What Changed and When

The Ministry of Labour and Employment, by notification S.O. 5109(E) issued under the Code on Social Security 2020, raised the wage ceiling for mandatory provident fund coverage from ₹15,000 to ₹25,000 per month with effect from 17 September 2026. This is the first change since the ceiling moved from ₹6,500 to ₹15,000 in September 2014, and it applies to EPF, EPS and EDLI wages together.

The ceiling has two functions. It fixes the wage up to which an employee must be enrolled (above it, a never-enrolled employee can be an excluded employee), and it fixes the wage up to which an employer must contribute for members who earn more. Both functions moved on the same date. The contribution rates (12% employee, 12% employer split 8.33% EPS and the balance EPF, plus 0.5% EDLI and 0.5% admin) did not change.

The ESIC ceiling did not change. It remains ₹21,000 gross per month (₹25,000 for persons with disability). The two schemes now have ceilings within ₹4,000 of each other but on different bases, PF on basic + DA and ESI on gross, so an employee can be inside PF and outside ESI, or the reverse. Do not let a system update to one ceiling accidentally overwrite the other; the ESI calculation guide covers that scheme separately.

• Ceiling ₹15,000 to ₹25,000 from 17 September 2026 under S.O. 5109(E)
• Applies to EPF, EPS and EDLI wages; contribution rates unchanged
• First revision since September 2014
• ESIC ceiling stays at ₹21,000 gross; different base, different scheme

Who Becomes Newly Covered

Any employee whose basic + DA is between ₹15,001 and ₹25,000 and who was treated as an excluded employee, because they had never been a PF member and earned above the old ceiling on joining, is a mandatory member from 17 September 2026. This group is large in retail, hospitality, logistics, BPO and small manufacturing, where basic in this band is common and PF was often waived at the employee's request to protect take-home.

Employees already members with wages above ₹15,000 were never excluded; for them the change is in the contribution base, not in coverage. Employees earning above ₹25,000 who were never members can still be excluded employees, subject to the usual declaration. Note that an excluded employee who becomes a member cannot later opt out even if wages rise above ₹25,000; membership continues.

Also check international workers, apprentices and trainees against the rules, because their treatment does not depend on the ceiling and should not change. And review anyone whose basic was kept below ₹15,000 by an allowance-heavy structure: the Code on Wages 50% add-back may already have put their wage above ₹15,000, and now within the ₹25,000 mandatory band. The PF calculation guide sets out the wage definition.

• Excluded employees with basic + DA ₹15,001–25,000 become mandatory members
• Existing members above ₹15,000: contribution base rises, coverage unchanged
• Never-enrolled employees above ₹25,000 can remain excluded with the proper declaration
• Re-test allowance-heavy structures under the 50% rule before deciding exclusion

Employer Cost Impact With Examples

Example 1, newly covered. An employee with basic + DA ₹22,000 who was excluded until 16 September. Before: employer PF cost ₹0. After: employer 12% = ₹2,640 (EPS 8.33% ₹1,833, EPF ₹807), EDLI 0.5% ₹110, admin 0.5% ₹110, total ₹2,860 per month or ₹34,320 per year. The employee's take-home falls by ₹2,640, their own 12%.

Example 2, existing member on the ceiling. Same ₹22,000 basic + DA, but already a member with contributions restricted to ₹15,000. Before: employer ₹1,800 + EDLI ₹75 + admin ₹75 = ₹1,950. After: ₹2,860. Increase ₹910 per month; the employee's deduction rises from ₹1,800 to ₹2,640. Example 3, member on ₹40,000 basic contributing on the ceiling: employer moves from ₹1,950 to ₹3,250 (₹3,000 + ₹125 + ₹125), an increase of ₹1,300 a month; employee deduction rises from ₹1,800 to ₹3,000.

At workforce level, a company with 100 newly covered employees averaging ₹20,000 basic + DA adds 13% × ₹20,000 × 100 = ₹2,60,000 per month, roughly ₹31 lakh a year, to its wage bill without anyone's gross changing. Use the PF calculator on your actual wage master to size the impact before finance asks.

• ₹22,000 newly covered: employer ₹0 to ₹2,860 per month; take-home down ₹2,640
• ₹22,000 member on old cap: employer ₹1,950 to ₹2,860; deduction ₹1,800 to ₹2,640
• ₹40,000 member on cap: employer ₹1,950 to ₹3,250; deduction ₹1,800 to ₹3,000
• 100 newly covered staff at ₹20,000 average: about ₹2.6 lakh per month

The EPS Cap and Pension Wages

EPS contribution is 8.33% of wages up to the ceiling, so the maximum monthly EPS contribution moves from ₹1,250 (8.33% of ₹15,000) to ₹2,082.50, rounded to ₹2,083 (8.33% of ₹25,000). For a member contributing on the ceiling, the employer's EPF share therefore changes from ₹1,800 − ₹1,250 = ₹550 to ₹3,000 − ₹2,083 = ₹917.

Pensionable salary, which drives the monthly pension formula (pensionable salary × pensionable service ÷ 70), is computed on wages up to the ceiling averaged over the final period of service. Members whose wages exceed ₹15,000 will see a higher pensionable salary for service after 17 September 2026, which improves eventual pension but does not retrospectively change earlier years unless EPFO issues specific instructions.

Employees who joined after 1 September 2014 with wages above the then ceiling and were never EPS members remain outside EPS; for them the whole employer 12% continues to EPF. Newly covered employees in the ₹15,001–25,000 band joining membership now are enrolled in EPS in the normal way because their wages are within the current ceiling. Keep the EPS flag per employee and check it against EPFO's instructions for this transition. See the EPS glossary entry for the scheme rules.

• Maximum EPS contribution ₹1,250 to ₹2,083 per month
• Employer EPF share on the ceiling ₹550 to ₹917
• Pensionable salary rises for service after 17 September 2026
• Post-2014 high-wage joiners never in EPS stay outside it; check the flag per employee

September 2026: The Split-Month Computation

Because the change is effective mid-month, September 2026 wages are split. For 1 to 16 September the ceiling is ₹15,000; for 17 to 30 September it is ₹25,000. The reasonable approach is to pro-rate the applicable ceiling by days and cap each part separately. For a member with basic + DA of ₹22,000 previously contributing on ₹15,000: first part ₹15,000 × 16 ÷ 30 = ₹8,000; second part ₹22,000 × 14 ÷ 30 = ₹10,266.67; PF wages ₹18,267; employee share ₹2,192; EPS ₹1,522; employer EPF ₹670; EDLI ₹91; admin ₹91.

For a member on ₹40,000 basic + DA contributing on the ceiling: ₹15,000 × 16 ÷ 30 = ₹8,000 plus ₹25,000 × 14 ÷ 30 = ₹11,666.67, PF wages ₹19,667, employee share ₹2,360. For a newly covered employee on ₹22,000 who was excluded, membership begins on 17 September and PF wages for the month are the 14-day portion, ₹10,267, giving an employee share of ₹1,232. Their date of joining EPF in the ECR is 17 September 2026 even though employment began earlier.

Follow EPFO's instructions for the ECR of September 2026 on how to present the split; if the portal expects a single wage figure per member, document your pro-rata working in the payroll file so it can be shown at inspection. From October 2026 onwards the ceiling is simply ₹25,000 for the full month. The EPF glossary entry will note any subsequent clarifications.

• 1–16 Sep at ₹15,000 ceiling; 17–30 Sep at ₹25,000; pro-rate by days and cap each part
• ₹22,000 member: PF wages ₹18,267, employee ₹2,192
• ₹40,000 member on ceiling: PF wages ₹19,667, employee ₹2,360
• Newly covered ₹22,000 employee: joins EPF on 17 Sep; PF wages ₹10,267, employee ₹1,232

Payroll Configuration Checklist

Start with the wage master: confirm every employee has basic + DA as a separate, correct field, and recompute wages under the 50% rule where allowances dominate. Then update the ceiling value in the payroll system, or the referenced cell in your spreadsheet, and verify that the EPS cap, the EDLI cap and the excluded-employee test all read from the same ceiling rather than from separately hard-coded 15,000s.

Next, re-run the exclusion review. Produce a list of employees with basic + DA between ₹15,001 and ₹25,000 flagged as excluded, obtain UANs or generate new ones, set their EPF joining date to 17 September 2026, and file the declaration forms. Check each employee's EPS eligibility flag. Then re-issue CTC letters or a salary annexure where the employer PF contribution has changed, so that the CTC on record matches what payroll will now cost.

In Attend Mitra, the PF wage ceiling, EPS eligibility and per-employee PF applicability are payroll settings; updating the ceiling and re-flagging newly covered employees is done in the web console before the September run, and the payroll run then computes the employee and employer figures on attendance-linked earned wages. The salary register and PF summary export are your reconciliation for the ECR, which you still file on the EPFO portal. The EPF and ESIC setup guide walks through the settings.

• Verify basic + DA per employee and apply the 50% add-back where needed
• Update the ceiling once; confirm EPS cap, EDLI cap and exclusion test read from it
• List excluded employees in the ₹15,001–25,000 band; enrol with a 17 Sep 2026 EPF joining date
• Check EPS flags; re-issue CTC annexures where employer PF changed
• Reconcile the salary register to the ECR before the 15 October deadline

Communicating the Take-Home Change to Employees

Newly covered employees will see a fall in take-home of 12% of basic + DA, ₹2,640 for someone on ₹22,000, in the October payslip for September wages, and a smaller fall in the September slip itself because of the split month. Explain it before the payslip lands: what changed, that it is a statutory requirement not a company decision, that the employer is contributing an equal amount plus EDLI, and that the money is theirs in the EPF account with interest and insurance cover.

A one-page note and a short session for supervisors works better than a policy circular. Include the employer's contribution figure for the employee's own wage so the message is about total compensation rising, not take-home falling. Where a company had agreed net salaries with junior staff, decide explicitly whether to absorb the employee share by raising gross; that is a commercial choice and it also raises the PF base.

Employees asking to opt out should be told clearly that mandatory coverage cannot be waived once wages are within the ceiling. Employees already above ₹25,000 and excluded may continue to be excluded, but any who wish to join can, and the employer must then contribute at least on the ceiling. The labour codes impact guide sets this change in the wider context of the new Codes.

• Tell newly covered employees before the payslip: statutory change, equal employer match, EDLI cover
• Show total compensation, not just the take-home fall
• Decide whether to gross up net-salary agreements; it also raises the PF base
• No opt-out within the ceiling; voluntary joining above it binds the employer to contribute on the ceiling