The Provident Fund wage ceiling is INR 25,000, and the 2026 Scheme changes withdrawals

Since 17 September 2026 the monthly wage ceiling for mandatory Employees' Provident Fund (EPF) coverage is INR 25,000, not INR 15,000, and since 29 June 2026 the Employees' Provident Funds Scheme, 2026 has replaced the 1952 Scheme under the Code on Social Security, 2020. For an employer the first change widens who must be enrolled and raises the contribution on every wage between INR 15,000 and INR 25,000; for a member the second keeps 25 per cent of the account locked until exit and lengthens the wait for a final settlement from two months to twelve.

What changed, and from when?

Three instruments carry the change, and they differ in status.

The Employees' Provident Funds Scheme, 2026 was notified as G.S.R. 525(E) on 29 June 2026 by the Ministry of Labour and Employment, under section 15(1)(a) of the Code on Social Security, 2020. Paragraph 1(2) brings it into force on the date of publication in the Gazette, and the notification supersedes the Employees' Provident Funds Scheme, 1952 except for things done before. This is the way the Code carries the provident fund forward: the Code applies from 21 November 2025, and the Scheme is the subordinate instrument that now holds the operating rules. The Code itself is covered in an earlier note on what the labour codes cost, which does not deal with provident fund and is not repeated here.

The wage ceiling was changed by S.O. 5109(E) of 17 September 2026. Under section 2(89) of the Code, the Central Government notified INR 25,000 a month as the wage ceiling for Chapter III of the Code, with effect from publication, in supersession of S.O. 2702(E) of 29 May 2026. This is notified law, not an announcement. The Union Cabinet approval and the Ministry's press release of 16 September 2026, published through the Press Information Bureau (PIB), preceded it by a day and give the reason: the ceiling had stood at INR 15,000 since September 2014.

The third item is not law. The Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation decided on 13 October 2025 to simplify partial withdrawals, and on 2 March 2026 recommended an interest rate of 8.25 per cent for 2025-26. The first decision reached the statute book through paragraph 46 of the 2026 Scheme. The second was, in the PIB release, a recommendation that "would be officially notified by the Government of India". This note has not seen the Government's notification of the rate.

What does the INR 25,000 ceiling change for an employer?

Paragraph 18(2) of the Scheme fixes the employer's contribution at 12 per cent of the wages payable, with the employee's share equal to it, and paragraph 18(3) limits it to the wage ceiling notified under the Code. The rate did not move (it is ten per cent for the classes notified in S.O. 3582(E) of 1 July 2026). The base did.

Two consequences follow. An employee whose wage is above INR 15,000 and up to INR 25,000 was an excluded employee under paragraph 2(1)(f) of the Scheme and now is not. And an employee already enrolled who was earning more than INR 15,000 was contributing on INR 15,000 and now contributes on the wage up to INR 25,000.

The mechanics of the transition month are not in the gazette. The Employees' Provident Fund Organisation's frequently asked questions (FAQs) on the revision set out the method for September 2026: wages for 1 to 16 September are capped at INR 15,000 and wages for 17 to 30 September at INR 25,000, reported in one electronic challan-cum-return, with the September dues payable by 15 October 2026. Paragraph 20(1) of the Scheme requires payment within fifteen days of the close of every month. Whatever the method, an employer's payroll for the wage month of September 2026 has to apply two ceilings.

What it costs, worked (illustrative). Take an employer with 40 employees, each with a provident fund wage of INR 20,000 a month and each already a member contributing on INR 15,000.

Before 17 September 2026:  12 per cent x 15,000        = INR 1,800 a side
From October 2026:         12 per cent x 20,000        = INR 2,400 a side
Increase in employer share: 2,400 - 1,800 = 600 x 40   = INR 24,000 a month
Over twelve months:                                      INR 2,88,000

September 2026, per employee (method as in the FAQs):
16/30 x 15,000 = 8,000;  14/30 x 20,000 = 9,333.33;  total 17,333.33
12 per cent of 17,333.33                                = INR 2,080 a side
Employer share for 40: 2,080 x 40                       = INR 83,200
(against INR 72,000 at the old ceiling, an increase of INR 11,200)

The employer's 12 per cent includes the 8.33 per cent that goes to the Employees' Pension Scheme; deposit-linked insurance and administrative charges, each 0.5 per cent in the FAQs, are payable on top and are not modelled. The same arithmetic applies to an employee not previously covered, for whom the whole contribution is new: a wage of INR 20,000 enrolled from 17 September yields 12 per cent of 9,333.33, or INR 1,120 a side, for September.

Two points of law sit under the arithmetic. Under paragraph 21 the employer's share cannot be deducted from the member, and under paragraph 22 the member's share is recoverable from wages "and not otherwise", subject to provisos. So the extra INR 600 a month is borne by the employer, not recovered from the employee. For September 2026 the FAQs let an employer defer recovery of the employee share for newly covered employees to the next payroll cycle without the consent of the Inspector-cum-Facilitator that the third proviso otherwise requires.

What changes for a member who needs money?

Paragraph 46 replaces the older list of withdrawal purposes with three heads: illness, education and marriage; housing; and special circumstances. Each is capped at the "Eligible Member Balance", defined as the amount to the member's credit after deducting the "Minimum Balance". The Minimum Balance is 25 per cent of the aggregate contributions credited to the member, employee and employer share together with interest, up to the date of withdrawal. The smallest withdrawal is INR 1,000.

The conditions are uniform: twelve months of total membership, counted under paragraph 47 to include earlier service and membership of the Fund or an exempted trust. Education withdrawals may be made up to ten times and marriage withdrawals up to five times during membership, against a combined limit of three earlier, as the CBT release records. Housing withdrawals, which cover purchase, a site, construction, repayment of a home loan, and renovation, may be made up to five times. Special circumstances may be claimed up to two times in a financial year, and the 2025 release adds that no reason need be assigned. A member who leaves employment before twelve months can still withdraw, up to the Eligible Member Balance. Counts restart from 29 June 2026 under paragraph 46(6).

What it releases, worked (illustrative). A member has INR 12,00,000 standing to credit, employee and employer share with interest.

Minimum Balance: 25 per cent x 12,00,000          = INR 3,00,000
Eligible Member Balance: 12,00,000 - 3,00,000     = INR 9,00,000
Housing withdrawal (home loan repayment), up to 100 per cent of 9,00,000
                                                   = INR 9,00,000
Balance left in the Fund                           = INR 3,00,000

The headline in the October 2025 release was that members could withdraw up to 100 per cent of the "eligible balance". The arithmetic shows what the phrase means: all of the eligible balance, and never the whole account.

When can a member take a final settlement?

Paragraph 49(1) lists the exits that allow the full amount at once: retirement at fifty-five, permanent total incapacity, migration abroad, retrenchment, and a voluntary retirement scheme. Where a member is discharged with retrenchment compensation under the Code on Industrial Relations, 2020, or is transferred to an establishment outside the Code, payment follows a continuous period of two months.

The general case is paragraph 49(2). A member who has simply ceased to be an employee may withdraw the full amount only after a continuous period of not less than twelve months without employment in any establishment covered by the Code. The CBT release describes the change as one from "2 months to 12 months". The waiting period does not apply to a female member resigning to marry. A member who withdraws and later joins a covered establishment is treated under paragraph 49(3) as a fresh member.

The worked case (illustrative): a member resigns on 1 March 2027 with INR 12,00,000 to credit and has no job. On 1 June 2027 the full settlement under paragraph 49(2) is not available, because three months of unemployment is less than twelve. The member may instead use paragraph 46 for the INR 9,00,000 eligible balance, if one of the three heads applies and twelve months of membership is complete. The full INR 12,00,000 becomes payable on application after 1 March 2028, and interest runs to the date the final payment is authorised under paragraph 42(1)(b). Paragraph 54 requires a complete claim to be settled within twenty days of receipt.

What else sits in the same notification?

Annexure parts of the Scheme contain two one-time windows, VISHWAS, 2026 and AMNESTY, 2026, each running six months from 29 June 2026, so to about 29 December 2026 and extendable. The PIB release of 29 July 2026 describes VISHWAS as a settlement route for damages levied for late remittance for periods before 14 June 2024. The rates are those of paragraph 23(1), applied by the Annexure: 0.25 per cent for a default of less than two months, 0.50 per cent for more than two and less than four months, and 1 per cent for more than four months. AMNESTY covers provident fund trusts recognised under income tax law that never received a formal exemption. Both are conditional.

What remains unsettled?

Three things.

First, the transition month. The September method comes from the FAQs, which are guidance and not a notification.

Second, the Minimum Balance. Paragraph 46 measures it on the aggregate contributions credited up to the date of withdrawal. Whether that aggregate is reduced by earlier withdrawals, and so whether a second withdrawal leaves 25 per cent of the gross or of the net figure, is not stated in the text read.

Third, the interest rate. The Central Board of Trustees recommended 8.25 per cent for 2025-26; the Government's notification of the rate has not been read.