EPF overhaul: Voluntary contributions above Rs 1,800, withdrawals simplified

The Employees Provident Fund Organisation (EPFO) has introduced significant changes to its rules, affecting nearly 8 crore active members. Under the new Employees' Provident Funds Scheme, 2026, notified on Wednesday, the mandatory contribution limit remains at 12% of the statutory wage ceiling of Rs 15,000 per month, which translates to Rs 1,800 per month from both employee and employer. Any contribution above this amount will now be voluntary.

Employees earning above Rs 15,000 can choose to contribute additional amounts from their salary towards their provident fund on a voluntary basis. Employers have the option, but not the obligation, to match these additional voluntary contributions. Both employees and employers can reduce or stop such additional contributions at any time. This flexibility is intended to give members greater control over their retirement savings, aligning with the objectives of the new labour codes.

The EPFO has also streamlined the categories for advance withdrawals from 13 to just three: essential needs (covering illness, education, and marriage), housing needs, and special circumstances. Members can now withdraw up to 100% of their eligible balance, which includes both employee and employer shares, provided they maintain a minimum balance of 25% of contributions in their account at all times.

For contract workers, the new scheme clarifies that the 'principal employer' is responsible for ensuring PF contributions unless the contractor is independently registered. Even if the contractor makes the payment, the principal employer bears ultimate responsibility.

Additionally, employers must now file a consolidated return in Form V within 15 days of the scheme's application, detailing all employees' Aadhaar, PAN, universal account number, gross wages, and EPF wages. The government has also notified three special drives to address historical compliance gaps and resolve pending issues.