2.1 Ministry of Labour and Employment
Wage Ceiling for Provident Fund under the Code on Social Security, 2020
Notification No. S.O. 5109(E); Date of Issue: 17 September 2026; Effective Date: 17 September 2026
https://www.labour.gov.in/static/uploads/2026/09/2b0f1dbbd3769fc388416186ec145328.pdf 

The Central Government has raised the wage ceiling from INR 15,000 to INR 25,000 per month for the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS) and Employees’ Deposit Linked Insurance (EDLI) scheme (together, the “PF schemes”). The ceiling is the wage level up to which coverage under the PF schemes is mandatory, and the cap on wages for calculating contributions. Employees whose PF wages are above INR 15,000 and up to INR 25,000, who were previously outside mandatory coverage, are now mandatorily covered under the PF schemes (subject to the applicable coverage conditions). Contribution rates are unchanged: 12% each from employer and employee, with the employer’s share split between pension (8.33%) and provident fund (3.67%). “Wages”, the basis for calculating contributions under the PF schemes, are basic pay, dearness allowance (DA) and retaining allowance, not gross salary. Where allowances and other components exceed half of total pay, the excess is also counted as wages. For September 2026, contributions are calculated at the old ceiling for 1–16 September and the new ceiling for 17–30 September, in a single return due by 15 October 2026.

What should foreign companies do?

• Employers need to check which components count as wages, including whether allowances exceed half of total pay, as this decides coverage and contribution amounts.
• Review and prepare a list of employees with wages between INR 15,000 and INR 25,000 (newly mandatorily covered), and existing members whose contributions were capped at INR 15,000 (contributions will increase).
• Employers’ contributions (12% of wages) are expected to rise by up to INR 1,200 per month for existing members whose contributions were capped at INR 15,000, and by up to INR 3,000 per month for newly covered employees.
• Employers must enrol eligible employees themselves. For newly covered employees, they may recover the September employee share through the October payroll, provided the full contribution is reported and paid by 15 October 2026. Employers cannot recover their own higher share by reducing salary.
• Employees earning above INR 15,000 may see take-home pay fall by up to INR 1,200 per month, or by 12% of wages if newly covered. In return, they receive a matching employer contribution, pension cover and life insurance. Employees with PF wages below INR 15,000, and those already contributing on actual wages, see no change in take-home pay.