EPF in November 2026: what you need to know
- New scheme: the EPF Scheme, 2026 (G.S.R. 525(E), notified 29 June 2026 under the Code on Social Security, 2020) replaces the EPF Scheme, 1952.
- Wage ceiling: raised from Rs 15,000 to Rs 25,000 a month from 17 September 2026, the first revision since 2014.
- Rates unchanged: 12% from the employee, 12% from the employer. The CBT has recommended 8.25% interest for FY 2025-26.
- Withdrawals simplified: partial withdrawals now fall under three groups: illness, education and marriage; housing; and special circumstances.
- Faster claims: advance claims up to Rs 5 lakh can be auto-settled by the system if your KYC is complete.
- Tax limits unchanged: interest on employee contributions above Rs 2.5 lakh a year is taxable. Employer contributions above Rs 7.5 lakh a year (EPF, NPS and superannuation together) are taxable.
Most employees look at EPF twice: once when it is deducted from the payslip, and once when they need the money. The 2026 changes affect both. Your monthly deduction may have gone up from the September 2026 payslip, and the rules for taking money out are now simpler but stricter in places.
This guide covers what changed, whom it affects, and what to do about it, for employees and for the HR and finance teams who run payroll. If you only need the tax side of a withdrawal, our EPF withdrawal tax guide goes deeper on the 5-year rule and TDS.
What Changed, and What Did Not
The 2026 Scheme moves EPF onto the Code on Social Security, 2020 and tidies up rules that had built up since 1952. It does not redesign the fund.
| Before | Now | |
|---|---|---|
| Legal basis | EPF Scheme, 1952 under the EPF & MP Act, 1952 | EPF Scheme, 2026 (G.S.R. 525(E), 29 June 2026) under the Code on Social Security, 2020 |
| Wage ceiling | Rs 15,000 a month | Rs 25,000 a month from 17 September 2026 (S.O. 5109(E)) |
| Partial withdrawal rules | Many separate purposes, each with its own service and amount conditions | 3 groups with common conditions (para 46) |
| Definition of "wages" | Basic + DA + retaining allowance | Same core, but under the Code, excluded allowances above 50% of total remuneration are added back to wages |
| Contribution rate | 12% + 12% | Unchanged |
| Interest | Declared yearly | Unchanged; 8.25% recommended for FY 2025-26 |
The 50% wage rule is the change payroll teams most often miss. It comes from the definition of wages in the Code on Social Security, which came into force on 21 November 2025, not from the EPF Scheme itself. If HRA, conveyance and other excluded allowances together exceed half of total pay, the excess counts as wages for EPF. A structure that kept basic low to keep EPF low may no longer work. Our guide to the four Labour Codes explains the rule with examples.
The Rs 25,000 Wage Ceiling: Who Is Actually Affected
The wage ceiling does two things:
- It decides who must join EPF. A new joiner with wages at or below the ceiling must be enrolled.
- It sets the wage on which the mandatory contribution is calculated. Employers may contribute on a higher amount, but are not required to.
Raising it to Rs 25,000 affects people differently depending on where they stand:
| Your situation | What changes from 17 September 2026 |
|---|---|
| Already a member, contributions on actual wages | Nothing, unless you earn above Rs 25,000 and your employer chooses to contribute only on the ceiling |
| Already a member, wages above Rs 15,000, employer contributed only on Rs 15,000 | Contributions now go up to Rs 25,000 (or your actual wages, if lower). Take-home falls, and your corpus grows |
| New joiner, wages between Rs 15,000 and Rs 25,000 | Must now be enrolled. Before, you could be treated as an "excluded employee" |
| New joiner, wages above Rs 25,000, never a member | Not mandatory. Membership is voluntary and needs a joint request from you and the employer |
| Wages up to Rs 15,000 | No change |
September 2026 is a split month. EPFO's official wage-ceiling FAQ asks employers to file one ECR for September, using Rs 15,000 for 1 to 16 September and Rs 25,000 from 17 September.
What happens to take-home pay
Take Rahul, whose EPF wages (basic + DA) are Rs 22,000. His employer used to contribute only on the old ceiling.
| Old ceiling | New ceiling | |
|---|---|---|
| EPF wage base | Rs 15,000 | Rs 22,000 |
| Rahul's contribution (12%) | Rs 1,800 | Rs 2,640 |
| Employer's contribution (12%) | Rs 1,800 | Rs 2,640 |
| Change in take-home | Rs 840 less a month | |
| Change in total going to EPF and EPS | Rs 1,680 more a month |
Rahul's take-home drops by Rs 840, but Rs 1,680 more goes into his retirement savings each month: his Rs 840 plus the employer's matching Rs 840. Over a full year that is Rs 20,160 more saved, before interest.
For employers: the cost of the higher ceiling is the extra 12%, plus EDLI and admin charges on the higher wage base, for every affected employee. It applies from the 17 September 2026 wage period, so check that your September ECR already reflects it.
Contributing above the ceiling
Employees earning above Rs 25,000 can contribute on their full wages if the employer agrees to do the same. If the employer won't, an employee can still put in more through the Voluntary Provident Fund (VPF), up to 100% of basic + DA. VPF earns the same EPF interest, but the employer does not match it, and it counts toward the Rs 2.5 lakh tax limit explained below.
Where the Monthly Contribution Goes
The employee's 12% goes into the EPF account in full. The employer's 12% is split.
| Component | Paid by | Rate | Where it goes |
|---|---|---|---|
| EPF | Employee | 12% | Your EPF account |
| EPF | Employer | 3.67% | Your EPF account |
| EPS | Employer | 8.33% (of wages up to the ceiling) | Pension fund |
| EDLI | Employer | 0.5% | Life cover for the member |
| Admin charges | Employer | 0.5% | EPFO |
EDLI and admin charges are paid on top of the employer's 12%, not out of it.
Example: EPF wages of Rs 20,000
| Monthly | |
|---|---|
| Employee EPF (12%) | Rs 2,400 |
| Employer EPF (3.67%) | Rs 734 |
| Employer EPS (8.33%) | Rs 1,666 |
| Credited to your EPF account | Rs 3,134 |
| Credited to EPS | Rs 1,666 |
| Employer's EDLI + admin (0.5% + 0.5%) | Rs 200 |
| Employer's total cost | Rs 2,600 |
At the full ceiling of Rs 25,000, EPFO's FAQ gives Rs 3,000 from the employee, Rs 2,083 to EPS and Rs 917 to EPF from the employer, and Rs 125 each for EDLI and admin charges. The EPS share is now calculated on wages up to Rs 25,000 (it was capped at Rs 1,250 a month on Rs 15,000). The government's 1.16% EPS contribution stays on Rs 15,000, and the maximum EDLI cover stays Rs 7 lakh.
For the employer side in more detail, including ESI and due dates, see our PF and ESI employer compliance guide.
Withdrawing From EPF: The Three Groups
Before 2026, every reason for a partial withdrawal had its own rule. Paragraph 46 of the 2026 Scheme groups them into three.
| Group | Covers | How many times |
|---|---|---|
| Illness, education and marriage | Illness of self or family, education of self or children, marriage of self or family | Education up to 10 times and marriage up to 5 times in total; no count limit stated for illness |
| Housing | Buying or building a house, buying a site, repaying a home loan, renovation | Up to 5 times in total |
| Special circumstances | Situations such as a natural calamity or closure of the establishment | Up to 2 times in a financial year |
The count starts afresh from the date the 2026 Scheme came into force.
Rules that apply to all three
- Minimum membership of 12 months for every purpose. The old rules ranged from no minimum to several years, depending on purpose.
- Minimum withdrawal of Rs 1,000.
- Up to 100% of the Eligible Member Balance can be withdrawn, but 25% of your total contributions (employee and employer share) and interest must stay in the account as a minimum balance. In practice, the most you can take out as advances is about 75% of your balance.
Example: your EPF account holds Rs 4,00,000 of contributions and interest. The minimum balance is 25%, or Rs 1,00,000, so the most you can withdraw as an advance is Rs 3,00,000.
Leaving a job vs losing one
Final settlement of the whole account is different from a partial withdrawal.
| Situation | What you can do |
|---|---|
| Changing jobs | Do not withdraw. Transfer to the new employer's EPF under the same UAN. Service continues, which matters for tax (see below) |
| Unemployed | Partial withdrawal while you look for work. Final settlement of EPF only after 12 months of continuous non-employment (para 49(2)). There is no waiting period for a woman who resigns to get married |
| Retirement | Full settlement of EPF. EPS pays a monthly pension from age 58 if you have at least 10 years of eligible service |
Withdrawing the entire balance every time you change jobs is the most expensive EPF habit. It breaks the 5-year count for tax-free withdrawal and gives up compounding at around 8.25%.
EPFO 3.0: Faster Claims
EPFO 3.0 is the digital transformation framework approved by the EPFO Central Board of Trustees on 13 October 2025, to be rolled out in phases.
| Feature | What it means for you |
|---|---|
| Auto-settlement up to Rs 5 lakh (raised from Rs 1 lakh, PIB 24 June 2025) | Advance claims are approved by the system without an officer's manual check |
| Settlement usually within 3 days for auto-settled claims | Much faster than manual processing |
| Payment to your bank or post office account | Para 48 of the 2026 Scheme pays partial withdrawals into the member's account at a scheduled bank, co-operative bank or post office |
| UPI and ATM withdrawal | Widely reported online, but as of 3 November 2026 we found no EPFO circular, PIB release or Gazette notification launching it. Do not plan around it yet |
Example: you need Rs 3 lakh for a family member's surgery. With 12 months of membership, Aadhaar and PAN linked to your UAN, a verified bank account, and enough Eligible Member Balance, the claim falls inside the auto-settlement limit and should be paid within a few days. If any KYC field is missing, it goes to manual processing and you lose the speed.
Do this now, before you need the money: log in to the EPFO member portal, check that Aadhaar, PAN and bank account all show as verified, and add or update your nominee.
How EPF Is Taxed
From tax year 2026-27, the Income-tax Act, 2025 applies, but the EPF tax rules carry over from the 1961 Act with the same limits. There are three stages to look at.
1. Contributions
| Old regime | New regime | |
|---|---|---|
| Your own contribution (including VPF) | Deductible within the Rs 1.5 lakh limit (old Section 80C, now Section 123 of the 2025 Act) | No deduction |
| Employer contribution | Not taxed if total employer contributions to EPF, NPS and superannuation are within Rs 7.5 lakh a year | Same |
| Employer contribution above Rs 7.5 lakh | Taxable as a perquisite | Same |
Not sure which regime suits you? Compare both in our old vs new tax regime guide.
2. Interest
There are two separate limits, and both are measured on contributions, not interest:
- Your contributions above Rs 2.5 lakh a year (Rs 5 lakh if your employer makes no contribution): the interest earned on the excess is taxable every year as income from other sources, whether or not you withdraw it. From 1 April 2026 this sits in Schedule II of the Income-tax Act, 2025 and Rule 277 of the Income-tax Rules, 2026 (earlier, Section 10(11)/10(12) and Rule 9D).
- Employer contributions above Rs 7.5 lakh a year: the excess is a taxable perquisite, and the interest and other accretions on that excess are also taxed as a perquisite each year.
Example: Ananya's basic is Rs 2,50,000 a month. Her 12% contribution is Rs 30,000 a month, or Rs 3,60,000 a year, which is Rs 1,10,000 above the Rs 2.5 lakh limit. At 8.25%, a full year's interest on that excess would be about Rs 9,075. In the first year it is less, because the excess builds up month by month. The excess stays in a separate taxable sub-account, so its interest is taxable every year after that too, at her slab rate.
If your contributions, including VPF, are at or below Rs 20,833 a month (Rs 2.5 lakh a year), this limit does not affect you.
3. Withdrawal
| Situation | Tax |
|---|---|
| Withdrawal after 5 years of continuous service | Tax-free |
| Before 5 years, because of ill-health, closure of the employer's business, or another cause beyond your control | Tax-free |
| Before 5 years, any other reason | Taxable: employer contributions and interest as salary, interest on your own contributions as other income, and any deduction claimed earlier on your contributions is reversed |
| Transfer to the new employer's EPF | Not a withdrawal. Service with earlier employers counts toward the 5 years |
TDS on early withdrawals: EPFO deducts TDS at 10% when the taxable withdrawal is Rs 50,000 or more (Section 392(7) of the 2025 Act, earlier Section 192A). Without a PAN the rate is higher. If your tax for the year is nil, file the no-TDS declaration with the claim. From 1 April 2026 that declaration is Form 121, which replaces Form 15G and 15H. The Section 192A TDS guide covers the mechanics.
Higher Pension Under EPS
This applies to a small group: employees who were EPS members on 1 September 2014, whose employers contributed on actual wages above the ceiling, and who exercised a joint option with their employer following the Supreme Court's judgment in EPFO v. Sunil Kumar B. (4 November 2022).
For them, the pension contribution is calculated on actual wages instead of the ceiling wage, and it comes out of the employer's existing 12%, not on top of it. More goes to EPS and less to the EPF account. Arrears for past years are also moved from EPF to EPS when the option is processed. In return, the monthly pension is calculated on higher wages.
If your joint option was rejected or is still pending, check the status on the EPFO portal and read the reasons given before deciding whether to appeal. The trade-off is a smaller lump sum now against a larger pension for life, so model both before committing.
Checklists
For employees
- Check the September and October 2026 payslips. Has your EPF wage base moved to the new ceiling?
- Log in to the member portal and confirm Aadhaar, PAN, bank account and nominee are all verified
- If you changed jobs, confirm your old balance was transferred under your UAN, not left behind or withdrawn
- If you contribute more than Rs 20,833 a month including VPF, expect taxable interest and report it in your ITR
- Before any early withdrawal, count your continuous service. Under 5 years means tax, and possibly TDS
- If you were an EPS member on 1 September 2014 and contributed on actual wages, check the status of your higher pension option
For employers and payroll teams
- Find every employee with EPF wages between Rs 15,000 and Rs 25,000 who was capped or excluded, and start contributions from 17 September 2026
- Test every salary structure against the 50% wage rule
- File the September 2026 ECR with the split wage base, and correct any later month where the old ceiling was applied
- Recalculate EPS, EDLI and admin charges on the new wage base
- Track employer contributions to EPF, NPS and superannuation together against the Rs 7.5 lakh limit, and report any excess as a perquisite in Form 130 (previously Form 16)
- Clear pending joint-option verifications for higher pension
Summary
| Topic | Position on 3 November 2026 |
|---|---|
| Governing scheme | EPF Scheme, 2026 (G.S.R. 525(E), 29 June 2026) |
| Wage ceiling | Rs 25,000 a month from 17 September 2026 |
| Contribution | 12% employee + 12% employer, unchanged |
| Interest FY 2025-26 | 8.25% recommended by the CBT (2 March 2026) |
| Partial withdrawals | 3 groups, 12 months' membership, 25% of contributions and interest stays in the account |
| Final settlement after job loss | After 12 months of continuous non-employment |
| Auto-settlement | Up to Rs 5 lakh |
| Taxable interest | On employee contributions above Rs 2.5 lakh a year |
| Employer contribution limit | Rs 7.5 lakh a year across EPF, NPS and superannuation |
| Tax-free withdrawal | After 5 years of continuous service |
| TDS on early withdrawal | 10% on Rs 50,000 or more; Form 121 if your tax is nil |
Where Tax Garden Helps
The 2026 changes touch payroll, income tax and retirement planning at once. A missed wage-ceiling change shows up as an EPFO demand with damages. A missed Rs 2.5 lakh limit shows up as an income tax mismatch. A badly timed withdrawal costs both tax and future interest.
Tax Garden helps with:
- Payroll: recalculating EPF under the Rs 25,000 ceiling and the 50% wage rule, and filing corrected ECRs
- Employer tax limits: tracking the Rs 7.5 lakh cap across EPF, NPS and superannuation, and reporting perquisites in Form 130
- Employee tax: working out taxable EPF interest and reporting it correctly in the ITR
- Withdrawals: checking 5-year service, transfers and Form 121 before you file a claim
- EPFO queries: KYC, claim rejections and inspection notices
Looking for expert help with EPF and payroll compliance? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Sources: Employees' Provident Funds Scheme, 2026 (G.S.R. 525(E), Gazette of India, 29 June 2026), paras 46, 48 and 49; Notification S.O. 5109(E) and EPFO wage ceiling FAQs (September 2026); Code on Social Security, 2020; PIB release on the 239th CBT meeting (2 March 2026); PIB release on the Rs 5 lakh auto-settlement limit (24 June 2025); CBT decision on EPFO 3.0 (13 October 2025); Supreme Court of India, EPFO v. Sunil Kumar B. (4 November 2022); Income-tax Act, 2025 and Income-tax Rules, 2026. Examples are illustrative. EPFO limits and procedures change through notifications and circulars, so verify the current position on the EPFO website (epfo.gov.in) and incometaxindia.gov.in before acting. This article is general information and not a substitute for professional advice.
Frequently Asked Questions
What is the EPF wage ceiling from September 2026?
Rs 25,000 a month, up from Rs 15,000, with effect from 17 September 2026 (Notification S.O. 5109(E)). New joiners with wages up to Rs 25,000 must be enrolled, and mandatory EPF and EPS contributions are calculated on wages up to Rs 25,000. For September 2026, EPFO's FAQ asks employers to split the month: Rs 15,000 for 1 to 16 September and Rs 25,000 from 17 September.
Why has my EPF deduction gone up?
If your EPF wages are above Rs 15,000 and your employer was contributing only on Rs 15,000, contributions are now calculated on wages up to Rs 25,000. Your take-home falls by 12% of the difference, and your employer adds a matching 12% to your EPF and pension.
Did the EPF contribution rate change?
No. It is still 12% of wages from the employee and 12% from the employer (10% for certain notified establishments). Of the employer's share, 8.33% goes to the pension scheme (EPS) and 3.67% to your EPF account. At a wage of Rs 25,000, that is Rs 3,000 from you, Rs 2,083 to EPS and Rs 917 to EPF from the employer.
What is the EPF interest rate for FY 2025-26?
The EPFO Central Board of Trustees recommended 8.25% for FY 2025-26 at its 239th meeting on 2 March 2026, the same rate as FY 2024-25. EPFO credits it after the Government of India notifies the rate.
What are the three EPF withdrawal categories under the 2026 Scheme?
Illness, education and marriage; housing; and special circumstances. Each partial withdrawal needs 12 months of membership and a minimum of Rs 1,000, and 25% of your total contributions and interest must stay in the account. Education is allowed 10 times, marriage 5 times, housing 5 times, and special circumstances twice in a financial year.
How fast are EPF claims settled now?
Advance claims up to Rs 5 lakh can be auto-settled by the system, usually within 3 days, if your Aadhaar, PAN and bank account are verified on your UAN. Claims that fail any check go to manual processing, which takes longer.
Can I withdraw PF through UPI or an ATM?
As of 3 November 2026 we could not find an EPFO circular, PIB release or Gazette notification launching UPI or ATM withdrawal of PF. The EPF Scheme 2026 pays partial withdrawals into your bank or post office account. Check the EPFO website before relying on any UPI or ATM limit you read online.
Is EPF interest taxable?
Only in two cases: interest on the part of your own contributions above Rs 2.5 lakh in a year (Rs 5 lakh if your employer does not contribute), and employer contributions to EPF, NPS and superannuation above Rs 7.5 lakh a year, which are taxed as a perquisite along with the interest on that excess. If you contribute up to Rs 20,833 a month including VPF, the first limit does not affect you.
Is EPF withdrawal taxable after resigning?
It is tax-free after 5 years of continuous service, counting earlier employers whose EPF you transferred. Before 5 years it is taxable unless you left because of ill-health, closure of the employer's business or another cause beyond your control. EPFO deducts 10% TDS on taxable withdrawals of Rs 50,000 or more. From 1 April 2026, Form 121 replaces Form 15G and 15H for the no-TDS declaration if your tax for the year is nil.
Should I withdraw my EPF when I change jobs?
Usually not. Transfer it to the new employer under the same UAN. Withdrawing breaks the 5-year continuous service count for tax-free withdrawal and gives up interest at around 8.25%. Under the 2026 Scheme, final settlement after leaving a job is allowed only after 12 months of continuous unemployment anyway.
Does higher EPS pension cost my employer more?
No. For employees with a valid joint option under the Supreme Court's November 2022 judgment, the pension contribution is calculated on actual wages and comes out of the employer's existing 12% share, so less goes to the EPF account. The employer's total contribution does not rise because of the option.
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