EPFO Overhauls PF Rules: 12% Contribution Up to Rs 15,000 Mandatory

In an overhaul of provident fund rules for nearly eight crore active members, Employees' Provident Fund Organisation (EPFO) has said 12% contribution up to the statutory wage ceiling, which is currently at Rs 15,000 a month, is mandatory. Any contribution above that will be treated as voluntary. Even if your basic salary is Rs 1 lakh a month, Rs 1,800 will be deducted towards your PF contribution - along with a matching contribution by the employer. But you will also have the option to park the amount out of the remaining salary towards retirement savings. "An employee may opt to contribute, on a voluntary basis, an additional contribution on wages exceeding the statutory wage ceiling at statutory rate or at any rate in excess of statutory rate," according to provisions of the Employees' Provident Funds Scheme, 2026 notified Wednesday. Employers have the option - not an obligation - to match these additional voluntary contributions, and both the employees and employers can reduce or discontinue such additional voluntary contributions at any time.

EPFO simplifies withdrawals, cuts categories from 13 to just 3

An official told TOI, "The flexibility introduced in the scheme is to provide greater autonomy to the contributing members for their retirement savings. These provisions have been discussed extensively in the central board of trustee meetings (CBT) and have been made with their concurrence and align with the objectives of the new labour codes." Given that most private sector employees and employers have a cost-to-company relationship, salaries may be restructured, allowing both sides to work out an arrangement that is beneficial to the EPFO subscriber. The provision regarding coverage, however, remains unchanged as the new scheme provides continuity of membership by specifically stating that employees who were members under the earlier scheme will continue as members. The new scheme implements the changes related to withdrawals which were approved by the Central Board of Trustees last Oct . These changes include increasing the number of withdrawals that can be made in a year and streamlining the categories for drawing out advance funds, from 13 to just three - essential needs (illness, education, marriage); housing needs; and special circumstances. EPFO has also approved advance withdrawal up to 100% of the 'eligible balance' in the PF, including employee and employer share, with members now required to always maintain 25% of the contributions in their accounts as the minimum balance. For contract workers, the new scheme specifies the definition of "principal employer" and puts the onus of ensuring PF contributions for contractual staff on them. "The scheme has also clarified that the principal employer is responsible for making payment of PF contribution for employees engaged by or through a 'contractor' only where the contractor is not registered independently. However, even where the PF payment is made by the contractor, the ultimate responsibility for contributions remains with the principal employer," said Puneet Gupta, a partner at EY India. The new scheme also introduces several provisions on compliance requirements/filings to be done by the employer, including one-time, monthly and event-based compliances. Every employer is now required to file a consolidated return (in Form V) within 15 days of application of the scheme, giving details of all employees, including their Aadhaar, PAN, universal account number, gross wages and EPF wages. Along with the EPF Scheme 2026, govt has notified three special drives intended to regularise historical compliance gaps and resolve long-pending issues.