On 17 September 2026, the Ministry of Labour & Employment issued a notification increasing the wage ceiling for mandatory coverage from INR 15,000 per month to INR 25,000 per month for the purpose of the Employees’ Provident Fund (EPF). In this regard, the Employees’ Provident Fund Organisation (EPFO) has released frequently asked questions (FAQs) clarifying contribution and calculation methodology, transitional compliance requirements, and other operational aspects arising from revision of statutory wage ceiling.1
WHY THIS MATTERS
The increased statutory wage ceiling may expand mandatory EPF, EPS, and EDLI coverage to additional employees and increase contribution costs for some employers and employees. The mid-month effective date may also create an immediate administrative impact as wages and contributions need to be calculated separately for the periods from 1 September through 16 September 2026 and from 17 September through 30 September 2026.
Key Clarifications
Particulars | Clarification | FAQ reference |
Impact on revised wage ceiling for employees | - Employees drawing wages of up to INR 25,000 per month will now be mandatorily required to become members of Employee Provident Fund (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI) with both employee and employer required to mandatorily contribute on wages of up to INR 25,000 per month. | Q1, Q2, Q3, Q5, Q9, Q12, Q13, Q19, Q20 |
Computation mechanism and operational aspects for September 2026 | - Wages to be apportioned for periods – 1 September to 16 September 2026 and 17 September to 30 September 2026 for affected employees. | Q7 to Q11 |
Impact of revised wage ceiling on Cost To Company (CTC) | - CTC is not a statutory concept for determining PF liability. While CTC represents total cost incurred by employer toward employee, employer and employee contributions are legally distinct. | Q14, Q15 |
Impact on employee’s take-home salary | Any increase in employee share of EPF due to increase in wage ceiling is fully matched by the employer, earns better interest, comes with tax benefits, and builds towards a guaranteed pension and life insurance coverage. It may be thought of as moving from the take-home pocket to the PF account pocket, where it belongs entirely to the employee, grows every year, and remains easily accessible, with the balance in the PF account available for withdrawal to the extent of 75 percent for any need. | Q16 |
Increase in employee contribution and accumulation due to revised wage ceiling | Where PF contributions are required to be made on revised applicable wage, the employee's contribution may increase, since it is calculated as a percentage of PF wages. This applies to employees in INR 15,000 to INR 25,000 bracket or where the employee was earning more than INR 25,000 but contributing at INR 15,000, resulting in higher EPF accumulation along with applicable interest, depending on the wage on which contributions are made. | Q17, Q18 |
Implications for employees where wages exceed INR 25,000 | - If wages exceed INR 25,000, the statutory contribution may be restricted to the prescribed ceiling unless the employee is already contributing on higher wages. | Q21, Q22 |
Enrollment requirements due to revised wage ceiling | Revised statutory ceiling does not require members to submit any separate application. It will be the statutory responsibility of the employer to enroll such members and start compliance for them. | Q30, Q31 |
Additional clarifications on EPS | - The revised ceiling expands the scope for EPS coverage and permits pensionable wages to be considered up to the revised statutory ceiling, subject to applicable EPS provisions. | Q35, Q36 |
Additional clarifications on EDLI | Increase in wage ceiling can increase wage-linked component used for calculating the EDLI benefit, but maximum assurance benefit presently payable under EDLI remains INR 700,000. An actuarial valuation of the EDLI fund will be undertaken, and benefits may be decided in future based on the analysis. | Q38 |
Impact on cost for employer on account of revised wage ceiling | - For employers, the additional cost is a predictable 12 percent matching contribution (3.67 percent towards EPF and 8.33 percent towards EPS, capped at the revised INR 25,000 wage ceiling). | Q39, Q40 |
Benefits under Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY) scheme | - The additional cost arising to employers can be partly offset by the incentive of up to INR 3000 per month for every additional employment created under PMVBRY scheme. | Q39, Q41 |
Effective date of implementation | The revised wage ceiling remains effective from 17 September 2026. | Q45 |
Immediate action plan for employers | - Identify employees in INR 15,000–INR 25,000 wage band. | Q46 |
KPMG INSIGHTS
The FAQs provide practical guidance on several aspects of the changes, including employee coverage, contribution calculations, EPS enrollment, September 2026 payroll treatment, and ECR filing. The detailed illustrations and transition-related explanations mentioned therein could help employers implement the revised requirements consistently.
Employers could now align their payroll processes and employee communications with these clarifications and continue monitoring further EPFO portal instructions and operational guidance.
If assignees and/or their programme managers have any questions or concerns about the scope of the update, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax professional or a member of the GMS tax team with KPMG in India (see the Contacts section).
ENDNOTE:
1 Press Information Bureau, “EPFO Wage Ceiling FAQs,” published on 17 September 2026 (access may be restricted).
RELATED RESOURCE
This article is excerpted, with permission, from "EPFO releases FAQs on revision of statutory wage ceiling,” Tax Flash News (26 September 2026), a publication of the KPMG International member firm in India.
Contacts
More Information
Explore all GMS Flash Alert Topics
Explore GMS Flash Alert Newsletters & Trackers
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in India.
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2026 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.