India’s Ministry of Labour and Employment has notified the Employees’ Provident Funds Scheme, 2026 (“New Scheme”), replacing the Employees’ Provident Funds Scheme, 1952 (EPF Scheme, 1952) and operationalising provident fund provisions under the Code on Social Security, 2020. Effective 1 July 2026, the New Scheme marks a significant step in the broader transition to a Labour Code framework.
In addition, the government has introduced three special transition initiatives—Employees’ Enrolment Campaign, 2026, VISHWAS, 2026 and AMNESTY, 2026—to support the regularisation of compliance and dispute resolution.
This article overviews the key changes and their implications for employers.
Continuity of Coverage and Membership
The New Scheme provides seamless continuity for existing members. Employees covered under the EPF Scheme, 1952 automatically continue as members. The definition of “excluded employee,” tied to the statutory wage ceiling (INR 15,000 per month, as per the notification dated 29 May 2026), remains unchanged. Voluntary coverage continues to be permitted.
Employer impact: Existing membership structures can largely continue but onboarding processes for new employees should be reviewed.
Contribution Framework
The contribution structure remains consistent: both the employer and the employee contribute 12% of ‘wages’ as defined under the Code on Social Security, 2020, subject to the wage ceiling. Mandatory contributions for employees earning above the ceiling are capped at the statutory limit, although employees may contribute more voluntarily, with the employer permitted to make a matching contribution.
Impact on employers: Payroll systems may require updates to accommodate flexible contribution options and any administrative charges linked to voluntary contributions.
Simplified and Partial Withdrawals
The New Scheme allows withdrawals upon retirement, permanent migration, overseas employment and other specified events. It also streamlines partial withdrawals for purposes such as illness, education, marriage and housing, with new safeguards such as minimum balance requirements.
Impact on employers: HR and payroll teams should familiarise themselves with the revised withdrawal conditions to effectively support employee queries.
A dedicated definition of ‘principal employer’ has been introduced. Principal employers remain responsible for provident fund compliance for workers engaged through third-party contractors, particularly where contractors are not independently registered. Even where contractors undertake compliance activities, ultimate liability continues to rest with the principal employer. Nevertheless, the Scheme introduces new contractor-related compliance obligations.
Impact on employers: Organisations using contract labour should assess contractor registration status and strengthen contractor due diligence and monitoring mechanisms.
International Workers
The New Scheme retains the framework relating to international workers, clarifies the continuation of membership and provides detailed guidance on social security agreements and detached worker arrangements.
Impact on employers: Multinational employers should reassess contribution obligations for foreign nationals in India or Indian employees working abroad and related compliance.
Exempted Provident Fund Trusts
The governance framework for exempted establishments operating private provident fund trusts has been substantially expanded. Key changes include:
Impact on employers: This is a high-priority area for large organisations maintaining private provident fund trusts.
Expanded Digital Compliance
The New Scheme significantly increases electronic reporting requirements, including consolidated employee returns, ownership disclosures, authorised signatory filings, contractor declarations, joining/exiting reporting, and electronic contribution filings via Electronic Challan cum Return (ECR) mechanisms.
Greater reliance on Aadhaar, permanent account numbers, Universal Account Numbers and Aadhaar-seeded bank accounts for employee identification and administration signals a shift toward data-driven enforcement by the Employees' Provident Fund Organisation.
Impact on employers: Employers may need to modernise their EPF compliance infrastructure.
Revised provisions on damages for delayed compliance and a structured recovery framework have been introduced—particularly relevant for employers with pending compliance disputes.
As mentioned above, in addition to notifying the EPF Scheme, 2026, the government has introduced three special transition initiatives to support compliance regularisation and the resolution of disputes:
While the EPF Scheme, 2026 does not alter the core contribution structure of India’s provident fund system, it significantly strengthens governance, compliance and digital administration requirements. The scheme reflects a clear policy direction toward enhanced transparency, technology-enabled oversight and enhanced accountability across the provident fund ecosystem.
Employers should treat this transition as an opportunity to conduct a comprehensive provident fund health check, reassess contractor governance and due diligence processes, evaluate exempted trust operations and consider the benefits available under the newly introduced regularisation schemes. Early preparedness will be essential to mitigate compliance risk and manage a smooth transition to the social security framework under the Code on Social Security, 2020.
Preeti Sharma
BDO in India
In addition, the government has introduced three special transition initiatives—Employees’ Enrolment Campaign, 2026, VISHWAS, 2026 and AMNESTY, 2026—to support the regularisation of compliance and dispute resolution.
This article overviews the key changes and their implications for employers.
Key Highlights of the New Scheme
Continuity of Coverage and MembershipThe New Scheme provides seamless continuity for existing members. Employees covered under the EPF Scheme, 1952 automatically continue as members. The definition of “excluded employee,” tied to the statutory wage ceiling (INR 15,000 per month, as per the notification dated 29 May 2026), remains unchanged. Voluntary coverage continues to be permitted.
Employer impact: Existing membership structures can largely continue but onboarding processes for new employees should be reviewed.
Contribution Framework
The contribution structure remains consistent: both the employer and the employee contribute 12% of ‘wages’ as defined under the Code on Social Security, 2020, subject to the wage ceiling. Mandatory contributions for employees earning above the ceiling are capped at the statutory limit, although employees may contribute more voluntarily, with the employer permitted to make a matching contribution.
Impact on employers: Payroll systems may require updates to accommodate flexible contribution options and any administrative charges linked to voluntary contributions.
Simplified and Partial Withdrawals
The New Scheme allows withdrawals upon retirement, permanent migration, overseas employment and other specified events. It also streamlines partial withdrawals for purposes such as illness, education, marriage and housing, with new safeguards such as minimum balance requirements.
Impact on employers: HR and payroll teams should familiarise themselves with the revised withdrawal conditions to effectively support employee queries.
Enhanced Accountability for Principal Employers
A dedicated definition of ‘principal employer’ has been introduced. Principal employers remain responsible for provident fund compliance for workers engaged through third-party contractors, particularly where contractors are not independently registered. Even where contractors undertake compliance activities, ultimate liability continues to rest with the principal employer. Nevertheless, the Scheme introduces new contractor-related compliance obligations.Impact on employers: Organisations using contract labour should assess contractor registration status and strengthen contractor due diligence and monitoring mechanisms.
International Workers
The New Scheme retains the framework relating to international workers, clarifies the continuation of membership and provides detailed guidance on social security agreements and detached worker arrangements.
Impact on employers: Multinational employers should reassess contribution obligations for foreign nationals in India or Indian employees working abroad and related compliance.
Exempted Provident Fund Trusts
The governance framework for exempted establishments operating private provident fund trusts has been substantially expanded. Key changes include:
- Limit on the initial exemption validity to three years, with mandatory renewal requirements;
- Strengthened board governance and annual audit requirements;
- Electronic maintenance of trust records;
- Enhanced reporting and stricter investment governance requirements; and
- Mandatory applications for continuation of exemption within prescribed timelines.
Impact on employers: This is a high-priority area for large organisations maintaining private provident fund trusts.
Expanded Digital Compliance
The New Scheme significantly increases electronic reporting requirements, including consolidated employee returns, ownership disclosures, authorised signatory filings, contractor declarations, joining/exiting reporting, and electronic contribution filings via Electronic Challan cum Return (ECR) mechanisms.
Greater reliance on Aadhaar, permanent account numbers, Universal Account Numbers and Aadhaar-seeded bank accounts for employee identification and administration signals a shift toward data-driven enforcement by the Employees' Provident Fund Organisation.
Impact on employers: Employers may need to modernise their EPF compliance infrastructure.
Rationalised Damages and Compliance Enforcement
Revised provisions on damages for delayed compliance and a structured recovery framework have been introduced—particularly relevant for employers with pending compliance disputes.
Transition Schemes
As mentioned above, in addition to notifying the EPF Scheme, 2026, the government has introduced three special transition initiatives to support compliance regularisation and the resolution of disputes:
- Employees’ Enrolment Campaign, 2026: Facilitates the enrolment of previously uncovered employees and establishments into the provident fund framework. The initiative builds on earlier enrolment drives aimed at expanding social security coverage.
- VISHWAS, 2026: Provides a structured dispute-resolution mechanism offering reduced damages in specified ongoing litigation and compliance matters.
- AMNESTY, 2026: Offers organisations an opportunity to regularise historical compliance gaps, particularly those relating to recognised provident fund trusts and exemption-related issues. The scheme is intended to expedite resolution of legacy disputes and safeguard employee interests.
BDO Perspective
While the EPF Scheme, 2026 does not alter the core contribution structure of India’s provident fund system, it significantly strengthens governance, compliance and digital administration requirements. The scheme reflects a clear policy direction toward enhanced transparency, technology-enabled oversight and enhanced accountability across the provident fund ecosystem.Employers should treat this transition as an opportunity to conduct a comprehensive provident fund health check, reassess contractor governance and due diligence processes, evaluate exempted trust operations and consider the benefits available under the newly introduced regularisation schemes. Early preparedness will be essential to mitigate compliance risk and manage a smooth transition to the social security framework under the Code on Social Security, 2020.
Preeti Sharma
BDO in India