Hiring in India Through an EOR? How the Rs 25,000 PF Ceiling Changes Your Employer Cost
If you employ people in India through an Employer of Record (EOR), the new PF wage ceiling changes your monthly cost per employee. From 17 September 2026, the ceiling for mandatory Provident Fund (PF) rose from Rs 15,000 to Rs 25,000 a month.
This guide covers what changed, what it means under an EOR, what each employee now costs, and what to ask your provider.
Key takeaway: the PF wage ceiling is now Rs 25,000 a month. If your EOR worked out PF on the old Rs 15,000 cap, each employee with PF wages of Rs 25,000 or more costs about Rs 1,300 more a month. The EOR handles the change, but the cost usually passes to you, so ask for an updated cost sheet now.
What changed with the PF wage ceiling
The Union Cabinet approved the change on 16 September 2026, and it was notified the next day through Gazette notification S.O. 5109(E) under the Code on Social Security, 2020. In fact, it is the first revision since 2014.
- The ceiling moved, the rates did not. Employee and employer each still pay 12% of PF wages. With EDLI and admin charges, the employer cost is about 13%.
- It applies to PF wages, not CTC. PF wages are mainly basic pay plus dearness allowance. If excluded allowances exceed half of total pay, the excess also counts as wages.
- Some detail is pending. EPFO’s circular on applying the change, including September 2026 wages, is still awaited.
| Before 17 September 2026 | From 17 September 2026 | |
|---|---|---|
| PF wage ceiling | Rs 15,000 a month | Rs 25,000 a month |
| Employee PF rate | 12% of PF wages | 12% of PF wages (no change) |
| Employer PF rate | 12% of PF wages | 12% of PF wages (no change) |
| Highest employer cost, if PF is capped at the ceiling | About Rs 1,950 a month (about 13%) | About Rs 3,250 a month (about 13%) |
| Highest employee deduction, if capped | Rs 1,800 a month | Rs 3,000 a month |
| Mandatory enrolment | PF wages up to Rs 15,000 | PF wages up to Rs 25,000 |
| What counts as PF wages | Mainly basic pay plus DA | Mainly basic pay plus DA, with the 50% wages rule |
How the PF wage ceiling works under an EOR
An EOR is the legal employer of your team in India. It registers with EPFO, deducts and pays PF, and files the returns, so the compliance work sits with the EOR. The cost sits with you: statutory contributions are part of the monthly invoice, on top of salary and the EOR fee.
However, most Indian offers are made on a CTC basis with employer PF inside CTC. If CTC stays the same and PF rises, take-home pay falls. So plan how you will explain the change to your team.
EOR employer cost after the PF change: what you actually pay
The monthly cost of each EOR employee still has three parts.
- Gross salary. Does not change.
- Employer statutory costs. Employer PF, now on PF wages up to Rs 25,000, plus ESIC where it applies. This is the part that changes.
- EOR fee. Does not change.
For example, take a software engineer on Rs 18 lakh a year (Rs 1.5 lakh a month gross):
- Employer PF before: 12% of Rs 15,000 = Rs 1,800 a month
- Employer PF now: 12% of Rs 25,000 = Rs 3,000 a month
- Total employer increase with EDLI and admin charges: about Rs 1,300 a month, or Rs 15,600 a year
On the other hand, if your EOR already pays PF on full basic pay with no cap, your cost does not change. You can check any salary in our PF calculator.
Who now has to be enrolled in PF
Under the higher PF wage ceiling, EOR employees with PF wages up to Rs 25,000 who were outside PF under the old Rs 15,000 limit must now be enrolled. Your EOR should list them and confirm their start date once EPFO issues its circular.
What to ask your EOR provider
- Is PF worked out on the Rs 25,000 ceiling, or on full basic pay?
- What is the revised cost per employee, and from which invoice?
- How does our contract pass through statutory cost changes?
- Which employees now need PF enrolment, and when?
- Will CTC stay the same, or rise to protect take-home pay?
Finally, the new ceiling applies to every employer in India, so it does not change the case for an EOR. For when an EOR fits and when your own entity is better, see Employer of Record in India: costs, timeline and when to use one.
Frequently asked questions
Does the PF wage ceiling apply to EOR employees in India?
Yes. The EOR is the legal employer in India, so the new ceiling applies to its employees like any other employer.
Who pays the extra PF cost under an EOR?
The EOR pays EPFO, but in most contracts the client bears the cost through the monthly invoice.
When does the new PF wage ceiling apply from?
From 17 September 2026. EPFO’s circular on applying it is still awaited.
Will take-home pay go down?
It can, if PF wages are above Rs 15,000 and CTC stays the same. Some employers raise CTC to protect take-home pay.
Hiring in India through an EOR?
Team Management Services has been a payroll and employment partner in India since 2006. As your EOR, we handle PF enrolment, contributions and filings, and show you each employee’s updated cost before it reaches your invoice. Our EOR fees start from USD 50 per employee per month. See how our Employer of Record service in India works, or work out your cost with our calculator.