For over seven decades, the Employees’ Provident Funds Scheme, 1952 has governed how crores of salaried employees in India save for retirement. Now, the central government has notified the Employees’ Provident Funds Scheme, 2026 under the Code on Social Security, 2020, replacing the 1952 scheme with a modernised legal framework.
The new scheme introduces a clearer framework for partial withdrawals, strengthens governance and compliance provisions, recognizes digital administration, and gives the Centre the authority to temporarily reduce or defer EPF contributions during emergencies such as a pandemic or national disaster.
In a departure from paper-based provisions, the new scheme propagates digital-first framework with electronic returns, claims and records. There is mandatory electronic maintenance of accounts and online member access. Online filing and electronic settlement have now become the standard.
The scheme strengthens the regulatory framework governing exempted establishments operating their own provident fund trusts. The revised provisions prescribe detailed requirements relating to the constitution and functioning of boards of trustees, electronic maintenance of accounts, investment of trust funds, annual audits, online claim settlement, periodic reporting, renewal and cancellation of exemptions and transfer of accumulated balances upon surrender or cancellation of exempted status.
Mandatory annual audits with defined reporting timelines and audit rotation will be done. Stronger penalties for delayed returns, non-compliance and governance failures have also been incorporated.
Contract workers are now legally eligible for provident fund benefits. The primary employer (Principal Employer) holds ultimate responsibility for ensuring contractors deposit the mandatory 12% EPF contributions on time, even if the contractor directly pays the wages.
EPFO now allows members to make non-refundable partial withdrawals (using EPF Form 31) and provides temporary contribution relief to employers during national disasters, pandemics or severe natural calamities. The government may temporarily reduce or defer EPF contributions during epidemics or disasters.
Provisions governing international workers are more consolidated under India’s social security agreement framework. Employees covered under India’s Social Security Agreements (SSAs) continue to receive treaty-based benefits, while detached workers from countries having reciprocal agreements may remain exempt from Indian EPF contributions where applicable.
International workers opting to avail benefits under applicable bilateral agreements may contribute their entire wages instead of the statutory wage ceiling.
While the new framework largely retains the existing contribution rate and wage ceiling, it introduces one change that could directly affect both employees and employers. From now on, mandatory EPF contributions will be capped at Rs 1,800 a month for employees earning above the statutory wage ceiling. Any contribution beyond that will happen only if both the employee and employer agree to it voluntarily.
