EPF wage ceiling is now ₹25,000: what every startup employer must do this month

For twelve years, ₹15,000 was the number that decided mandatory EPF coverage. That number has changed with immediate effect, and it lands hardest on startups running large junior and operations teams.

What exactly changed

The Ministry of Labour and Employment issued Notification S.O. 5109(E) on 17 September 2026 under Section 2(89) of the Code on Social Security, 2020, setting the new wage ceiling at ₹25,000 per month. This follows Union Cabinet approval on 16 September 2026 and is the first revision since the ceiling moved from ₹6,500 to ₹15,000 in 2014.

• Over 51 lakh additional employees are expected to come under mandatory coverage.
• Estimated annual budgetary support will climb to roughly ₹11,339 crore, up from about ₹10,250 crore.
• Note the legal framework: this is a notification under the Code on Social Security, 2020, distinct from the old EPF & MP Act, 1952, and separate from the new EPF, EPS and EDLI schemes notified on 8 July 2026.

The cost impact, rupee by rupee

Contribution rates are unchanged: 12% from the employee, 12% from the employer, plus EDLI and administrative charges that take the employer's total to around 13%. What has expanded is the base on which they apply.

For an employee whose PF was previously capped at ₹15,000, this adds an extra ₹1,300 a month, or ₹15,600 a year, once administrative and EDLI charges are counted. For newly covered junior hires who were previously excluded, the full cost is around ₹2,600 a month, or ₹31,200 a year. Multiply that across your operations, sales and support headcount before you finalise next quarter's burn rate.

Who is affected: the five categories

• Wages ₹15,001 to ₹25,000, not a PF member earlier. Newly covered, mandatory. Enrol from 17 September 2026, generate or link the UAN, and start EPF, EPS and EDLI.
• Existing member, wages above ₹15,000, capped at ₹15,000. Higher contribution base. Revise the cap to ₹25,000 from 17 September 2026, pro rata for September.
• Existing member, already contributing on actual wages. No change in total PF outgo. Re-split the employer share: more to EPS, less to EPF, EDLI marginally higher.
• Wages above ₹25,000, not a PF member. No change. Remains excluded, though the voluntary option continues.
• Wages up to ₹15,000. No change. Continue as is.

The detail most blogs miss: "wages" is not just "basic"

Many startups keep basic pay lean and pad allowances to shrink the PF base. That no longer works. Section 2(88) of the Code defines wages as basic pay, dearness allowance and retaining allowance, explicitly excluding items such as bonus, HRA, overtime and commission.

If those excluded payments exceed 50% of total remuneration, the excess is added back as wages. This statutory rule echoes the Supreme Court's position in RPFC (II) West Bengal v. Vivekananda Vidyamandir (28 February 2019), which held that universal allowances paid to all employees in a category count as basic wages. If your salary structures pre-date the labour codes, audit them now.

What your employees will notice

Take-home pay will drop for employees earning between ₹15,000 and ₹25,000, even though their long-term savings and social security improve. Communicate the change before the September payslip lands to avoid confusion, and keep an eye out for EPFO circulars on existing employees and EPS options.

Frequently asked questions

Is the ₹25,000 limit on gross salary or basic?

Neither. It applies to "wages" under Section 2(88) of the Code, which carries the 50% add-back rule.

Can an employee above ₹25,000 still contribute to PF?

Yes. Employees earning above the ceiling can opt in voluntarily under the existing higher-wage provisions.

What should a startup do this month?

• Identify every employee with wages between ₹15,001 and ₹25,000 and enrol them from 17 September 2026.
• Revise the contribution cap for existing members and process September pro rata.
• Test your salary structures against the 50% add-back rule.
• Re-forecast employer cost for the current and next quarter.
• Brief the team before payslips go out.