PF Deduction Rules 2026: How Much PF Comes Off Salary
PF is 12% of wages from you and 12% from your employer. The wage ceiling rose to ₹25,000 on 17 September 2026, so capped PF is now ₹3,000 a month. The split, the labour codes and the tax rules.
Updated 27 September 2026 · 4 minute read
Employee PF is 12% of your wages, and your employer adds another 12%. Many employers stop at the statutory wage ceiling, which went up from ₹15,000 to ₹25,000 a month on 17 September 2026. So a capped deduction is now ₹3,000 a month, not ₹1,800. Other employers take 12% of your full basic. And since the labour codes came into force on 21 November 2025, "wages" for PF means basic plus DA plus retaining allowance, with any allowances above half of your total pay added back.
The contributions, line by line
| Contribution | Rate | Where it goes |
|---|---|---|
| Your share | 12% of wages | Your EPF account |
| Employer share, pension part | 8.33% of wages up to ₹25,000, so at most ₹2,083 a month | Employees' Pension Scheme (EPS) |
| Employer share, the rest | The remainder of the 12% | Your EPF account |
| Insurance (EDLI) | 0.5% of wages up to ₹25,000 | Paid by the employer, not credited to you |
| EPFO admin charges | 0.5% | Paid by the employer, not credited to you |
A few small or specifically notified establishments contribute 10% instead of 12%. Whether you are in EPS depends on your wages when you joined, or on 17 September 2026 when the new ceiling began. If they were within the ceiling at either point, you are a member. If not, the whole employer share goes to your EPF account. People earning between ₹15,000 and ₹25,000 who used to be EPF-only were moved into EPS from 17 September 2026.
Capped or full: what it looks like
For a monthly basic plus DA of ₹30,000, as an EPS member:
| PF on the ₹25,000 ceiling | PF on full wages | |
|---|---|---|
| Your contribution | ₹3,000 | ₹3,600 |
| Employer to EPS | ₹2,083 | ₹2,083 |
| Employer to EPF | ₹917 | ₹1,517 |
| Credited to your EPF each month | ₹3,917 | ₹5,117 |
Contributions on wages up to ₹25,000 are compulsory. Going above it is optional, and your employer's policy, or a joint choice by you and your employer, decides which column you are in. From October 2026, a PF line of ₹3,000 means you are on the ceiling. If yours still says ₹1,800 and your basic is above ₹15,000, ask payroll why.
September 2026 is a split month. The old ceiling applies from the 1st to the 16th and the new one from the 17th, so that month's PF is a pro-rated figure, about ₹2,360 on a ₹30,000 basic. EPFO has also let employers recover the extra employee share in the next payroll, so some people will see the catch-up in October. The EPF wage ceiling guide covers who the change affects and what it does to take-home.
What the labour codes changed
The Code on Social Security uses the same single definition of wages as the other labour codes. If your allowances, other than items like gratuity and retrenchment compensation, are more than 50% of your total pay, the excess counts as wages. On the full-wages basis that raises your PF. On the ceiling basis it only matters while your wages are below ₹25,000, because the cap still applies above that. How the labour codes change your salary works through an example, and the in-hand salary calculator lets you switch between the two PF bases.
How PF is taxed
- Your contribution counts towards the ₹1.5 lakh limit in section 123 (the old 80C), in the old regime only. The new regime gives no deduction for it.
- The employer's contribution is not taxed, as long as its contributions to PF, NPS and superannuation together stay within ₹7.5 lakh a year.
- Interest is tax-free, except on your own contributions above ₹2.5 lakh a year, or ₹5 lakh if your employer does not contribute. Interest on the excess is taxable each year. The rate for 2025-26 is 8.25%; see the EPF interest rate guide.
- Withdrawals after five years of continuous service are tax-free. Before that they are taxable, and TDS applies above ₹50,000; the PF withdrawal calculator shows the numbers.
Voluntary PF
You can ask your employer to deduct more than 12% as voluntary provident fund (VPF). It earns the same interest as EPF and sits in the same account, and the ₹2.5 lakh interest limit applies to your contributions including VPF. It is a simple, safe way to save more if you are in the old regime and have room in section 123.
Frequently asked questions
How much PF is deducted from salary?
12% of your wages, which means basic plus DA plus retaining allowance. If your employer caps PF at the wage ceiling, ₹25,000 a month since 17 September 2026, the deduction is ₹3,000 a month.
What are the new PF rules in 2026?
Two things changed. The labour codes, in force since 21 November 2025, define wages as basic, DA and retaining allowance, with allowances above 50% of total pay added back. Then on 17 September 2026 the wage ceiling rose from ₹15,000 to ₹25,000, which raised capped PF from ₹1,800 to ₹3,000 a month and brought people earning up to ₹25,000 into compulsory PF.
Is the employer's PF contribution part of my salary?
It is part of your CTC, not your gross salary. It never reaches your bank account; it goes into your EPF account and, partly, into the pension scheme.
Is PF deduction allowed in the new tax regime?
No. Your own PF contribution counts under section 123 only in the old regime. The employer's contribution stays tax-free in both, within the ₹7.5 lakh limit.
Why does the employer's 12% not all reach my EPF account?
Because 8.33% of wages up to ₹25,000, at most ₹2,083 a month, goes to the Employees' Pension Scheme, which pays a monthly pension later rather than a lump sum.