EPF Scheme 2026 Takes Effect: Key Changes for Employers and Employees Under Social Security Code

The Employees' Provident Fund Scheme, 2026 has come into effect from June 29, 2026, replacing the Employees' Provident Fund Scheme, 1952 that governed provident fund contributions in India for over seven decades. The new scheme has been notified under the Code on Social Security, 2020, which consolidates and replaces nine existing labour welfare laws including the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

What Has Changed Under EPF Scheme 2026

The core contribution structure remains unchanged. Both employers and employees continue to contribute 12 percent of basic wages plus dearness allowance to the provident fund. The definition of wages, however, now follows the unified definition under the Code on Social Security, 2020, which may affect the calculation base for some establishments.

The most significant change for employees concerns partial withdrawal. Under the new scheme, a minimum balance of 25 percent must be maintained in the EPF account at all times. This means employees can withdraw up to 75 percent of their accumulated balance for permissible purposes such as housing, medical emergencies, education, or marriage. The earlier scheme had different withdrawal limits tied to specific purposes and years of service.

VISHWAS and AMNESTY Schemes

The government has introduced two compliance facilitation schemes alongside the new EPF rules. The VISHWAS (Voluntary Compliance Incentive for Historical Arrears Scheme) allows establishments with outstanding EPF dues to settle their arrears with reduced penalties and interest. The AMNESTY scheme provides a window for unregistered establishments to come into compliance without facing prosecution for the period of non-compliance.

These schemes are particularly relevant for small and medium enterprises that may have been operating outside the EPF framework. Employers who take advantage of the AMNESTY window will need to register their establishments and begin making regular contributions going forward.

Employees Enrolment Campaign

The Employees Enrolment Campaign is a nationwide drive to expand the coverage of social security schemes to workers who are currently outside the organised sector. The campaign aims to bring gig workers, platform workers, and informal sector workers into the EPF and ESI (Employees' State Insurance) framework. This aligns with the Code on Social Security's mandate to extend social security coverage to all workers, including those in the gig economy.

Impact on Employers

Employers need to review their payroll systems to ensure compliance with the new scheme. Key action items include updating the contribution calculation base to align with the new wage definition, reviewing existing employee EPF accounts for the 25 percent minimum balance requirement, and ensuring that their establishment registration under the EPFO is current.

Employers who have been non-compliant should consider the VISHWAS and AMNESTY windows to regularise their position. The penalties for non-compliance under the Code on Social Security, 2020 are stricter than under the old Act, with provisions for imprisonment up to three years and fines up to Rs 1 lakh for repeat offences.

Related Reading

For more on employment law developments, see our coverage of the Code on Wages 2019 implementation, how to register as a gig worker for social security benefits, and related labour law updates.

Key Takeaways

The EPF Scheme 2026 replaces the 1952 scheme and is notified under the Code on Social Security, 2020. Contributions remain at 12 percent each for employer and employee, but the wage definition has been unified. Employees must maintain a minimum 25 percent balance in their EPF accounts and can withdraw up to 75 percent for permissible purposes. The VISHWAS scheme allows settlement of historical arrears with reduced penalties. The AMNESTY scheme provides a window for unregistered establishments to achieve compliance. The Employees Enrolment Campaign aims to extend EPF and ESI coverage to gig workers and informal sector workers.

Key Takeaways for Employers and Employees

The notification of the EPF Scheme 2026 under the Social Security Code, 2020 represents a significant step in India's ongoing labour law reform process. The new scheme replaces the earlier EPF Scheme, 1952, while preserving the core structure of mandatory employer and employee contributions to a provident fund account. Employers should review the new scheme carefully to understand any changes in contribution rates, compliance requirements, or administrative procedures.

For employees, the transition to the new scheme is designed to be seamless, with existing provident fund balances and service records being carried forward. However, employees should verify their Universal Account Number (UAN) details, ensure that their KYC information is up to date on the EPFO portal, and confirm that their employer is remitting contributions under the new scheme from the effective date. Any discrepancies in contribution records should be reported to the employer and the EPFO promptly.

For employers, the key compliance actions include updating payroll systems to reflect any changes in the contribution calculation methodology, ensuring timely registration of new employees under the revised scheme, and filing periodic returns in the prescribed format. Non-compliance with provident fund obligations can result in significant penalties, including prosecution of the employer under the Social Security Code. Employers should also review their employment contracts and HR policies to ensure alignment with the new framework.

For related guidance, see our guide on how to withdraw PF online in India (EPFO claim process) and how to claim gratuity in India.