These employees may see a drop in their in-hand salary; here is the full breakdown of the new EPFO rule.
The new EPFO rule could reduce your in-hand salary. Find out how much this will impact the pockets of those earning between ₹15,000 and ₹25,000 and how much PF will be deducted.
EPFO: If your salary falls between ₹15,000 and ₹25,000, your take-home pay will be directly affected. The EPFO has raised the PF wage ceiling—the limit on which PF is calculated—from ₹15,000 to ₹25,000. While this change came into effect on September 17, 2026, calculations for September had to be made using both the old and new rules. October 2026 will be the first full month where the new ceiling is fully implemented.
By how much will your PF deduction increase?
Suppose your PF wage is ₹20,000. Previously, ₹1,800 was deducted from your salary for PF each month because the calculation was based on a limit of only ₹15,000. Now, starting in October, this deduction will rise to ₹2,400—an increase of ₹600 per month.
| Component | Old ₹15,000 Ceiling | New ₹25,000 Ceiling (₹20,000 PF Wage) |
|---|---|---|
| Employee EPF Contribution | ₹1,800 | ₹2,400 |
| Employer EPS Contribution | ₹1,250 | ₹1,666 |
| Employer EPF Contribution | ₹550 | ₹734 |
| Total Employer Contribution | ₹1,800 | ₹2,400 |
| Total (Employee + Employer) | ₹3,600 | ₹4,800 |
This means the company will also have to contribute an additional ₹600 to match the amount.
Will everyone's PF be deducted based on the ₹25,000 limit?
Not at all; ₹25,000 is simply a set ceiling. It does not mean that everyone's PF deduction will be calculated based on this specific figure. For those whose actual PF wage is lower than this, the calculation will be done accordingly. For instance, based on the EPFO example:
On a PF wage of ₹10,000, the deduction will be ₹1,200.
On a PF wage of ₹20,000, the deduction will be ₹2,400.
On a PF wage of ₹25,000 (the full ceiling), the deduction will be ₹3,000.
Also, keep in mind that PF wages and your gross salary are not the same thing; they can differ.
What will change for existing EPF members?
Employees who were previously excluded from the pension scheme (EPS) because their salary exceeded ₹15,000 will now be mandatorily included in the EPS following the new ceiling. This means that the company's contribution will now be split between EPS and EPF instead of going entirely into the EPF.
How will this impact in-hand salary?
Employees whose deductions were previously capped based on the ₹15,000 limit may see a slight reduction in their in-hand salary, as a larger amount will be deducted for PF. The actual impact will depend on your current salary structure and the agreement with your company. The EPFO has clarified that the employer's contribution and the employee's contribution are legally distinct; a company cannot label its own contribution as part of the CTC to offset the employee's deduction.
