New Delhi, Jul 3: The Ministry of Labour and Employment has introduced a significant change to the Employees' Provident Fund (EPF) framework by making provident fund contributions on wages above the monthly salary ceiling of ₹15,000 voluntary under the newly notified Employees' Provident Funds Scheme, 2026.
Under the earlier Employees' Provident Funds Scheme, 1952, employees earning up to ₹15,000 per month were mandatorily covered under the EPF. Employees with salaries above the threshold could also opt to join the scheme voluntarily. Once enrolled, both the employee and the employer were required to contribute to the EPF based on the employee's actual basic wages, even if those exceeded the prescribed wage ceiling.
The newly notified Employees' Provident Funds Scheme, 2026 changes this framework by specifying that EPF contributions will be subject to the notified wage ceiling unless both the employer and employee choose to contribute on higher wages.
The scheme also provides that employers may continue making contributions on wages above the salary ceiling to the Employees' Pension Fund in cases where higher-wage contributions have already been permitted under the Employees' Pension Scheme, 1995.
With the revised provisions, employers and employees now have the flexibility to decide whether EPF contributions should be calculated only on the statutory wage ceiling of ₹15,000 per month or on the employee's actual higher basic salary.
The move is expected to provide greater flexibility in provident fund contributions while allowing employees and employers to jointly determine the level of retirement savings that best suits their financial and employment arrangements.
