift an additional portion of salary to protected retirement savings, with tax benefits under the relevant provisions. The employee's retirement corpus will grow, resulting in higher future pensions.
Immediate actions for employers
- Identify employees on payroll drawing basic wages between INR 15,000 and INR 25,000 who were previously not enrolled and were treated as excluded employees.
- Initiate Universal Account Number (UAN) and member ID linkage, and complete mandatory Aadhaar verification on the Unified Employer Portal for employees becoming eligible for mandatory coverage.
- Ensure that payroll software is configured with the new wage ceiling of INR 25,000.
- Update the payroll budget by forecasting the increase in employer PF liability.
- Communicate to employees the increase in PF deductions, along with the enhanced benefits under the EPS and EDLI schemes.
