Pay-slips to change for those earning between ₹15,000 and ₹25,000; find out how your take-home salary will be affected

The Union Cabinet has raised the EPF wage ceiling from ₹15,000 to ₹25,000. Learn how this new rule will impact your in-hand salary, PF deductions, and retirement savings.

EPF Wage Ceiling: If your basic salary falls between ₹15,000 and ₹25,000, you may soon see changes in your pay-slip and retirement savings. The Union Cabinet has approved raising the mandatory wage ceiling for the Employees' Provident Fund (EPF) from ₹15,000 to ₹25,000 per month. Effective from September 17, 2026, this decision is expected to extend social security benefits under the EPFO ​​to approximately 51 lakh new employees across the country. This is the first time the limit has been revised since 2014.

How will your in-hand salary be affected?

Under the new rule, your take-home salary (in-hand salary) may see a slight reduction, but your retirement fund will grow larger:

What will the deduction amount to? Previously, based on the ₹15,000 limit, the employee's PF deduction at a rate of 12% was ₹1,800. Now, based on the ₹25,000 limit, this deduction could go up to ₹3,000.

Impact on salary: Employees falling under this new limit for the first time may see a reduction of up to ₹1,200 per month in their in-hand salary. However, for those who are already having PF deducted based on their actual basic salary, there will be no significant impact on their salary.

How will the calculation of the company's contribution change?

The employer's 12% contribution is split into two components—EPF (Employees' Provident Fund) and EPS (Employees' Pension Scheme):

(Note: This calculation is merely an example. Your take-home salary will also depend on your company's salary structure and employment contract.)

Why is this decision beneficial for you?

Although this rule might leave you with slightly less cash in hand today, it is highly beneficial for you in the long run:

Larger retirement corpus: Regular and higher contributions will accelerate the growth of your PF balance, which will earn interest at the rate declared by the EPFO.
Social security: Along with EPF, employees will also receive coverage under schemes like EPS and EDLI (Employees' Deposit Linked Insurance).

What points should be kept in mind?

Salary basis: This rule applies not to your total gross salary or CTC, but to the basic wages and Dearness Allowance (DA) covered under EPF regulations.
EDLI insurance claim: While media reports mention a maximum benefit of ₹10.5 lakh under EDLI, no such new limit has been officially announced. Employees should await the detailed notification regarding the scheme.