India's mandatory provident fund net widened on 17 September 2026, when the wage ceiling for compulsory Employees' Provident Fund Organisation (EPFO) coverage rose from ₹15,000 to ₹25,000 a month. It is the first revision since September 2014, and the government expects it to bring more than 51 lakh additional employees into mandatory coverage (PIB, 2026).
The change lands in the middle of a larger rebuild of Indian employment law. The four labour codes took effect in November 2025, the central rules followed in May 2026, and states now have an October 31 target to finish their own. For payroll and HCM teams in India, three layers of the compliance stack are moving within the same few months.
This post covers India only and is not legal advice.
The EPF ceiling changes the payroll calculation
The Union Cabinet approved the Ministry of Labour and Employment's proposal to raise the ceiling, effective 17 September 2026 (PIB, 2026). Workers earning between ₹15,001 and ₹25,000 a month now fall inside mandatory coverage for all three EPFO schemes: the Employees' Provident Fund, the Employees' Pension Scheme and the Employees' Deposit Linked Insurance Scheme.
The cost effect is immediate. For an employee earning ₹25,000 or more whose contributions were restricted to the old ceiling, the employer's statutory EPF and EPS contribution rises from ₹1,800 to ₹3,000 a month, an increase of up to ₹1,200 per employee (Business Standard, 2026). Where the employee's own contribution is also capped at the ceiling, it rises by the same amount, and take-home pay falls unless the employer restructures pay.
The revision followed a court deadline. In January 2026 the Supreme Court directed the Centre and EPFO to decide within four months on a public interest petition seeking a revision of the ceiling, which had then been unchanged for 11 years (News On AIR, 2026).
For payroll systems, the ceiling is a single parameter, but the work around it is not. Employers have to identify staff newly in scope, register them, and decide how to handle salary structures built around the old ₹15,000 figure. Because the change took effect on the 17th, September is a split month, and each employer needs a documented position on how that first partial period is treated.
A new scheme sits underneath the ceiling
The higher ceiling applies to a scheme that is itself less than three months old. On 29 June 2026 the Ministry notified the Employees' Provident Funds Scheme 2026, the Employees' Pension Scheme 2026 and the Employees' Deposit-Linked Insurance Scheme 2026 under the Code on Social Security, 2020 (KPMG, 2026). An amnesty scheme was notified alongside them (EY, 2026).
The EPF Scheme 2026 took effect on 1 July and supersedes the 1952 scheme. Its broad contours are unchanged: contributions stay at 12% of wages, mandatory contributions for employees above the ceiling are restricted to the ceiling amount, and existing members carry over. What it adds are new compliance, governance and digital-interface measures (Business Today, 2026).
The practical consequence is that payroll vendors and in-house teams have had to absorb two EPF changes in one quarter: a new legal basis in July and a new ceiling in September. Any team that treated the July scheme as a paperwork change now has to revisit the same configuration.
State rules face an October 31 target
The third layer is the slowest. The central rules under all four codes were notified on 8 May 2026, but they apply only where the central government is the appropriate government, which covers sectors such as banking, insurance, telecommunications, mines, air transport, railways and central public sector undertakings (KPMG, 2026; DLA Piper, 2026). Labour is on the Concurrent List, so most private employers also depend on rules from the states where they operate.
On 24 September, Labour Secretary Chandra Bhushan Kumar said ten states have published their rules, the remaining states and Union Territories have issued drafts for consultation, and the Centre expects all of them to publish by October 31 (Business Standard, 2026; IANS, 2026). Kumar also said the government is building a "Labour Stack" to bring worker databases and welfare scheme information onto an integrated platform.
For a multi-state employer, this means there is still no single national rule set to configure. Some locations run on final state rules, others on drafts that can change before notification, and HRMS compliance calendars have to track both.
What to watch
The first marker is October 31. If the remaining states publish on time, employers get a complete set of state rules for the first time since the codes took effect; if several miss the date, multi-state compliance stays fragmented past it. The second is the October payroll run, the first full month under the ₹25,000 ceiling, which will show how many employers absorbed the higher contribution and how many passed it through as lower take-home pay. The third is the Labour Stack, which Kumar said should reach a pilot within 15 days before being tested in at least one state or Union Territory.
Sources
- Press Information Bureau. "Cabinet Approves Higher EPFO Wage Ceiling of Rs. 25,000, Expanding Mandatory Coverage." 2026. https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2310973®=3&lang=1
- Press Information Bureau. "EPFO Raises Wage Ceiling from Rs. 15,000 to Rs. 25,000; Over 51 Lakh Workers to Benefit." 2026. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2313829®=48&lang=2
- Business Standard. "EPFO ceiling hike to raise employer cost by ₹1,200 per worker." 2026. https://www.business-standard.com/amp/finance/news/epfo-ceiling-hike-to-raise-employer-cost-by-1-200-per-worker-126091701363_1.html
- News On AIR. "Supreme Court directs Centre, EPFO to decide on revision of EPFS wage ceiling within four months." 2026. https://www.newsonair.gov.in/supreme-court-directs-centre-epfo-to-decide-on-revision-of-epfs-wage-ceiling-within-four-months/
- KPMG. "India: Ministry of Labour and Employment Notifies Three Social Security Schemes." 2026. https://kpmg.com/xx/en/our-insights/gms-flash-alert/2026/flash-alert-2026-192.html
- EY India. "New Employees' Provident Funds Scheme and Amnesty 2026 notified under the Code on Social Security, 2020." 2026. https://www.ey.com/en_in/technical/alerts-hub/2026/07/new-employees-provident-funds-scheme-and-amnesty-2026-notified
- Business Today. "New EPF Scheme 2026 notified as part of Code on Social Security." 2026. https://www.businesstoday.in/personal-finance/news/story/new-epf-scheme-2026-notified-as-part-of-code-on-social-security-540258-2026-07-01
- KPMG. "India: Government of India Notifies Final Rules on Four Labour Codes." 2026. https://kpmg.com/xx/en/our-insights/gms-flash-alert/2026/flash-alert-2026-127.html
- DLA Piper. "Key considerations of the notified Central Rules under India's Labour Codes." 2026. https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/2026/Key-considerations-of-the-notified-Central-Rules-under-Indias-Labour-Codes
- Business Standard. "All states, UTs may notify labour code rules by Oct 31: Labour Secretary." 2026. https://www.business-standard.com/amp/india-news/all-states-uts-may-notify-labour-code-rules-by-oct-31-labour-secretary-126092401119_1.html
- IANS. "New Labour Codes to simplify compliance, enhance social security." 2026. https://ianslive.in/new-labour-codes-to-simplify-compliance-enhance-social-security--20260924173146