India raises EPFO statutory wage ceiling to INR 25,000 per month

India has expanded mandatory coverage under its statutory social security framework by increasing the wage ceiling for mandatory Employees’ Provident Fund Organisation (EPFO) coverage from INR 15,000 to INR 25,000 per month. The change took effect on 17 September 2026.

The change is expected to bring more than 5.1 million additional employees within mandatory EPFO coverage, subject to the applicable eligibility conditions and scheme provisions.

Background

On 17 September 2026, the Ministry of Labour and Employment issued Notification S.O. 5109(E) on the increase in the EPFO wage ceiling from INR 15,000 to INR 25,000 per month. The revised ceiling was approved by the Union Cabinet and took effect from the date of publication in the Official Gazette on 17 September 2026.

The increase represents the first revision to the EPFO wage ceiling since 2014 and reflects the government’s efforts to align social security coverage thresholds with prevailing wage levels and labor market conditions.

The revised wage ceiling has both compliance and cost implications for employers. Organizations with employees earning between INR 15,001 and INR 25,000 per month may need to enroll additional employees in statutory social security programs, update payroll processes, and account for higher employer contributions and administrative charges. Employers should assess the impact of the changes promptly to ensure compliance and understand any resulting workforce cost implications.

Key details

From 17 September 2026, employees earning monthly wages of up to INR 25,000 are now generally required to participate in the EPFO system, subject to other eligibility rules. Previously, employees earning above INR 15,000 per month at the time of joining employment were excluded from mandatory coverage.

The revised wage ceiling applies to all three social security schemes administered by the EPFO:

• Employees’ Provident Fund Scheme (EPF)

• Employees’ Pension Scheme (EPS)

• Employees’ Deposit Linked Insurance Scheme (EDLI)

Increase in maximum wage base on which mandatory EPF and EPS contributions are calculated

Under the current framework, employees contribute 12% of wages towards EPF. Employers also contribute 12% of wages (3.67% of wages are allocated to EPF and 8.33% of wages are allocated to EPS). Employees do not contribute to EPS. Employers and employees are generally not required to make statutory contributions on wages exceeding the applicable wage ceiling, and any contributions above the wage ceiling are considered voluntary in nature.

The higher wage ceiling has increased the maximum wage base on which mandatory contributions are calculated from INR 15,000 to INR 25,000. Accordingly, the maximum mandatory employer and employee contributions have increased from INR 1,800 per month each (12% of INR 15,000) to INR 3,000 per month each (12% of INR 25,000).

With the statutory wage ceiling increasing from INR 15,000 to INR 25,000:

*Subject to the applicable EPS provisions.

Increase in maximum wage base on which mandatory EDLI contributions are calculated

Employers currently contribute 0.5% of wages towards EDLI, subject to the statutory wage ceiling. With the increase in the wage ceiling to INR 25,000, the maximum mandatory employer EDLI contribution has increased to INR 125 per employee per month (0.5% of INR 25,000), up from the previous cap of INR 75 (0.5% of INR 15,000).

Increase in EPF administrative and inspection charges

The increase in the wage ceiling may also raise certain employer compliance costs. Employers may face increased EPF administrative charges (0.5% of wages for regular establishments) or inspection charges (0.18% of wages for exempted establishments) because these amounts are generally linked to the wage base on which contributions are calculated.

Employer action: ACT

Employers should review their workforce to identify employees earning between INR 15,001 and INR 25,000 per month who may require enrollment in EPF, EPS and EDLI due to the revised wage ceiling. The impact of the revised wage ceiling may be limited for employers and employees who already make contributions on wages exceeding INR 25,000.

In particular, employers should consider:

• assessing which employees are newly eligible for EPF, EPS and EDLI enrolment;

• reviewing payroll processes and contribution calculations;

• updating onboarding and social security compliance procedures;

• evaluating the cost implications of increased employer contributions and increased administrative and inspection charges; and

• communicating the changes and potential payroll implications to affected employees.

Employers requiring assistance in assessing the impact of the revised wage ceiling may wish to consult with Lockton India. The team supports clients across the full spectrum of employee benefits, including regulatory, statutory, and supplemental benefit matters, and can help organizations understand and address the compliance, payroll, cost, and employee benefit implications of the change.

This update is intended for general information purposes only and should not be considered legal, tax or statutory compliance advice. Employers should assess the applicability of the revised provisions based on their specific workforce and seek appropriate professional advice where required.

Further Information

Cabinet Approves Higher EPFO | Ministry of Labour & Employment (opens a new window)