India has increased the statutory wage ceiling for mandatory coverage under the Employees’ Provident Funds Organisation (EPFO) from ₹15,000 to ₹25,000 per month.
The revised ceiling came into effect on 17 September 2026 and is expected to bring more than 51 lakh additional employees within mandatory EPFO coverage. With the change now in force, employers should ensure that affected employees, payroll calculations and ongoing statutory processes are aligned with the revised requirements.
The previous ₹15,000 monthly wage ceiling has been increased to ₹25,000 under the Code on Social Security, 2020.
The revised ceiling applies for mandatory coverage under EPF, EPS and EDLI, subject to the applicable statutory and scheme provisions. Employees with applicable PF wages between ₹15,000 and ₹25,000 may therefore now fall within mandatory coverage where the relevant conditions are met.
The change may also affect existing EPF members whose contributions have previously been restricted to the ₹15,000 ceiling.
However, the revised ceiling does not mean that every employee earning more than ₹15,000 will automatically have PF contributions calculated on ₹25,000. The applicable PF wage, membership status and relevant statutory provisions still need to be considered at employee level.
Because the revised ceiling took effect part way through September, employers had to account for two different periods when processing September 2026 payroll.
The previous ₹15,000 ceiling applied from 1 to 16 September, while the revised ₹25,000 ceiling applied from 17 September onwards.
EPFO guidance confirmed that employers should calculate contributions appropriately for the two periods and file a single Electronic Challan cum Return (ECR) for September, rather than separate ECRs for each period.
For employers, this transition required changes to employee eligibility, PF wage calculations, deductions and statutory reporting. While the September implementation period has now passed, the calculations and records from that month should be retained as part of the payroll audit trail.
For employees affected by the revised ceiling, the change can increase the amount of wages taken into account when calculating statutory contributions.
Under the standard contribution structure, EPF is generally calculated at 12% of applicable wages for both employee and employer, with the employer contribution allocated between EPF and EPS in accordance with the applicable rules. From the revised ceiling, the EPS contribution for newly covered employees can be calculated on wages up to ₹25,000, subject to the relevant provisions.
The calculation will depend on the employee’s individual circumstances and applicable statutory and scheme provisions. The ₹25,000 figure should therefore be viewed as a revised wage ceiling, rather than a universal contribution base for every employee.
For October payroll and subsequent months, employers should ensure that payroll systems and contribution calculations reflect the revised ceiling where it applies.
The increase in the EPFO ceiling does not mean that PF contributions are simply calculated against gross salary up to ₹25,000.
PF wages are determined under the relevant statutory provisions and are not necessarily the same as an employee’s gross salary or total remuneration. An employee may have gross earnings above ₹25,000 while their applicable PF wages are determined differently.
Employers should therefore review the wage components used in their PF calculations when identifying employees affected by the revised ceiling, rather than relying on gross salary alone.
With the revised ceiling now in effect, employers should review their India payroll arrangements to ensure the change has been fully incorporated.
Key areas to consider include:
The change also highlights the importance of accurate employee and payroll data. Where responsibility for India payroll, HR and mobility is shared across internal teams or providers, clear ownership of the local statutory position will help ensure the revised requirements are applied consistently.
For further guidance on payroll, employment law and compliance requirements in India, visit our India Global Insights page on the activpayroll website.
Employers should now review the revised EPFO wage ceiling and ensure that employee eligibility, contribution calculations, payroll systems and statutory processes reflect the requirements currently in force.
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