EPFO's new rule: PF contribution over ₹1800 is now voluntary, and withdrawal has also become easier. Know the impact on 8 crore people.
According to the new EPF Scheme 2026, contributions to the PF exceeding ₹1800 per month have now been made completely voluntary. This means that companies can no longer deduct extra money from an employee's salary without their consent.
However, the 12% PF contribution up to the statutory wage limit of ₹15,000 will remain mandatory for everyone. This amount comes to ₹1800 per month.
For example, if an employee's basic salary is ₹1 lakh, their mandatory PF contribution will still be calculated on the ₹15,000 limit, which is ₹1800. The company will also contribute the same amount.
If employees wish, they can voluntarily deposit an amount greater than ₹1800 into their PF account. This will be considered a Voluntary Provident Fund (VPF).
It will not be mandatory for the company to contribute its share to this additional amount, although they can choose to do so. Both the employee and the company can modify or stop this additional contribution at any time.
The government states that the purpose of these changes is to give employees more freedom in their retirement savings and to make the PF system simpler than before.
EPFO has also significantly simplified the process of withdrawing money from the PF. Previously, there were 13 different categories for advance withdrawal, which have now been reduced to just three.
The first category is for essential needs like illness, education, and marriage. The second category is for housing-related needs, and the third is for special circumstances.
Members can now withdraw up to 100% of their eligible PF balance in advance. However, it will be mandatory to maintain at least 25% of the total contribution in the account.
The new rules also take into account the interests of contract employees. If a contractor is not registered with EPFO, it will be the full responsibility of the principal employer to deposit the employees' PF.
All companies will have to provide the details of all their employees to EPFO via 'Form V' within 15 days of the scheme's implementation, which will include information like Aadhaar, PAN, and UAN.
These changes are expected to result in more cash-in-hand for employees, helping them manage their financial goals better. Additionally, the compliance process for companies has been clarified.
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