The guidelines for the contribution and withdrawal in the employees' Provident Fund (EPF) has got major revamp as the Employees' Provident Fund Organisation (EPFO) notified the EPF Scheme 2026. One of the important changes under the new scheme, which replaces nearly seven decade old EPF Scheme, 1952, under Social Security Code 2020, is that it caps the mandatory employee contribution at Rs 1,800 per month, and any additional contribution will be voluntary.
As per the newly notified scheme, employees are required to contribute 12 per cent of wages up to the statutory wage ceiling of Rs 15,000 a month, which translates to a mandatory monthly PF contribution of Rs 1,800, irrespective of the monthly earnings of employees.
Impact on 8 crore subscribers
The move affects nearly 8 crore active EPFO subscribers and is aimed at simplifying the provident fund framework while retaining the core retirement benefits.
Let's assume that if a person has a basic salary of Rs 15,000, then the employer cuts 12 per cent of it as EPF contribution, which translates into Rs 1,800 per month. However, if an employee has a higher basic pay, let's say Rs 30,000, then employees pay Rs 3,600--12 per cent of it--as PF contribution, and that is what will be changed in the new scheme. If an employee does not want to contribute more than Rs 3,600 or more in case of higher basic pay, then they can continue with a capped amount of Rs 1,800 a month.
The same--Rs 1,800 contribution-- will be applicable for employees drawing higher salaries.
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Who should contribute more
Since the contribution amount is capped at Rs 1,800, a person who wants to create a long-term corpus with a decent and fixed yearly return should increase their EPF contribution above the capped amount. However, an individual who wants to put their money into other investment instruments or has the goal of a higher take-home pay can opt for the minimum contribution.
Meanwhile, employees who are already contributing 12 per cent of their basic salary to the EPF can continue to do so, subject to a mutual agreement with their employer.
Withdrawal Rules Change
In another major change under the new scheme, EPFO has reduced the number of withdrawal categories from 13 to just three, simplifying the withdrawal process for contributors.
Additionally, the EPF 2026 scheme allowed advance withdrawal of up to 100% of the eligible amount in certain cases, making it easier for members to access their provident fund savings in times of need.