Contributors

Mr. Bhushan Shah, Partner
Ms. Neha Lakshman, Associate Partner

On 29 June 2026, the Ministry of labour and Employment unveiled the new Employees’ Provident Funds Scheme, 2026, (“Scheme”) which was followed by Notification SO 3582(E) (“Notification”) on 1 July 2026, under the Code on Social Security, 2020 (“Code”). Together, these notifications operationalise the provident fund framework under the Code by replacing the long-standing Employees’ Provident Funds Scheme, 1952 with a modernised statutory scheme.

Employer and Employee Contributions

The contributions payable by the employer and the employee under the Scheme, shall be 12% (twelve percent). However the Notification mandates that the statutory rate of 10% shall continue to prevail in the following establishments:  

• Establishments where a resolution plan or repayment plan has been approved by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016; and
• Establishments engaged in the jute industry, beedi industry, brick industry, coir industry (other than the spinning sector); and guar gum factories.

The contributions shall be calculated on the basis of wages actually drawn or payable during the month, irrespective of the payment schedule. 

The employee may make voluntary contributions exceeding the wage ceiling, and the employer can match such voluntary contributions if they so choose. However the employer is under no obligation to do so. The employee or employer may at any time, opt to reduce or stop making such additional voluntary contributions. 

The Scheme clearly mandates that the employer shall not be entitled to deduct the employer's contribution from the wages of an employee or otherwise to recover it from him.

Continuity

Existing employees covered by the 1952 Scheme, continue to be covered and the wage ceiling remains constant at Rs. 15,000/- (Rupees Fifteen Thousand Only). The contribution payable in respect of a member is subject to the wage ceiling limit.

Reporting Responsibilities 

The new Scheme mandates several reporting requirements, that employers must comply with.

Employers are required to file a detailed return, within 15 days of the end of each month inter alia detailing the employees who are part of the Provident fund scheme, employees whose provident fund accounts have migrated to the employer as a result of them joining the establishment, employees who have left the service, etc. The employer must upload details relating to the contributions payable against each employee on the designated portal within 15 days of the close of each month. 

Every employer in relation to an establishment to which the Code applies must file an ownership return after registration of the establishment in the prescribed form, containing details of occupiers, directors, partners, manager or any other person, who has the ultimate control over the administration of the establishment along with documentary proof for authenticating identity on the specified portal. The extract of the ownership return must be displayed at the entrance of the establishment and on its website. 

The principal employer shall ensure registration of the establishment and declare all contractors engaged by him. Contractors and employers shall be jointly and severally liable for payment of contributions and charges in respect of contractual employees. 

Every contractor shall within ten days of the close of each month, inform the principal employer electronically of the, Universal Account Number, wages and contributions payable in respect of such contractual employees

Digital Transformation of the Provident Fund Administration

The Scheme places significant emphasis on technology-driven compliance by strengthening electronic governance across provident fund administration. Through provisions relating to electronic maintenance of records, online filing of returns and claims, digital access to member accounts and electronic reporting by employers and exempted establishments, the Scheme seeks to modernise compliance processes, improve administrative efficiency and enhance transparency in the management of provident fund obligations.

MHCO Comment:

Employers should view these notifications not merely as a continuation of the existing regime, but as the formal migration to a new statutory architecture. Organisations should undertake a review of payroll systems, digital compliance processes and historical provident fund practices to ensure full alignment with the new Scheme and minimise regulatory exposure.

This update was released on 15 Jul 2026.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
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