The Ministry of Labour and Employment has notified the Employees' Provident Funds Scheme, 2026, under the Code on Social Security, 2020, replacing the longstanding Employees' Provident Funds Scheme, 1952. The new framework, effective immediately, modernises the provident fund system through digitalisation, simplified processes, and enhanced compliance, according to Puneet Gupta, Partner, People Advisory Services at EY India. It also introduces special amnesty provisions to address past compliance lapses.
Coverage and Membership
The EPF Scheme, 2026 ensures continuity by automatically extending membership to all employees who were covered under the 1952 scheme. Employees whose wages exceed the statutory wage ceiling at the time of eligibility remain classified as "excluded employees," with the wage-ceiling-based exclusion criteria unchanged, Gupta noted. Such employees may opt out of mandatory PF coverage unless both employer and employee choose to join.
Contribution Structure
Under the new scheme, both employers and employees must contribute 12% of wages towards the provident fund. For employees earning above the wage ceiling, mandatory contributions are calculated only up to the prescribed ceiling. However, employees can voluntarily contribute on wages above the ceiling or at a rate higher than 12%, and employers may match these voluntary contributions. A new explicit provision allows either party to reduce or stop extra voluntary contributions at any point, offering greater retirement-planning flexibility. Employers are also required to pay administrative charges on wages against which voluntary contributions are made.
Simplified Withdrawals
The EPF Scheme, 2026 permits full withdrawal for specified events including retirement, permanent migration from India, overseas employment, and other prescribed situations. Membership continues until the balance is fully withdrawn. The scheme simplifies partial withdrawals for essential needs such as illness, education, marriage, and housing, subject to prescribed conditions and a minimum balance requirement.
Compliance and Digital Requirements
Employees are now required to provide Aadhaar, PAN, and Aadhaar-seeded bank account details to the EPFO. The scheme includes special amnesty provisions aimed at resolving long-pending compliance issues. The following table summarises key changes:
| Aspect | Old Scheme (1952) | New Scheme (2026) |
|---|---|---|
| Contribution rate | 12% each (employer/employee) | 12% each (unchanged) |
| Voluntary contributions | Allowed but less explicit | Explicit provision to reduce or stop |
| Partial withdrawals | Complex rules | Simplified for illness, education, marriage, housing |
| Compliance documents | Not specified | Aadhaar, PAN, Aadhaar-seeded bank account |
| Amnesty provisions | None | Special provisions for past lapses |
Implications for Employers and Employees
According to Puneet Gupta of EY India, the new scheme "represents a major milestone in the next phase of implementation of the labour codes" and "modernises the provident fund framework through greater digitalisation, simplified processes and enhanced compliance requirements for both employers and employers." Employers should review payroll systems to capture Aadhaar and PAN data, adjust voluntary contribution mechanisms, and prepare for potential amnesty claims. Employees gain clearer withdrawal rules and more flexibility in retirement savings.
Next milestone: The scheme takes effect immediately; employers must update compliance procedures accordingly.
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