EPF wage ceiling rises to ₹25,000 from 17 September 2026: coverage, EPS/EDLI and the September split month

What changed

On 16 September 2026 the Union Cabinet approved the first revision of the provident fund wage ceiling since 1 September 2014. The notification followed a day later: S.O. 5109(E) dated 17 September 2026, issued under Chapter III of the Code on Social Security, 2020, fixes the monthly wage ceiling at ₹25,000. It took effect on publication, 17 September 2026, and supersedes S.O. 2702(E) of 29 May 2026, which had re-notified ₹15,000 under the Code.

The ceiling does three jobs:

• Mandatory membership. An employee whose Code "wages" are at or below the ceiling must be a member of the EPF, EPS and EDLI schemes.
• Contribution base. Mandatory contributions are computed on wages up to the ceiling. Contributions above it are voluntary.
• EPS and EDLI caps. The pension diversion (8.33%) and the EDLI premium (0.5%) are computed on wages up to the ceiling.

The contribution rates are unchanged: 12% from the employee and 12% from the employer, of which 8.33% goes to EPS and 3.67% to EPF. EDLI is 0.5% and administrative charges are 0.5%, subject to a minimum of ₹500 a month per establishment.

Who is newly covered

"Wages" means wages under s.2(88) of the Code on Social Security: basic pay, dearness allowance and retaining allowance, plus the 50% add-back where excluded allowances exceed half of total remuneration. The test is not basic pay alone. Before you decide who is outside the net, run every employee through the Code definition.

• Previously excluded employees earning ₹15,001–₹25,000. They must be enrolled in EPF, EPS and EDLI from 17 September 2026. The EPFO FAQs say no separate application is needed. Generate or link the UAN and report them in the September ECR.
• Existing EPF-only members in the ₹15,001–₹25,000 band. These are typically members who joined after 1 September 2014 with wages above ₹15,000 and so were ineligible for EPS. According to the EPFO FAQs they move into EPS from 17 September, and their employer share splits 8.33% / 3.67%.
• Existing members earning above ₹25,000 whose employer contributed on capped wages. Membership is unchanged, but the mandatory base rises from ₹15,000 to ₹25,000. For most mid-level payrolls this is where the largest cost increase falls.
• Employees above ₹25,000 who contribute on full wages. This is a joint option under the EPF Scheme 2026. They can continue. The new ceiling does not force a reduction.
• New joiners. A new joiner whose Code wages exceed ₹25,000 and who has never been a member is an excluded employee, unless employer and employee jointly opt in. A new joiner at or below ₹25,000 must be enrolled, including in EPS.
• International workers. No change. They contribute on full salary from day one, and the EPS diversion is capped at 8.33% of the ceiling, which is now ₹2,083.

September 2026: the split month

Because the ceiling changed mid-month, the EPFO FAQs treat September 2026 as two periods reported in one ECR (Form VII), due by 15 October 2026:

• 1–16 September (16 days): ₹15,000 ceiling, pro-rated by days.
• 17–30 September (14 days): ₹25,000 ceiling, pro-rated by days.

Wages and the ceiling are both pro-rated by calendar days. The lower of the two gives the EPF wages for each period. The FAQs also allow an employee share not recovered in the September payroll, for example because payroll had closed, to be recovered in the next payroll without formal relaxation. The contribution itself must still be remitted in full by 15 October.

Worked example A: existing member, wages ₹30,000, employer contributes on the ceiling

• Employee share at 12%: ₹2,360
• EPS at 8.33%: ₹1,638
• Employer EPF share: 2,360 − 1,638 = ₹722
• EDLI at 0.5%: ₹98, and admin charges at 0.5%: ₹98

For comparison, August 2026 was ₹1,800 employee share and ₹1,250 EPS. October 2026 will be ₹3,000 employee share, ₹2,083 EPS, ₹917 employer EPF share and ₹125 EDLI.

Worked example B: previously excluded, wages ₹20,000

The employee is covered only from 17 September. EPF wages are 20,000 × 14/30 = ₹9,333, which is below the pro-rated ceiling of ₹11,667.

• Employee share at 12%: ₹1,120
• EPS at 8.33%: ₹777
• Employer EPF share: ₹343
• EDLI: ₹47, and admin charges: ₹47

From October the full month applies: ₹2,400 employee share, ₹1,666 EPS and ₹734 employer EPF share.

EPFO rounds each component to the nearest rupee. Reconcile your payroll output with the ECR template's own calculation before you upload.

Cost impact

Per employee, from October 2026 onwards, with the employer paying EPF, EDLI and admin charges:

Take a company with 40 capped employees and 20 newly covered employees. It adds about ₹1.04 lakh a month, or ₹12.5 lakh a year. The employee's take-home falls by the employee share: ₹1,200 a month for the capped employee and ₹2,400 for the newly covered one.

Where the CTC includes employer PF, the extra employer share usually comes out of gross or special allowance. The employee then loses on both sides. Check this against appointment letters, minimum wage and any "no reduction in gross" commitments before you restructure.

The government's own 1.16% EPS contribution is not a payroll item. The PIB figures imply a higher outgo, but the EPFO FAQs say it stays at ₹174 on ₹15,000.

What employers should do

• To do: Re-run every employee's Code wages (s.2(88) with the 50% add-back). Tag each one as newly covered, newly EPS-eligible, capped-member or opted-higher.
• To do: Update the payroll ceiling to ₹25,000 effective 17 Sep 2026. Keep ₹15,000 for 1–16 Sep. Update EPS and EDLI caps to ₹25,000.
• To do: Generate or link UANs and complete e-nomination for newly covered staff before the September ECR.
• To do: Prepare the single split-month ECR (Form VII) for September. Remit by 15 Oct 2026.
• To do: Decide whether to recover any unrecovered September employee share in the October payroll, and tell employees in writing.
• To do: Review CTC letters, offer templates and the payroll software's CTC-to-gross logic.
• To do: Recompute cost budgets and any cost-plus / transfer pricing mark-ups that pass through payroll cost.
• To do: Tell contractors. Principal employers should check that contractors apply the new ceiling in Forms XI and XII.
• To do: Review the Employees' Enrolment Campaign 2026 (open to 31 Oct 2026) for any historically un-enrolled staff.

Effective dates at a glance

Status note. The split-month method above follows the EPFO FAQs as reported by payroll publishers. One law-firm paper (Argus Partners) argues that September should use ₹25,000 for the whole month, because the notification sets a monthly ceiling and says nothing about daily conversion. The ECR will be validated by EPFO's system, so follow the EPFO method unless EPFO issues a different clarification. The official PIB pages could not be retrieved directly; their content was taken from published extracts.

General information, not legal advice. Last reviewed 27 Sep 2026.