India's EPF Scheme 2026: What Employers Need to Review

The EPF Scheme 2026 establishes India's updated provident fund framework under the Code on Social Security, 2020.

Existing EPF members continue under the new Scheme, while the framework addresses requirements relating to:

• Membership and employee coverage
• Employer and employee contributions
• Voluntary contributions
• Withdrawals
• International workers
• Contract labour
• Employer records and reporting

For employers, the priority should therefore be to understand both the substantive requirements and the processes needed to administer them consistently.

Employer and employee contributions generally continue at 12% of applicable wages, subject to the relevant statutory provisions.

The Scheme also provides for additional voluntary contributions. Under paragraph 19, an employee may opt to contribute on wages exceeding the statutory wage ceiling at the applicable statutory rate, or may contribute at a higher rate. The employer may make a corresponding additional contribution but is not required to do so. The employee or employer may subsequently reduce or discontinue their respective additional voluntary contributions, subject to the Scheme.

For employers, this makes accurate employee classification and payroll configuration important. Businesses should ensure that payroll systems apply the appropriate contribution treatment and that employee records supporting those calculations remain current.

The 2026 framework provides for partial withdrawals for specified needs, including:

• Illness
• Education
• Marriage
• Housing
• Other prescribed circumstances

Subject to the applicable conditions, the Scheme generally requires members to retain a minimum balance equal to 25% of the aggregate employer and employee contributions credited to the member, together with interest. The balance available after retaining this amount forms the basis of the ‘Eligible Member Balance’ for partial withdrawals. 

While withdrawals are primarily an employee matter, HR and payroll teams should understand the updated framework so that employee records and administrative processes can support requests appropriately.

International workers continue to be specifically addressed under the EPF Scheme 2026, including through provisions dealing with employees covered by applicable Social Security Agreements. 

Employers managing internationally mobile employees should therefore consider:

• Whether the employee falls within the applicable international worker provisions
• Whether a Social Security Agreement applies
• Whether a Certificate of Coverage is available or required
• The appropriate contribution basis
• Applicable payroll and reporting requirements

International worker treatment should be assessed separately rather than assuming that the rules applying to domestic employees automatically apply.

The Scheme provides for an initial consolidated return concerning International Workers within 15 days of its application to the establishment, including a Nil return where there are no International Workers required or entitled to become members. Employers must also electronically furnish prescribed monthly information concerning International Workers, including details of relevant new members, employees joining following a transfer and employees leaving service, within 15 days after the close of each month.

Contract labour is an important employer compliance area under the 2026 framework.

The Scheme continues to place provident fund compliance responsibilities on principal employers and contractors and introduces more structured contractor reporting requirements. 

The Scheme formalises these requirements through prescribed reporting. Principal employers must declare contractors in Form X. Contractors must furnish prescribed monthly worker and contribution information in Form XI within 10 days after the close of each month, while principal employers must furnish the prescribed monthly information in Form XII within 20 days after the close of the month.

For businesses with significant contractor populations, this reinforces the importance of visibility over provident fund compliance throughout the contractor relationship.

The Scheme also prescribes employee/member information requirements relevant to EPF administration. Members are required to furnish specified particulars, including Aadhaar, an Aadhaar-seeded bank account, PAN and UAN. Employers should review their onboarding and employee-data processes to ensure that information required for EPF administration is appropriately collected, validated and maintained.

For many businesses, the most significant consideration is not simply the headline contribution rate.

The wider challenge is ensuring that payroll, HR and contractor-management processes provide sufficient information and control to support compliance.

This becomes particularly important for organisations with:

• Large or changing workforces
• Multiple establishments
• Significant contract labour
• International workers

Provident fund compliance should therefore be viewed as more than a payroll calculation.

The question employers should ask is:

"Do we have sufficient visibility across our workforce to ensure our provident fund obligations are being managed correctly?"

Businesses should consider reviewing their existing provident fund arrangements against the new framework.

1. Review Payroll Configuration

Confirm that employee classifications and contribution calculations remain appropriate.

2. Validate Employee Information

Identify missing or inconsistent employee information required to support provident fund administration.

3. Review International Workers Separately

Assess internationally mobile employees based on their individual circumstances and determine whether an applicable Social Security Agreement or Certificate of Coverage affects their treatment.

4. Strengthen Contractor Oversight

Review how provident fund compliance is monitored for contract workers, ensure contractors are appropriately declared, and establish processes for obtaining and reviewing prescribed monthly worker and contribution information within the applicable timelines.

5. Map Reporting Responsibilities

Identify the applicable employer, international worker and contractor reporting requirements and assign clear internal ownership.

6. Review Internal Processes

Consider whether HR, payroll, procurement and finance teams have sufficient visibility over workforce changes that may affect provident fund compliance.

From Payroll Compliance to Workforce Governance

The EPF Scheme 2026 highlights how provident fund compliance increasingly extends across multiple business functions.

International assignments, contract labour, employee data and reporting requirements mean that effective compliance may require coordination between payroll, HR, finance, procurement and governance teams.

For employers, establishing clear ownership and visibility across these functions can help reduce compliance gaps as the new framework is implemented.

Managing payroll and statutory employment requirements in India can become increasingly complex as workforce structures evolve.

Vistra supports businesses with payroll and related HR administration, helping organisations manage statutory requirements while maintaining reliable processes and employee records.

For multinational organisations, our local India expertise and wider international capabilities can also support businesses managing employees across jurisdictions and navigating the payroll implications of cross-border mobility.

The new framework provides an opportunity for employers to review whether their payroll, employee information and contractor-management processes remain aligned with India's provident fund requirements.

Speak to Vistra's India team about reviewing your payroll and provident fund compliance requirements.