EPF wage ceiling ₹25,000 from 17 September 2026: payroll, salary TDS and gratuity

From 17 September 2026 the wage ceiling for Provident Fund is ₹25,000 a month, up from ₹15,000. More employees must now be covered, and contributions rise for anyone earning between the two limits. This guide explains what changed, using only official sources (listed at the end), and how TallyBook's payroll handles it along with salary TDS and gratuity.

What changed

• The notification: S.O. 5109(E), dated 17 September 2026, issued under section 2(89) of the Code on Social Security, 2020, sets ₹25,000 a month as the wage ceiling for Chapter III of the Code (the EPF chapter), with effect from its publication on 17 September 2026. EPFO circulated it to its offices on 25 September 2026.
• It applies to EPF, EPS (pension) and EDLI (insurance), according to EPFO's FAQ on the change.
• Rates are unchanged: employee 12%; employer 12%, of which 8.33% goes to the pension scheme (EPS) and 3.67% to EPF.
• Who must be covered: employees with wages up to ₹25,000 must be enrolled. Employees who were previously excluded but were working on 17 September 2026 must be enrolled from that date.
• Pension: the maximum EPS contribution rises from ₹1,250 to ₹2,083 a month (8.33% of ₹25,000). EPFO's FAQ says EPS membership applies to employees whose wages on joining, or on 17 September 2026, do not exceed ₹25,000.

A worked example (full month, from October 2026)

An employee's PF wages (basic plus DA) are ₹20,000 a month. If you were limiting contributions to the old ₹15,000 ceiling:

EDLI and administrative charges are each 0.5% of wages up to the ceiling, which EPFO's FAQ puts at ₹125 each at the ₹25,000 limit, with a minimum administrative charge of ₹500 a month per establishment. Rounding rules in the ECR may change the last rupee.

September 2026: the part month

Because the change came in mid-month, EPFO's FAQ says September 2026 contributions are worked out separately for 1–16 September (₹15,000 ceiling) and 17–30 September (₹25,000 ceiling), with wages prorated on a 30-day month, and paid in a single ECR due 15 October 2026. It also says there is no postponement to 1 October. The employee share for newly covered staff may be recovered in a later payroll, but the full amount must still be paid by the due date.

How TallyBook handles the ceiling

Since version 0.2.1:

• PF pay heads that use the statutory ceiling use ₹25,000 from 17 September 2026 and ₹15,000 before. You do not need to edit them.
• September 2026 payroll is split by days: ₹15,000 up to the 16th and ₹25,000 from the 17th.
• If you typed your own ceiling into a PF pay head (for example, you always contribute on full wages), it is left as you entered it. Check those pay heads.
• Contribution rates are unchanged in TallyBook, as in the law.

TallyBook does not create the ECR file. Use the Payroll Statement as your working and file on the EPFO portal. Setup of PF, ESI and PT pay heads is in payroll in TallyBook.

ESI has not changed. ESIC's coverage page still gives the ESI wage limit as ₹21,000 a month (₹25,000 for persons with disability). The new ₹25,000 figure is for EPF only.

Income tax on salary (TDS)

Since version 0.2.0, TallyBook works out income tax on salary for each employee by slab, under either the new or the old regime, including rebate, surcharge and cess:

1. Fill in each employee's Income Tax Declarations.
2. Check the Income Tax Slabs. They are editable, so you can update them when a Finance Act changes the rates.
3. Run payroll as usual. The Income Tax Computation report shows the working for each employee.

For reference, the new regime (the default unless the employee opts out) under section 202 of the Income-tax Act, 2025, unchanged by the Finance Act, 2026:

Under the new regime, an individual with total income up to ₹12 lakh gets a rebate of the full tax up to ₹60,000 (section 156, the old 87A), with marginal relief just above ₹12 lakh, and salaried employees get a standard deduction of ₹75,000 (or the salary, if less). Cess and any surcharge are added on top.

Compare the slabs in TallyBook with the rates on incometaxindia.gov.in for the tax year before relying on them. For TDS on other payments and the new Income-tax Act, 2025, see TDS under the Income-tax Act, 2025.

Gratuity under the Code on Social Security

The four Labour Codes, including the Code on Social Security, 2020, came into force on 21 November 2025 (PIB). Under section 53 of that Code:

• Gratuity is payable after at least five years of continuous service. The five-year condition does not apply on death or disablement, or on the expiry of fixed-term employment. PIB's release on the Codes describes fixed-term employees as eligible after one year.
• The amount is 15 days' wages for each completed year of service, or part of a year over six months, at the last wages drawn. For monthly-paid staff, 15 days' wages is monthly wages ÷ 26 × 15.
• The maximum is as notified by the Central Government, which the Ministry of Labour's FAQ gives as ₹20 lakh.
• "Wages" means basic pay, DA and retaining allowance; if excluded items such as HRA, conveyance, overtime and commission exceed half of total pay, the excess is added back to wages.

Example: last monthly wages ₹26,000 and 7 years 8 months of service. The 8 months is more than six months, so it counts as a year: ₹26,000 ÷ 26 × 15 × 8 = ₹1,20,000.

TallyBook's gratuity follows these rules, including fixed-term employees after one year, and the Gratuity report shows the amounts, which helps you provide for gratuity in the books.

Checklist for this month

1. Update TallyBook to 0.2.1 or later (F1, then Alt+U).
2. Review PF pay heads with a custom ceiling.
3. List employees earning between ₹15,000 and ₹25,000 who were not members, and enrol them from 17 September 2026.
4. Recheck September 2026 payroll against EPFO's FAQ before the ECR.
5. Check each employee's Income Tax Declaration and regime.

Sources

• EPFO circular dated 25.09.2026 with Gazette notification S.O. 5109(E) of 17.09.2026 (epfindia.gov.in)
• EPFO: FAQs on enhancement of wage ceiling (epfindia.gov.in)
• PIB, 16 September 2026: wage ceiling raised to ₹25,000 from 17 September 2026
• PIB, 23 September 2026: S.O. 5109(E) and EPS maximum of ₹2,083
• PIB, 21 November 2025: the four Labour Codes made effective
• Code on Social Security, 2020, section 53 (gratuity) and section 2(88) (wages) (labour.gov.in)
• Ministry of Labour and Employment: FAQs on the Labour Codes (labour.gov.in)
• ESIC: coverage and wage limit (esic.gov.in)
• The Income-tax Act, 2025, Gazette of India: sections 156, 202 and 392 (slabs, rebate, standard deduction, salary TDS)

Some news sites also mention a separate pension-scheme notification and a proposal to raise the ESI limit; we could not find either on an official site, so they are not covered here.

Frequently asked questions

From when does the ₹25,000 EPF wage ceiling apply?

From 17 September 2026, the date notification S.O. 5109(E) was published. September 2026 is split: 1 to 16 September uses the ₹15,000 ceiling and 17 to 30 September the ₹25,000 ceiling.

Have PF contribution rates changed?

No. The employee pays 12% and the employer 12%, of which 8.33% goes to the pension scheme and 3.67% to EPF.

Do I need to change my PF pay heads in TallyBook?

Not if they use the statutory ceiling: from version 0.2.1 they use ₹25,000 from 17 September 2026 automatically. A ceiling you typed yourself is left as entered, so review those.

Has the ESI wage limit changed too?

No. ESIC still gives the ESI wage limit as ₹21,000 a month (₹25,000 for persons with disability).

Does TallyBook calculate gratuity for fixed-term employees?

Yes. From version 0.2.0 gratuity follows the Labour Codes, including fixed-term employees after one year, and the Gratuity report shows the working.

Can TallyBook file the ECR?

No. Prepare the ECR on the EPFO portal using the Payroll Statement as your working.

TallyBook is an independent product made by Techardent Labs and is not affiliated with, endorsed by or connected to Tally Solutions Pvt. Ltd. TallyPrime and Tally are trademarks of their owner. Tax rules change often; confirm current rates, limits and due dates on the official portals or with your Chartered Accountant.