EPF wage ceiling raised from ₹15,000 to ₹25,000: what changes for your payroll
PF on the ceiling goes up from ₹1,800 to ₹3,000 a month, more employees must now be covered, and September 2026 payroll needs care. Here’s what employers and employees should know.
● Cabinet approved · Notification awaited
The Union Cabinet has approved raising the EPF wage ceiling from ₹15,000 to ₹25,000 per month, effective 17 September 2026. According to reports, about 51 lakh more employees will now get PF, pension and insurance cover.
The formal Government notification and EPFO’s detailed guidelines are still awaited. The final rules will depend on that notification. Here’s what the change means in simple terms.
PF on the ceiling goes up from ₹1,800 to ₹3,000
Many employers calculate PF on wages up to the ceiling only. For them, PF will now be calculated on ₹25,000 instead of ₹15,000.
| Component | Rate | Earlier (₹15,000) | Now (₹25,000) |
|---|---|---|---|
| Employee’s share | 12% | ₹1,800 | ₹3,000 |
| Employer’s share | 12% | ₹1,800 | ₹3,000 |
| ↳ Pension (EPS) | 8.33% | ₹1,250 | ≈ ₹2,083 |
| ↳ PF (EPF) | 3.67% | ₹550 | ≈ ₹917 |
Please note:
- The ₹3,000 figure applies only to employees whose Basic + DA is ₹25,000 or more. For lower salaries, PF stays at 12% of actual Basic + DA.
- If you already pay PF on full Basic + DA (above ₹15,000), the total PF amount will not change for those employees. However, more of the employer’s share may now go to the pension (EPS) account.
- EDLI and EPF admin charges are calculated on wages up to the ceiling, so these are also expected to go up slightly.
More employees must now be covered
PF is now compulsory for all employees with Basic + DA up to ₹25,000. Earlier, this applied only up to ₹15,000.
Employees earning between ₹15,001 and ₹25,000 who are not yet PF members must be enrolled, and their UAN must be generated.
Salary above ₹25,000: who is exempt and who is not
An employee earning above ₹25,000 is not always exempt from PF. It depends on whether they are already a member.
New employee, never a PF member
A new joinee with Basic + DA above ₹25,000 who has never been a PF member is not required to join. Joining is optional.
Existing PF member
Anyone who is already a PF member must keep contributing, even if their salary is above ₹25,000.
Important: Do not stop PF deductions for existing members just because their salary is above the new limit.
What about September 2026 payroll?
The change applies from 17 September 2026, not from 1 September. EPFO is expected to clarify how September contributions should be calculated. The new ceiling may apply to the full month, or only to wages for 17–30 September.
Our suggestion: Finalise September PF only after EPFO’s clarification. The ECR for September is due by 15 October 2026, so there is time to wait for the guidance.
Impact in simple terms
The effect depends on salary, membership, and how PF is currently calculated. Monthly figures:
| Basic + DA | Current PF practice | Employee PF | Employer PF | Take-home |
|---|---|---|---|---|
| ₹12,000 | Any | ₹1,440 → ₹1,440 | ₹1,440 → ₹1,440 | No change |
| ₹20,000 | Not a PF member so far | Nil → ₹2,400 | Nil → ₹2,400 | Down ₹2,400 |
| ₹20,000 | PF limited to ₹15,000 | ₹1,800 → ₹2,400 | ₹1,800 → ₹2,400 | Down ₹600 |
| ₹20,000 | PF on full salary | ₹2,400 → ₹2,400 | ₹2,400 → ₹2,400 | No change |
| ₹30,000 | Existing member, PF limited to ceiling | ₹1,800 → ₹3,000 | ₹1,800 → ₹3,000 | Down ₹1,200 |
| ₹30,000 | Existing member, PF on full salary | ₹3,600 → ₹3,600 | ₹3,600 → ₹3,600 | No change |
| ₹30,000 | New joinee, never a member | Optional | Optional | No change unless they join |
Figures exclude EDLI and EPF admin charges, which are paid only by the employer.
For employees
Where PF goes up, take-home salary will be a little lower. The extra amount goes into their own PF savings and pension, and their EDLI insurance cover is also expected to increase.
For employers
Where PF goes up, the cost per employee rises by an amount equal to the employee’s increase, plus small increases in EDLI and admin charges. The maximum PF increase is ₹1,200 per month, for employees earning above ₹25,000.
What employers should do now
- List employees with Basic + DA between ₹15,001 and ₹25,000 who are not yet PF members, and enrol them.
- Check whether you calculate PF on the ₹15,000 ceiling or on actual Basic + DA, and update your payroll settings if needed.
- Do not stop PF deductions for any existing member, whatever their salary.
- Tell your employees about the possible change in take-home salary from September 2026.
- Hold September PF calculations until EPFO confirms the method, and file the ECR by 15 October 2026.
Gurpreet Kaur
Questions about how this affects your payroll? Get in touch. We will share updates once the official notification and EPFO guidelines are released.
Sources
- Business Today – EPFO wage ceiling hike: Rs 15,000 to Rs 25,000
- India TV News – EPF wage ceiling raised to Rs 25,000
This article is for general information only. It is based on the Cabinet decision as reported, and the final rules will follow the official notification. Please seek advice for your specific situation.