The biggest payroll change of the year is here. The EPF wage ceiling has been raised from ₹15,000 to ₹25,000 a month, with effect from 17 September 2026.
The Union Cabinet approved the change on 16 September 2026. The Government expects more than 51 lakh additional employees to come under mandatory PF, pension (EPS) and insurance (EDLI) cover.
What has changed
The 12% contribution rates are the same. What has changed is the wage ceiling they apply to.
| Monthly contribution at the ceiling | Old (₹15,000) | New (₹25,000) |
|---|---|---|
| Employee share (12%) | ₹1,800 | ₹3,000 |
| Employer → pension, EPS (8.33%) | ₹1,250 | about ₹2,083 |
| Employer → PF account (3.67%) | about ₹550 | about ₹917 |
The ceiling had stayed at ₹15,000 since September 2014, so this is the first revision in twelve years.
Who is affected
- Employees with PF wages between ₹15,001 and ₹25,000 who were not members may now need to be enrolled, subject to the membership rules.
- Existing members see higher contributions where you restrict contributions to the ceiling.
- Employees above ₹25,000 who already contribute: more of the employer's 12% now goes to their pension.
Remember that PF wages are not the same as CTC. Check which salary components count as wages before you decide who is covered.
What it costs
For an employee at the new ceiling, the employer's monthly PF cost rises from ₹1,800 to ₹3,000. The employee's take-home pay falls by the same amount.
That second point is the one that causes trouble. An unexplained drop in take-home pay damages trust quickly, even when the money is going into the employee's own savings.
Your action list
- Identify everyone affected. List every employee whose PF wages fall between ₹15,001 and ₹25,000, and check their membership status.
- Handle September carefully. The change took effect mid-month, so September may need the old ceiling for 1–16 September and the new one from 17 September. Confirm the treatment with EPFO guidance and your payroll provider.
- Update your payroll system and employee master data before the next run.
- Review your CTC structures and offer letters for new hires, so the PF cost is built in.
- Talk to your people before payslips go out. Explain what changed, that it is a legal requirement, how much more is going into their PF, and who to ask.
A note for founders
This change hits hardest in small companies with many employees in the ₹15,000–₹25,000 range. Factor the extra cost into your budgets now, rather than discovering it in the next PF return.
This article is for general information and is not legal advice. Check the current EPFO circulars and take professional advice for your situation.
Startup & MSME HR Toolkit
Setting up payroll and statutory registrations right from the start saves painful corrections later. The free Startup & MSME HR Toolkit covers it all for your first 10 employees.
Get it free →