PF Calculation 2026: ₹25,000 Wage Ceiling, Formula & Examples

PF calculation on salary in 2026 comes down to one formula and one new number. The employee pays 12% of PF wages. The employer also pays 12%, of which 8.33% goes to the pension scheme (EPS) and 3.67% to the provident fund (EPF), plus 0.5% for deposit linked insurance (EDLI) and 0.5% as administrative charges. Since 17 September 2026 those percentages run on PF wages up to ₹25,000 a month instead of ₹15,000, under notification S.O. 5109(E).

Quick answer: on PF wages of ₹20,000, the employee contributes ₹2,400 and the employer contributes ₹2,400 (₹1,666 to EPS and ₹734 to EPF), plus ₹100 EDLI and ₹100 admin charges. At ₹25,000 or more, for an employee in the pension scheme, the figures are ₹3,000 from each side, with ₹2,083 to EPS and ₹917 to EPF, plus ₹125 EDLI and ₹125 admin charges.

Below: the formula, which wages count, a step-by-step method, worked examples at ₹12,000, ₹18,000, ₹25,000 and ₹30,000, employees outside the pension scheme, the September 2026 split month and the employer cost. Every figure is computed from a notified rate.

This is general guidance for employers, current at 30 October 2026, and follows the FAQs EPFO has published on the wage ceiling revision. It is not legal advice. Confirm your own position with your advisor before you file.

PF Calculation on Salary 2026: The Formula

The rates were notified on 1 July 2026 under the EPF, EPS and EDLI Schemes, 2026, and none changed on 17 September. Only the wage they run on changed.

Written as formulas:

• Employee PF = 12% × PF wages (capped at ₹25,000)
• Employer EPS = 8.33% × PF wages (capped at ₹25,000), if the employee is a pension member
• Employer EPF = 12% × PF wages − Employer EPS
• EDLI = 0.5% × PF wages (capped)
• Admin charges = 0.5% × PF wages (capped), with a minimum of ₹500 a month per establishment

Round each amount to the nearest rupee and work out the pension line before the employer PF line, because the employer PF share is what is left of the 12% after the pension share. That is why EPFO's own tables show ₹2,083 and ₹917 at ₹25,000 rather than two figures computed separately at 8.33% and 3.67%.

Two exceptions. Notified establishments, including jute, beedi, brick, non-spinning coir and guar gum units, contribute at 10% rather than 12%. And the Central Government adds its own 1.16% to the pension fund, but that stays on wages up to ₹15,000, so it is at most ₹174 a month per member, outside your payroll.

What Changed on 17 September 2026

S.O. 5109(E), dated 17 September 2026 and issued under clause (89) of section 2 of the Code on Social Security, 2020, notified ₹25,000 a month as the wage ceiling for Chapter III of the Code, which covers provident fund, pension and deposit linked insurance. It took effect from the date of publication and superseded S.O. 2702(E) of 29 May 2026, which had carried the ₹15,000 figure. The Cabinet approved it on 16 September, and the government expects more than 51 lakh additional employees to come under mandatory coverage. The last revision was in September 2014, from ₹6,500 to ₹15,000.

The pension and insurance bases moved with it, because the EPS and EDLI Schemes, 2026 tie their contributions to the notified ceiling rather than a fixed figure. So the maximum employer pension share rose from ₹1,250 to ₹2,083 a month, and the maximum EDLI contribution from ₹75 to ₹125, as EPFO's FAQ (Q13) illustrates.

ESI did not move. The notification uses the section 2(89) power for Chapter III only. The ESI threshold of ₹21,000 under Chapter IV is unchanged, and our guide to ESI calculation and contribution rates covers it.

The date is fixed. EPFO's FAQ (Q45) states that the effective date was not postponed to 1 October 2026. September 2026 is a split month, and October 2026 was the first full month on the new ceiling.

Which Wages Count for PF Calculation on Salary

The ceiling applies to PF wages, not gross salary or CTC.

PF wages are wages as defined in section 2(88) of the Code on Social Security, 2020. In practice that is basic pay, dearness allowance and retaining allowance. Allowances such as HRA, conveyance and overtime are excluded. But if the excluded components add up to more than half of total remuneration, the excess is added back to wages. Our piece on salary allowances covers which components sit where, and our guide on how to calculate payroll in India works through the add-back step.

EPFO's FAQs give two examples. An employee on a gross of ₹60,000 whose PF wages are ₹30,000 is not required to be covered as a new joiner, although they can opt in with the employer's consent (Q26). An employee on a gross of ₹50,000 whose PF wages are ₹25,000 must be a member of EPF, EPS and EDLI (Q27).

How to Calculate PF on Salary, Step by Step

Step 1: Work out PF wages. Add basic pay, dearness allowance and retaining allowance, then apply the 50% add-back if excluded allowances exceed half of total remuneration.

Step 2: Pro-rate for unpaid days. If the employee has non-contributory (NCP) days in the month, reduce PF wages in proportion to paid days. Section 10 shows how.

Step 3: Apply the ceiling. If PF wages exceed ₹25,000, take ₹25,000, unless the employee and employer have jointly opted to contribute on higher actual wages.

Step 4: Employee share. Multiply the capped wage by 12%. This is deducted from the employee's salary.

Step 5: Pension share. If the employee is a pension member, multiply the capped wage by 8.33% and round to the nearest rupee. If they are not, the pension share is nil.

Step 6: Employer PF share. Take 12% of the capped wage and subtract the pension share.

Step 7: Employer-only charges. Add 0.5% EDLI and 0.5% administrative charges on the same capped wage. The establishment pays at least ₹500 a month in admin charges in total.

Step 8: Report and remit. Enter PF wages, EPS wages, EDLI wages and NCP days for each member in the ECR and pay by the 15th of the following month.

To check one employee's figures against a real salary structure, our salary calculator runs the deduction for you.

PF Calculation Examples at ₹12,000, ₹18,000, ₹25,000 and ₹30,000

All rows assume a pension member, a full month with no NCP days, and a wage month from October 2026 onwards. "Employer total" is the employer's PF, pension, EDLI and admin charges together.

₹12,000. Below both the old and new ceilings, so nothing changed. Employee PF is 12% of ₹12,000, or ₹1,440. Pension is 8.33% of ₹12,000, which is ₹999.60 and rounds to ₹1,000, leaving ₹440 in employer PF. EDLI and admin charges are ₹60 each.

₹18,000. If this employee was already a member contributing on the old ₹15,000 cap, the wage used rises to ₹18,000. Employee PF is ₹2,160, up ₹360. Pension is 8.33% of ₹18,000, which is ₹1,499.40 and rounds to ₹1,499, leaving ₹661 in employer PF. EDLI and admin charges are ₹90 each. The employer's total goes from ₹1,950 (₹1,800 + ₹75 + ₹75) to ₹2,340, an increase of ₹390 a month.

₹25,000. This is the new cap. Employee PF is ₹3,000. Pension is 8.33% of ₹25,000, which is ₹2,082.50 and rounds to ₹2,083, leaving ₹917 in employer PF. EDLI and admin charges are ₹125 each. Against ₹1,950 under the old cap, the employer's total rises by ₹1,300 a month.

₹30,000. The ceiling restricts the wage used to ₹25,000, so every figure matches the ₹25,000 row. The employer's increase is the maximum, ₹1,300 a month or ₹15,600 a year per employee. The employee's deduction rises from ₹1,800 to ₹3,000.

A newly covered employee at ₹22,000. Someone who was an excluded employee until 16 September now contributes in full. Employee PF is ₹2,640. Pension is 8.33% of ₹22,000, which is ₹1,832.60 and rounds to ₹1,833, leaving ₹807 in employer PF. EDLI and admin charges are ₹110 each. The employer's cost goes from nil to ₹2,860 a month. Had the same person been an existing member capped at ₹15,000, the increase would have been ₹910.

If your payslips do not match this table, look for a hard-coded ₹15,000 in the pension line, an EDLI line that missed the new base, or an ESI threshold that moved when it should not have. Our guide to payslip format in India shows how these lines should appear.

Employees Without Pension (EPS) Membership

The table above assumes everyone is in the pension scheme. Many are not. Since September 2014, anyone who first joined PF on wages above ₹15,000 was enrolled in EPF only, with the whole employer 12% going to EPF. The revision treats them in two ways.

EPF-only members on PF wages of ₹15,000 to ₹25,000 join the pension scheme. EPFO's FAQs (Q9, Q12, Q23) say these employees must be made EPS members with effect from 17 September 2026. On PF wages of ₹20,000 the employer's ₹2,400 now splits as ₹1,666 to EPS and ₹734 to EPF, where it previously all went to EPF. If they were already contributing on their actual ₹20,000, the employer's 12% does not change, only its split. If they were capped at ₹15,000, the base rises as well.

EPF-only members above ₹25,000 stay outside the pension scheme. EPFO's FAQ (Q13) states that pension membership is available only to employees whose wages on joining, or on the date the new ceiling took effect, did not exceed the ceiling. For an EPF-only member on PF wages of ₹35,000, contributions from October 2026 are ₹3,000 from the employee and ₹3,000 from the employer, all of it to EPF, with nil to EPS and ₹125 each for EDLI and admin charges. Against a ₹15,000 cap the employer increase is still ₹1,300; only the split differs.

Existing pension members above ₹25,000 stay in, capped at ₹2,083. New joiners above ₹25,000 need not join, and if they opt in to EPF they do not enter the pension scheme. So pension status must be a field in your payroll data, checked per employee against UAN records. Our glossary entry on the UAN covers the linkage rules.

What the New Ceiling Costs the Employer

For an existing member who was capped at ₹15,000, the employer's monthly increase, including EDLI and administrative charges, is:

• ₹390 at PF wages of ₹18,000
• ₹910 at PF wages of ₹22,000
• ₹1,300 at PF wages of ₹25,000 or more, which is ₹15,600 a year

Each figure is the employer's 12% on the extra wage, plus 0.5% EDLI and 0.5% admin charges on the same amount, so 13% of the difference between the old and new capped wage. At ₹25,000 or more that is 13% of ₹10,000, or ₹1,300. For a newly covered employee, the whole contribution is new, so at ₹22,000 the employer's cost rises from nil to ₹2,860 a month. Multiply each band by its headcount and you have your budget figure.

Admin charges have a floor. EPFO's FAQ (Q13) sets them at 0.5% of PF wages, with a minimum of ₹500 a month for an establishment with at least one contributing member, and ₹75 where there is none.

The EDLI benefit did not rise with the contribution. EDLI costs more, up to ₹125 a month, but EPFO's FAQ (Q38) confirms that the maximum assurance benefit stays at ₹7 lakh. Our glossary entry on EDLI explains what the cover pays.

PMVBRY can partly offset the cost of new hires. The Pradhan Mantri Viksit Bharat Rozgar Yojana pays employers up to ₹3,000 a month per additional employee on wages up to ₹1 lakh, for hires made by 31 July 2027 who stay at least six months. EPFO's FAQs (Q39, Q40) call it a partial offset. It covers net new hires, not existing staff whose base went up, and the Part A first-time employee benefit stays capped at ₹15,000 (Q41).

CTC, Take-Home Pay and What You Cannot Deduct

The employee's own 12% is deducted from salary. For an employee previously capped at ₹15,000, take-home falls by up to ₹1,200 a month, and a newly covered employee at ₹22,000 sees ₹2,640 move from net pay into their PF account. That is lawful, and the money belongs to the employee.

The employer's 12%, EDLI and admin charges are a different matter. EPFO's FAQs (Q14, Q15) state that CTC is not a statutory concept for PF. The employer's statutory contribution cannot be treated as an employee deduction by describing it as part of CTC, and the employee's statutory wages must not be reduced to fund it. The EPF Scheme, 2026 also bars an employer from deducting its own contribution from a member's wages or otherwise recovering it from the member. Doing so, or cutting wages or benefits to make room, may be an offence under section 133 of the Code, with a penalty of up to ₹50,000.

So budget the employer's increase as an employer cost, explain the employee-side change before it reaches a payslip, and update offer letters and the appointment letter template, which may still say an employee is "not covered" because their wage exceeds ₹15,000. Any redesign of salary structures for future hires is worth taking advice on first. Our breakdown of CTC structure in India shows how the PF lines sit in an offer.

For employees, EPFO's FAQ (Q16) frames it well: the money moves from the take-home pocket to the PF pocket, matched by the employer, earning interest and adding to pension and life cover.

PF Calculation for September 2026, the Split Month

September 2026 had 16 days under the old ceiling and 14 under the new one. EPFO's FAQs (Q7 to Q9) require a single ECR for the month, with contributions on the ₹15,000 ceiling for 1 to 16 September and on the ₹25,000 ceiling from 17 September, apportioned by days.

Existing pension member on ₹25,000 or more. Capped wage = ₹15,000 × 16/30 + ₹25,000 × 14/30 = ₹8,000 + ₹11,666.67 = ₹19,666.67. Employee PF is 12%, or ₹2,360. Pension is 8.33%, ₹1,638.23, which rounds to ₹1,638. Employer PF is ₹2,360 less ₹1,638, or ₹722. EDLI and admin charges are ₹98.33 each, which round to ₹98.

Newly covered employee on ₹22,000. No contribution is due for 1 to 16 September, so the September wage is ₹22,000 × 14/30 = ₹10,266.67. Employee PF is ₹1,232. Pension is ₹855.21, which rounds to ₹855, leaving ₹377 in employer PF. EDLI and admin charges are ₹51.33 each, which round to ₹51.

Recovering the employee share. For employees newly brought into coverage, EPFO allowed employers to recover the September employee share from the next payroll cycle without prior approval from the Inspector-cum-Facilitator (FAQ Q10, Q11). This relief applies only to the internal payroll deduction. The September ECR and the full remittance of both shares were still due by 15 October 2026.

If September was filed on the old ceiling. That deadline has now passed. If your September return went in on ₹15,000 throughout, or left out newly covered employees, compute the shortfall for 17 to 30 September and remit it now. Late contributions attract simple interest at 12% a year under section 127 of the Code, plus damages under paragraph 23 of the EPF Scheme, 2026. Both grow the longer the shortfall stays open. Keep the day-count worksheet with the challan.

PF Calculation With NCP Days

Unpaid days reduce PF wages, and they reduce the ceiling too. An employee on ₹30,000 with three NCP days in a 30-day month has PF wages of ₹25,000 × 27/30 = ₹22,500, not ₹25,000. Employee PF is ₹2,700. Pension is 8.33% of ₹22,500, which is ₹1,874.25 and rounds to ₹1,874, leaving ₹826 in employer PF.

Reporting ₹25,000 alongside three NCP days over-contributes. Our guide to NCP days in PF covers how to count them and why auditors read that field first.

Employees Already Contributing Above ₹25,000

Where employer and employee have jointly opted to contribute on full actual wages, EPFO's FAQ (Q22) confirms the arrangement continues; nobody needs to cut back to ₹25,000. Only the classification changes: on ₹40,000, the first ₹3,000 from each side is now statutory and the rest is by agreement.

Employees making extra voluntary contributions will see their total deduction rise as the statutory part grows, so tell them they can adjust the voluntary element.

The higher ceiling does not by itself give anyone pension on actual wages above ₹25,000. Pension on higher wages continues to depend on the scheme provisions and on any option already granted, and nothing in the notification or EPFO's FAQs creates a new route to it.

The change does not reach backwards: a settlement for service ending in August uses August's ceiling. Gratuity runs on last drawn wages, as our piece on gratuity calculation in India explains.

What EPFO's FAQs Have Settled

EPFO's FAQs on the revision have answered every open point that matters for PF calculation:

• September 2026: one ECR, wages apportioned by days at ₹15,000 up to 16 September and ₹25,000 from 17 September (Q7 to Q9).
• Pension share: 8.33% on wages up to ₹25,000, maximum ₹2,083 a month (Q13).
• Administrative charges: 0.5% of PF wages up to the ceiling, minimum ₹500 a month per establishment, or ₹75 with no contributing member (Q13).
• EPF-only members: those on wages up to ₹25,000 join EPS from 17 September. Those above stay outside it (Q9, Q12, Q13, Q23).
• New hires above ₹25,000: not required to be covered. They can opt in to EPF with the employer's consent, without pension membership (Q13, Q26).
• CTC: the employer's contribution cannot be recovered from the employee by calling it part of CTC (Q14, Q15).
• Government pension share: stays at 1.16% of wages up to ₹15,000, so ₹174 a month at most (Q37).
• EDLI benefit: the maximum stays ₹7 lakh (Q38).
• Effective date: 17 September 2026, not postponed (Q45).

What to Do Now, in Order

1. Pull the list. Every employee with PF wages above ₹15,000, tagged as capped member, EPF-only member, pension member above ₹25,000, or previously excluded.

2. Enrol the newly covered. Collect UANs and check each against previous employment before generating a new one. Move EPF-only members on wages up to ₹25,000 into EPS from 17 September.

3. Price it. Use ₹390, ₹910 and ₹1,300, or 13% of each employee's extra capped wage, plus the full cost for newly covered staff.

4. Configure and test. Set ₹25,000 for PF, pension, EDLI and admin charges, leave ESI at ₹21,000, and check one payslip per row of the tables above by hand.

5. Close September. If the September ECR missed the day-apportioned basis or newly covered staff, remit the shortfall now, and recover any deferred employee share in the next payroll.

6. Communicate and reconcile. Explain payslip changes before they land, update letter templates, and run the monthly PF and ESI reconciliation in our payroll compliance checklist.

Questions People Ask About PF Calculation in 2026

What is the PF calculation formula in 2026?

Employee PF is 12% of PF wages, capped at ₹25,000. The employer also pays 12%: 8.33% to EPS for pension members (maximum ₹2,083) and the balance to EPF. The employer additionally pays 0.5% EDLI and 0.5% admin charges on the same base, with admin charges subject to a ₹500 monthly minimum per establishment.

How is PF calculated on basic salary of ₹25,000?

If basic plus DA is ₹25,000 and allowances do not exceed half of total pay, the employee pays ₹3,000. The employer pays ₹2,083 to EPS and ₹917 to EPF, plus ₹125 EDLI and ₹125 admin charges, a total employer cost of ₹3,250 a month.

Is PF calculated on gross salary or basic salary?

On PF wages under section 2(88), which is basic pay, DA and retaining allowance, with excluded allowances above 50% of total remuneration added back. It is not gross salary or CTC (EPFO FAQ Q24, Q25).

Does the EPS pension share also move to ₹25,000?

Yes, for pension members. The Employees' Pension Scheme, 2026 ties the 8.33% to the notified ceiling, so the maximum moved from ₹1,250 to ₹2,083 a month (EPFO FAQ Q13). EPF-only members above ₹25,000 remain outside the pension scheme.

Can the employer's increase be adjusted within CTC?

No. EPFO's FAQ (Q15) states that the employer's contribution cannot be treated as an employee deduction by describing it as part of CTC, and statutory wages must not be reduced. Only the employee's own 12% comes out of their salary.

Where This Leaves You

PF calculation on salary in 2026 is the same formula on a bigger base: 12% from each side, 8.33% of the employer's share to pension for pension members, and 0.5% each for EDLI and admin charges, all on PF wages up to ₹25,000. The work is in the detail around it: the right wage figure, each employee's pension status, NCP days, the September split, and keeping the employer's cost on the employer's side of the payslip.

Engage, our payroll management system, calculates PF, ESI, professional tax and TDS together and treats the wage ceiling as a setting rather than hard-coded logic, so a change like this one is an update, not a rebuild. If your PF is still worked out by hand, our comparison of Excel payroll and payroll software shows where the time goes. To see your own numbers, book a demo and bring one payslip at ₹22,000. We will run it through the new ceiling with you.

Sources

• Ministry of Labour and Employment, Notification S.O. 5109(E) dated 17 September 2026.
• Press Information Bureau, Cabinet approval of the wage ceiling revision, 16 September 2026.
• Employees' Provident Fund Organisation, FAQs on the wage ceiling revision (question numbers as cited above).
• Code on Social Security, 2020, sections 2(88), 2(89), 127 and 133.
• Employees' Provident Funds Scheme, 2026, Employees' Deposit Linked Insurance Scheme, 2026 and Employees' Pension Scheme, 2026, G.S.R. 525(E) to 527(E) of 29 June 2026, and the rate notifications of 1 July 2026.
• Employees' State Insurance Corporation, ₹21,000 ESI wage ceiling.