EPF Scheme 2026: New Withdrawal Rules And Contribution Cap Introduced

New Delhi, Jul 3 (KNN) The Employees’ Provident Fund (EPF) Scheme, 2026 introduces key changes for subscribers, particularly on partial withdrawals, effective June 29.

The Centre has notified the new scheme, replacing the EPF Scheme, 1952, as part of implementing the Code on Social Security, 2020.

Mandatory Contributions Capped at Wage Ceiling

In a significant structural change, contributions above the monthly wage ceiling of Rs 15,000 — currently fixed at Rs 1,800 per month — have been made voluntary under the new scheme. 

Under the earlier framework, employees and employers contributed on actual basic wages even when these exceeded the wage ceiling, with the excess employer contribution flowing into EPF accounts. 

The new scheme explicitly limits mandatory employer and employee contributions to the statutory wage ceiling, while permitting voluntary contributions beyond it. The Rs 15,000 wage ceiling has remained unchanged since 2014.

Streamlined Withdrawal Categories

The new scheme incorporates withdrawal reforms announced by the Employees' Provident Fund Organisation (EPFO) in October 2025, which reduced withdrawal categories from 13 to three: essential needs covering illness, education, and marriage; housing needs; and special circumstances.

A mandatory minimum balance of 25 per cent of the eligible member balance must be maintained in the EPF account at all times. Withdrawals are therefore calculated on the remaining 75 per cent of total funds, referred to as the eligible member balance. The full 100 per cent can be withdrawn only after remaining unemployed for one year.

For illness of self or family members, members may withdraw up to 100 per cent of the eligible member balance after 12 months of total fund membership. 

For education and marriage of self or family members, withdrawal of up to 100 per cent of the eligible member balance is permitted after 12 months, subject to a cap of 10 withdrawals for education and 5 for marriage over the membership period.

Housing-related withdrawals — covering purchase of a house or flat, plot acquisition, home construction, housing loan repayment, and repairs or renovations — are limited to 75 per cent of total funds after 12 months of membership, with a maximum of five such withdrawals permitted.

Contract Workers and Principal Employer Liability

For the first time, the concept of a principal employer has been formally introduced into the EPF scheme for contract workers, in line with the provisions of the labour codes. 

Where a contractor is not independently registered, the principal employer will be required to pay both employer and employee contributions, along with administrative charges, within 15 days of the close of every month. Even where the contractor makes PF payments directly, ultimate liability for contributions rests with the principal employer.

(KNN Bureau)