PF is 12% of wages from the employee and 12% from the employer. Of the employer’s 12%, 8.33% of wages up to ₹25,000 goes to the pension scheme (EPS) and the rest to the provident fund (EPF). ESI is 0.75% from the employee and 3.25% from the employer, for employees whose wages are up to ₹21,000 a month.
The PF wage ceiling rose from ₹15,000 to ₹25,000 on 17 September 2026, so many older calculators and templates now give wrong answers. This guide shows the current rates as of 24 September 2026, worked examples below and above the ceiling, and Excel formulas you can type into your own sheet.
PF and ESI rates at a glance (September 2026)
All PF and ESI figures in this guide come from the table below. PF rates are set by the EPF, EPS and EDLI Schemes, 2026, which replaced the old schemes on 29 June 2026. ESI rates are published by ESIC.
| Item | Rate | Base and limit |
|---|---|---|
| Employee PF | 12% | PF wages |
| Employer share to EPS (pension) | 8.33% | Wages up to ₹25,000, so a maximum of ₹2,083 |
| Employer share to EPF | 12% minus the EPS amount | PF wages |
| EDLI (insurance), employer | 0.5% | Wages up to ₹25,000, so a maximum of ₹125 |
| EPF admin charges, employer | 0.50% | PF wages, minimum ₹500 a month per establishment |
| ESI, employee | 0.75% | Wages up to ₹21,000 (₹25,000 for persons with disability) |
| ESI, employer | 3.25% | Same as above |
A lower PF rate of 10% applies to classes of establishments the government notifies. PF amounts are rounded to the nearest rupee, with 50 paise rounded up. ESI amounts are always rounded up to the next rupee (Social Security (Central) Rules, 2026, rule 19).
The ₹25,000 PF ceiling from 17 September 2026
The wage ceiling for mandatory PF coverage is now ₹25,000 a month, notified by the Ministry of Labour and Employment and in force from 17 September 2026. It had stayed at ₹15,000 since September 2014, according to the Ministry of Labour and Employment. Some older EPFO pages may still show ₹15,000, so rely on the notification rather than those pages. Take an employee with PF wages of ₹25,000 whose employer used to cap PF at the old ceiling. The employee’s own deduction rises from ₹1,800 to ₹3,000 a month. The employer’s pension share rises from ₹1,250 to ₹2,083, and EDLI and admin charges rise from ₹75 to ₹125 each.
The change matters most where an employer limits PF to the ceiling. The table compares the old and new position for an employee whose PF wages are ₹25,000.
| Item (₹ per month) | Old ceiling ₹15,000 | New ceiling ₹25,000 |
|---|---|---|
| Employee PF (12%) | 1,800 | 3,000 |
| Employer to EPS (8.33%) | 1,250 | 2,083 |
| Employer to EPF | 550 | 917 |
| EDLI (0.5%) | 75 | 125 |
| Admin charges (0.50%) | 75 | 125 |
| Fall in take-home pay | ₹1,200 a month | |
Where the employer already paid PF on the full ₹25,000, the employee’s deduction does not change. Only the employer’s split moves: more goes to EPS (₹2,083 instead of ₹1,250) and less to EPF. For September 2026 salaries, which straddle the change, follow EPFO’s instructions on how to apply the new ceiling for the part month.
Step 1: Find the PF wages
PF is calculated on “wages” as defined in the Labour Codes, not on gross salary. Wages means basic pay, dearness allowance (DA) and retaining allowance. HRA, conveyance, overtime, commission and similar items are excluded, but if the excluded items exceed 50% of total pay, the excess is added back (MoLE Compliance Handbook).
Example: total pay ₹40,000, made up of basic plus DA ₹16,000, HRA ₹16,000 and conveyance ₹8,000. Exclusions are ₹24,000, which is ₹4,000 over half of total pay, so PF wages are ₹20,000. The payroll process guide explains where this step sits in the monthly cycle.
PF calculation when wages are below ₹25,000
Below the ceiling, every PF component is a straight percentage of wages. Take an employee with PF wages of ₹18,000.
| Component | Working | Amount (₹) |
|---|---|---|
| Employee PF | 18,000 × 12% | 2,160 |
| Employer to EPS | 18,000 × 8.33% = 1,499.40 | 1,499 |
| Employer to EPF | 2,160 − 1,499 | 661 |
| EDLI | 18,000 × 0.5% | 90 |
| Admin charges | 18,000 × 0.50% | 90 |
The employee’s salary is reduced by ₹2,160. The employer pays ₹2,160 + ₹90 + ₹90 = ₹2,340 on top of the salary. The employee’s PF account receives ₹2,160 + ₹661 = ₹2,821 a month, and ₹1,499 goes to the pension fund.
PF calculation when wages are above ₹25,000
Above the ceiling, the employer can limit PF to ₹25,000 or, where the employer and employee opt for it, pay on full wages. EPS and EDLI stay capped either way. Take PF wages of ₹40,000.
| Component (₹) | Limited to ₹25,000 | On full ₹40,000 |
|---|---|---|
| Employee PF (12%) | 3,000 | 4,800 |
| Employer to EPS (capped) | 2,083 | 2,083 |
| Employer to EPF | 917 | 2,717 |
| EDLI (capped) | 125 | 125 |
| Admin charges (0.50% of PF wages) | 125 | 200 |
The EPS figure comes from 25,000 × 8.33% = ₹2,082.50, which rounds up to ₹2,083. One more rule applies to new joiners. An employee who joins on wages above the ceiling is not automatically covered by mandatory PF, subject to the scheme’s provisions (PIB, 16 September 2026). Someone who is already a PF member stays covered after a pay rise.
How is ESI calculated? Worked examples
ESI is a simple percentage, but the rounding and coverage rules trip people up. ESI applies to establishments with 10 or more employees, and to employees whose wages are up to ₹21,000 a month. Under the Social Security Code, the same definition of wages used for PF also applies to ESI, so check how your employer applies it.
| Monthly wages (₹) | Employee 0.75% | Employer 3.25% | Total |
|---|---|---|---|
| 18,000 | 135 | 585 | 720 |
| 20,500 | 153.75 → 154 | 666.25 → 667 | 821 |
| 21,000 | 157.50 → 158 | 682.50 → 683 | 841 |
Three rules to remember:
- Low earners pay nothing: an employee whose daily average wage is up to ₹176 pays no ESI. The employer still pays its 3.25%.
- Contribution periods: ESI runs in two periods, April to September and October to March. An employee covered at the start of a period generally stays covered until it ends, even if a raise takes wages above ₹21,000.
- Disability: for persons with disability, the wage limit is ₹25,000. The ₹21,000 limit was not revised along with the PF ceiling.
Combined example: PF and ESI on one salary
Here is one employee’s full statutory calculation. Salary: basic ₹14,000 plus DA ₹6,000, total ₹20,000, with no other allowances. So wages for both PF and ESI are ₹20,000.
| Line | Employee (₹) | Employer (₹) |
|---|---|---|
| PF: employee 12% / employer EPS 8.33% | 2,400 | 1,666 |
| PF: employer to EPF | – | 734 |
| EDLI and admin charges | – | 200 |
| ESI | 150 | 650 |
| Total | 2,550 | 3,250 |
Take-home before any TDS is ₹20,000 − ₹2,550 = ₹17,450. The employer’s monthly cost is ₹20,000 + ₹3,250 = ₹23,250.
Excel formulas for a PF and ESI sheet
A simple sheet needs one row per employee and the formulas below. Put PF wages in column B, ESI wages in column C and paid days in column D, starting in row 2.
| Column | Calculates | Formula (row 2) |
|---|---|---|
| E | Employee PF, limited to ceiling | =ROUND(MIN(B2,25000)*12%,0) |
| F | Employer to EPS | =ROUND(ROUND(MIN(B2,25000)*8.33%,2),0) |
| G | Employer to EPF | =E2-F2 |
| H | EDLI | =ROUND(MIN(B2,25000)*0.5%,0) |
| I | Admin charges | =ROUND(MIN(B2,25000)*0.5%,0) |
| J | ESI, employee | =IF(OR(C2>21000,D2=0),0,IF(C2/D2<=176,0,ROUNDUP(ROUND(C2*0.75%,2),0))) |
| K | ESI, employer | =IF(C2>21000,0,ROUNDUP(ROUND(C2*3.25%,2),0)) |
For PF on full wages, replace MIN(B2,25000) with B2 in columns E and I only; EPS and EDLI stay capped. The inner ROUND(…,2) matters: it rounds to paise first, so a tiny decimal error in the spreadsheet cannot push ROUNDUP a rupee too high. The ESI formulas treat the ₹21,000 limit month by month, so override them for an employee who is still inside a contribution period after a raise. For percentages, rounding and lookups beyond payroll, see our guide to Excel formulas for accountants. IPA’s Advanced Excel course covers IF, ROUND and lookup formulas of this kind.
Due dates and common mistakes
Both PF and ESI must be paid within 15 days of the end of the month, so August contributions are due by 15 September. PF is paid through the monthly ECR on the EPFO employer portal and ESI through the ESIC portal. Late PF payment attracts interest and damages, and a separate late fee applies to PF returns filed late. For reference, the EPF interest rate for 2025-26 is 8.25%.
- Using the ₹15,000 PF ceiling after 17 September 2026.
- Calculating PF on basic pay only, without the 50% add-back.
- Rounding ESI to the nearest rupee instead of up.
- Capping EPF along with EPS when the employer has opted to pay on full wages.
These calculations, the ECR upload and the ESI return are part of IPA’s payroll management course, taught by Ms. Neena, a chartered accountant with over 20 years in tax, audit and payroll.
How we teach this at IPA
PF and ESI have a module of their own in IPA’s payroll course: PF registration and returns, ESI return filing and challan payments, practised on sample payroll data in TallyPrime and Zoho Payroll. It sits between the TDS module and the general statutory compliance rules, so calculations and filings are learned together.
Frequently asked questions
What is the PF percentage for employee and employer in 2026?
12% each, on PF wages. The employer’s 12% splits into 8.33% for EPS (on wages up to ₹25,000, so a maximum of ₹2,083) and the balance for EPF. Some notified establishments use 10%.
What is the maximum PF deduction from salary?
If the employer limits PF to the ceiling, the employee’s maximum is ₹3,000 a month (12% of ₹25,000). If the employer and employee opt to contribute on full wages, there is no fixed upper limit.
Is ESI deducted if salary is above ₹21,000?
Not for a new employee whose wages are above ₹21,000. An employee already covered at the start of a contribution period generally continues until that period ends, even after a raise.
How is ESI rounded?
Always up to the next rupee. For example, 0.75% of ₹20,500 is ₹153.75, so the employee’s ESI is ₹154.
Does the new ₹25,000 ceiling increase ESI too?
No. The ₹25,000 figure is the PF wage ceiling. The ESI wage limit remains ₹21,000, or ₹25,000 for persons with disability.
Is PF deducted on HRA?
No. HRA is excluded from PF wages. But it counts towards the 50% test: if HRA and other excluded allowances together exceed half of total pay, the excess is added to PF wages. The payroll executive salary guide covers the jobs built on these calculations.