Every employee contributes a portion of their salary to their PF account. The Employees' Provident Fund Organization (EPFO) has made a major change to PF coverage. The EPFO ​​salary limit has been increased from ₹15,000 per month to ₹25,000. This change could bring more than 5.1 million employees under the EPFO's ambit.

The new salary limit will be effective from September 17, 2026, and the first full salary month under this change will be October 2026. This could result in changes to PF and pension contributions for eligible employees.

If the salary is Rs 20,000 then how much PF will be deducted?

Suppose an employee's applicable PF salary is ₹20,000. In this case, 12% of the employee's salary, or ₹2,400, will be deposited as PF contribution. Of the employee's ₹2,400 contribution, ₹1,666 (8.33%) will go to the Employee Pension Scheme (EPS), while the remaining ₹734 (3.67%) will be deposited into the EPF account. Therefore, the total contribution from the employee and employer will be ₹4,800.

Will each employee's PF contribution be ₹3,000?
Not every employee's PF contribution will be ₹3,000. ₹25,000 is the revised statutory salary limit. The contribution base for each employee is not required to be ₹25,000. If the applicable PF salary is lower, a 12% contribution is calculated on that amount.

For example, for a PF salary of ₹10,000, the employee's contribution will be ₹1,200, for ₹20,000 it will be ₹2,400, and for ₹25,000 it will be ₹3,000. This change may benefit employees who were previously excluded from the EPS due to the ₹15,000 limit. However, the actual deduction from salary will depend on the employee's applicable PF salary and salary structure. Furthermore, the employee's statutory contribution is different from the deduction from the employee's salary.

PC: NDTV INDIA