India’s labour ministry has increased the mandatory wage ceiling for Employees’ Provident Fund contributions to Rs25,000, ensuring employees’ net salaries remain unaffected despite higher employer contributions, in a move aimed at expanding social security coverage.
India’s labour ministry has told employers not to trim workers’ take-home pay after the government raised the Employees’ Provident Fund wage ceiling to Rs25,000 a month, a move that will pull many more staff into mandatory retirement savings. According to the ministry, companies cannot treat the higher employer contribution as a way to offset pay and must ensure that employees do not end up worse off in their monthly salary packets.
The change took effect on 17 September 2026 and replaces the previous Rs15,000 threshold. LiveMint reported that the Union Cabinet approved the increase to widen mandatory EPF coverage, while other industry explanations said the move could bring a large number of additional workers into the system and strengthen long-term retirement savings. The ministry said the purpose is to extend social security without allowing employers to pass the cost back to staff.
Officials have also told employers to start checking affected workers immediately rather than waiting for the next payroll cycle. The ministry wants companies to identify eligible employees, work out the amounts due, enrol them, report the changes, deposit the contributions and reconcile the records without delay. It has also clarified that employees with wages above Rs15,000 and below Rs25,000 who qualify under the new limit must join the Employees’ Pension Scheme.
Under the revised structure, the employee’s mandatory 12% contribution will continue to go entirely to the provident fund. The employer’s 12% share will be split, with 8.33% directed to the pension scheme and the balance paid into the provident fund. The ministry has acknowledged that employers’ costs are likely to rise, but said the additional burden may be partly offset by incentives under the PM Viksit Bharat Rozgar Yojana, which offers support for each additional job created.
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