If you have questions or would like additional information on the material covered herein, please contact:
Jeetika Aggarwal, Associate
jaggarwal@lexcounsel.in
On September 16, 2026, the Union Cabinet approved the proposal of the Ministry of Labour & Employment (“L&E Ministry”) to increase the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (“EPFO“) from INR 15,000 per month to INR 25,000 per month (“Amendment”). The Amendment will be operationalised under the Code on Social Security, 2020 read with the rules, schemes, and other directions issued thereunder (“SS Code“), which governs the Employees’ Provident Fund (“EPF“) framework through Chapter III that applies to establishments with 20 or more employees.
(1) What does this mean?
Under the SS Code, employers and employees are subject to certain membership and contribution requirements prescribed under the applicable EPF, pension and deposit linked insurance schemes. The wage ceiling provided under the SS Code determines the employee coverage, and the statutory contributions payable by the employers and employees towards provident fund and other applicable benefits. Pursuant to the Amendment, every employee drawing wages up to INR 25,000 will attract mandatory employer contribution (currently 12% of wages), in addition to the equal employee contribution. Accordingly, an increase in the wage ceiling will bring employees who were previously outside the mandatory coverage within its ambit.
(2) Key Implications for Employers:
Once the Amendment is operationalised, the employers should:
- (i) identify employees earning between INR 15,000 and INR 25,000 who will now come within the ambit of mandatory EPFO coverage and assess the resulting contribution impact;
- (ii) review salary structures and employment documentation for such employees and assess the impact on CTC and take-home pay;
- (iii) update payroll, enrolment records and Electronic Challan-cum-Return filings, as applicable, to ensure timely compliance and avoid potential interest, damages or penalties; and
- (iv) review the position of contract workers and employees covered through exempted PF trusts, where relevant.
Even though the Government has announced that the Amendment will take effect from September 17 2026, the Official Gazette and the transitional provisions will provide further clarity on the manner and timing of implementation to include the employees earning between INR 15,000 and INR 25,000 within the EPFO coverage.
We will keep you updated on further developments.