Quick answer: Under India's Code on Social Security, 2020, an employer must pay both PF and ESI contributions by the 15th of every month for the previous month's wages. PF is 12% from the employee and 12% from the employer, and the PF wage limit has been raised from ₹15,000 to ₹25,000 a month from 17 September 2026. ESI is 0.75% from the employee and 3.25% from the employer for staff earning up to ₹21,000. Late payment attracts 12% yearly interest plus damages.

Does the new ₹25,000 PF limit affect your payroll? Praans Consultech can check your salary structure, PF and ESI calculations and filing dates, and tell you exactly where you stand. Contact Praans Consultech: Sandeep@praansconsutech, +91 95997 81731

Key numbers at a glance (2026)

• PF wage limit: ₹25,000 a month from 17 September 2026 (notification S.O. 5109(E)), up from ₹15,000

• ESI wage limit: ₹21,000 a month

• PF rate: 12% from the employee and 12% from the employer (Section 16 of the Code)

• ESI rate: 0.75% from the employee and 3.25% from the employer (Section 29 of the Code)

• Due date: 15th of the following month, for both PF and ESI

• Interest on late payment: 12% a year, simple interest (Section 127), plus damages (Section 128)

If you run a business in India, this is the one compliance area where a small slip repeats every single month. So let's go through it in plain words: what changed, what you owe, when you owe it, and what happens if you miss it.

What has changed under the new Social Security Code?

The Code on Social Security, 2020 came into force on 21 November 2025. It folds nine older laws into one, including the Employees' Provident Funds Act, 1952 and the ESI Act, 1948. PF now sits in Chapter III of the Code and ESI in Chapter IV.

The government then filled in the details during 2026. The Central Rules arrived on 8 May. New EPF, Pension and EDLI schemes were notified on 29 June. And on 17 September, the PF wage ceiling went up from ₹15,000 to ₹25,000 for the first time since 2014.

The contribution rates themselves did not change. What changed is the base they are calculated on, the ceiling, the penalty slabs and the amount of paperwork that now happens online, through the EPFO portal and the ESIC portal.

PF wage limit raised from ₹15,000 to ₹25,000: what it means for you

The PF wage limit in 2026 is ₹25,000 a month, effective 17 September 2026 under notification S.O. 5109(E), issued under Section 2(89) of the Code. It replaced the old limit of ₹15,000, and it is the first increase since 2014, when the limit went up from ₹6,500 to ₹15,000.

What changes	PF rule before 17 September 2026	PF rule from 17 September 2026
PF wage limit	₹15,000 a month	₹25,000 a month
Highest PF per side at 12%	₹1,800 a month	₹3,000 a month
Employees who must be in PF	Wages up to ₹15,000	Wages up to ₹25,000
Pension scheme for the ₹15,000 to ₹25,000 group	Left out	Included from 17 September 2026

Who is affected?

• Employees earning ₹15,000 to ₹25,000 who were not in PF. They now qualify and should be enrolled from 17 September 2026, with a UAN generated or linked.

• Existing members whose PF was capped at ₹15,000. Their contribution now follows actual wages up to ₹25,000. Someone on ₹20,000 now sees ₹2,400 from each side, up from ₹1,800.

• Employees earning above ₹25,000. They are not forced to change. If they already contribute on higher wages, do not cut that back without checking the arrangement first.

The cost adds up quickly. If 20 of your employees earn ₹20,000 and were capped at ₹15,000 before, your own PF bill rises by about ₹12,000 a month.

How do you handle September 2026?

The limit changed in the middle of the month, so September has two parts. EPFO's FAQs say to use ₹15,000 for 1 to 16 September and ₹25,000 for 17 to 30 September, and to report it all in one September return.

Take an existing member on ₹20,000. For the first 16 days, wages count as ₹15,000 × 16/30 = ₹8,000. For the last 14 days, they count as ₹20,000 × 14/30 = ₹9,333. September's PF wages are therefore about ₹17,333, and each side pays about ₹2,080. From October wages onward, it is simply actual wages up to ₹25,000.

A common mix-up

The ₹25,000 limit is for PF only. The ESI limit is still ₹21,000. An employee can be inside PF and outside ESI at the same time.

Who needs to register for PF and ESI?

The rule of thumb is simple. If you have 20 or more employees, PF applies to you. If you have 10 or more, ESI applies to you.

	PF	ESI
Applies when you employ	20 or more people	10 or more people (seasonal factories are excluded)
Smaller employers	Can opt in if most employees agree	Can opt in voluntarily with fewer than 10
Where	All of India	All of India, though a few districts are still being notified
Run by	EPFO	ESIC

Two things catch employers out. First, once you are covered, you stay covered even if your headcount later drops below the limit. Second, ESI used to apply only in "notified areas". That restriction is gone, so an office in a smaller city is no longer safe just because it was never covered before.

How much PF do you have to pay?

Section 16 of the Code sets the PF rate. The employee pays 12% of wages and the employer pays 12% of wages. Out of the employer's 12%, about 8.33% goes into the employee's pension and the rest into the PF account. On top of that, the employer pays 0.5% towards EDLI insurance, plus a small administration charge. Neither of these can be deducted from the employee's salary.

The bigger news is the new ₹25,000 wage limit, explained in the section above. At the full limit, each side pays ₹3,000 a month instead of ₹1,800.

September 2026 is calculated in two parts because the limit changed mid-month. The worked example is in the section above.

What counts as "wages"?

Section 2(88) of the new Code gives one definition of wages for PF, ESI, gratuity and bonus. Wages mean basic pay plus dearness allowance. Items like HRA, conveyance and overtime are left out, but only up to a point. If those excluded items add up to more than half of the total pay, the extra gets added back to wages.

So if someone earns ₹40,000 and ₹24,000 of it is allowances, only ₹20,000 of the allowances can stay out. Wages become ₹20,000, not ₹16,000. Salary structures with a tiny basic pay no longer lower your PF bill.

How much ESI do you have to pay?

Section 29 of the Code and Rule 19 of the Central Rules, 2026 set the ESI rate: 3.25% of wages from the employer and 0.75% from the employee, so 4% in total. It covers employees whose wages are ₹21,000 a month or less. That limit has stayed the same, and it is still used in practice even though the government has not formally notified a fresh figure under the new Code.

Here is where the wages rule bites. ESI eligibility is checked on wages as the Code defines them, not on gross salary or CTC. An employee with a high allowance share can land inside ESI when they would have been outside it before.

A few more points worth knowing:

• If someone's wages cross ₹21,000 during a six-month contribution period, they stay covered until that period ends. The periods run April to September and October to March.

• The employer deposits both shares, even for workers hired through a contractor, and can recover the amount from the contractor.

• Employees now get cover for accidents on the way to and from work.

• For an employee with a certified disability, the employer's share is waived for up to three years.

What are the PF and ESI due dates?

Both are due on the 15th of the month after the wages were paid. For PF, you file the ECR (the online return) and pay in one go. For ESI, you upload employee details on the ESIC portal, generate a challan and pay.

What you are paying or filing	Last date
PF contribution and ECR	15th of the month after the wages were paid
ESI contribution and challan	15th of the month after the wages were paid
ESI half-yearly return	Around the 11th to 12th after each six-month period ends

The ESI half-yearly return is built from your monthly uploads, so you mainly review and certify it. Sources differ between the 11th and the 12th, so check the exact date on the ESIC portal.

When the 15th is a Sunday, do not count on extra time. Pay on the last working day before it.

What happens if you pay late?

You pay 12% simple interest a year from the due date until the day you actually pay (Section 127 of the Code). On top of that come damages under Section 128.

For PF, the 2026 scheme sets damages on a sliding scale: 0.25% of the unpaid amount per month if you are less than 2 months late, 0.5% per month for 2 to 4 months, and 1% per month beyond that. Filing the return late also costs ₹500 a day. For ESI, damages have been reported at 5% to 25% a year depending on the delay, under older rules that still apply during the transition, so confirm the current slab.

The serious part is the deducted-but-not-deposited case. If you cut the employee's share from salary and do not deposit it, Section 133 of the Code allows a jail term of at least one year and a ₹1,00,000 fine. Never use that money as working capital.

For a feel of the numbers, ₹4,20,000 of PF paid 45 days late costs about ₹6,214 in interest alone.

Other PF and ESI rules employers often miss

Beyond rates and due dates, the new Code carries a few rules that rarely make headlines.

• Voluntary PF above the limit. Employees can contribute more than the statutory amount, or on wages above ₹25,000. The employer is not required to match anything above the standard share, though it may choose to.

• No deducting the employer's share. A contractor or employer cannot recover the employer's PF, EDLI or admin charges from an employee's wages. Doing so can attract a fine of up to ₹50,000.

• Principal employer liability. For contract workers, the principal employer pays both shares first and can recover them from the contractor afterwards.

• Time limits on inquiries. PF and ESI inquiries into past dues cannot start after 5 years and should generally finish within 2 years.

• Notice before action. The Code asks for a 30-day improvement notice for certain violations, giving you time to fix the problem.

• Digital records. Returns, nominations and employee records are now expected online. Registers must be kept for five years and wage slips issued on or before payday.

• Staying covered. Once PF or ESI applies to your establishment, it keeps applying even if headcount later falls.

• Relief in a disaster. In a pandemic or national disaster, the Central Government can defer or reduce contributions for up to three months at a time.

• Gig and platform workers. Companies that engage gig workers through an app must register them and deposit contributions on a set yearly schedule.

Employer checklist: what you must do

1. Register on the EPFO portal (20+ employees) and the ESIC portal (10+ employees).

2. Enrol everyone eligible from their joining date, and link each UAN with Aadhaar so your return is not rejected.

3. Recalculate wages under the new definition and check the 50% rule on every salary structure.

4. Apply the ₹25,000 PF ceiling and enrol the ₹15,000 to ₹25,000 group.

5. Deduct only the employee's share from pay. The employer's share, EDLI and admin charges are your cost.

6. Pay by the 15th, ideally a day or two earlier.

7. Update exits on both portals, since audits often flag headcount mismatches.

8. Keep records: registers for five years and wage slips given on or before payday.

9. Check your contractors. As the principal employer, you pay first and carry the risk if they do not.

There is also a window worth using. The Employees' Enrolment Campaign, 2026 lets you enrol staff who joined between April 2009 and March 2026 and were never covered, with damages capped at ₹100. It closes on 31 October 2026.

Frequently asked questions

1. Is PF mandatory for a company with fewer than 20 employees?

No, not by default. PF becomes compulsory at 20 employees, but a smaller employer can opt in if the employer and most employees agree.

2.What is the PF wage limit in 2026?

It is ₹25,000 a month from 17 September 2026. Before that it was ₹15,000. The limit decides who must be covered and the maximum wages on which contributions are calculated.

3.What is the ESI contribution rate?

The employer pays 3.25% and the employee pays 0.75% of wages, so 4% in total, for employees earning up to ₹21,000 a month.

4. What is the last date to pay PF and ESI?

The 15th of the following month. For example, October 2026 wages are due by 15 November 2026.

5. Did the new labour codes change PF and ESI rates?

No. The rates stayed the same. What changed is the definition of wages, the PF wage ceiling, the penalty slabs and the move to online compliance.

6. Can I deduct PF from an employee and pay it late?

You should not. Late payment brings 12% interest and damages, and not depositing a deducted amount can lead to prosecution.

The bottom line

PF and ESI are not hard to follow once you know the rhythm: register, calculate on the right wages, deposit by the 15th, and keep clean records. The new Social Security Code did not change the rates, but it did change the base, the ceiling and the cost of getting it wrong. Check your September return this week, and plan October's payment for Friday 13 November.

Not sure your payroll is compliant with the new Code? Talk to the team at Praans Consultech. We will review your salary structure, PF and ESI calculations and filing dates, and tell you exactly where you stand.

Contact Praans Consultech:

Mobile: 9050576838

Website: www.praansconsultech.com

E-Mail: info@praansconsultech.com

This article is general information, not legal advice. Rules and notifications are still being updated, so confirm important decisions against the latest official notices or with a professional.

About the author

Sandeep Kumar is the Founder of Praans Consultech. He writes about labour law and payroll compliance in plain language so that employers and employees can understand their rights and duties.

He holds an LLB and an LLM (Master of Laws), is currently pursuing a Ph.D., and is an alumnus of XLRI. He has over 15 years of experience in labour law, business registration and startup advisory. Before starting Praans Consultech, he worked as a Director at a leading logistics company, where he led large teams.

PF and ESI Compliance in India (2026): PF Limit Raised to ₹25,000, Rules, Due Dates and Employer Duties Under the New Social Security Code

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