India’s Union Cabinet has approved raising the monthly Employees’ Provident Fund Organisation (EPFO) wage ceiling for mandatory coverage from INR 15,000 to INR 25,000, effective 17 September 2026, to be followed by the required statutory and administrative implementation steps.1
WHY THIS MATTERS
The higher wage ceiling could bring more employees within mandatory provident fund coverage and may increase contribution costs for affected employers and employees. Employers may also need to update payroll configurations, review employee populations and communicate the change to all relevant stakeholders.
Key Highlights
- The Union Cabinet has approved the proposal of the Ministry of Labour & Employment to enhance the wage ceiling for mandatory coverage under the EPFO from INR 15,000 per month to INR 25,000 per month.
- The wage ceiling limit was previously enhanced in September 2014 from INR 6,500 per month to INR 15,000 per month.
- The Ministry of Labour & Employment vide gazette notification S.O. 5109(E) has notified that the effective date of the change in wage ceiling limit is 17 September 2026.
KPMG INSIGHTS
The increase in the wage ceiling limit will expand the scope of mandatory provident fund coverage to a larger segment of the workforce. This will enhance provident fund savings, provide pension and insurance benefits, and strengthen retirement security.
Employers may assess the potential financial and operational implications of the change, including increased provident fund contribution costs, payroll system updates, employee communications, and onboarding processes.
If assignees and/or their programme managers have any questions or concerns about the scope of the update, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax professional or a member of the GMS tax team with KPMG in India (see the Contacts section).
ENDNOTE:
1 Press Information Bureau, “Union Cabinet Approves Increase in EPFO Wage Ceiling to INR 25,000,” published on 16 September 2026.
RELATED RESOURCE
This article is excerpted, with permission, from "Union Cabinet approves increase in EPFO wage ceiling to INR25,000,” Tax Flash News (16 September 2026), a publication of the KPMG International member firm in India.
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