PF Ceiling Is Now Rs 25,000, but ESIC Is Still Rs 21,000: What Employers Get Wrong
Since 17 September 2026, the EPF wage ceiling has been Rs 25,000 a month. The ESIC limit did not move. It is still Rs 21,000 a month. And since 21 November 2025, both limits are tested on the same “wages” under the Code on Social Security, 2020, not on gross pay.
Many payrolls still get one or both of these wrong, which can lead to wrong deductions, missed coverage, interest and damages.
Quick answer: PF and ESIC now use the same definition of wages: basic pay, dearness allowance and retaining allowance, with excluded allowances above half of total pay added back. PF is mandatory for wages up to Rs 25,000 a month. ESIC covers wages up to Rs 21,000 a month (Rs 25,000 for persons with disability). An employee with wages of Rs 23,000 is in PF but not in ESIC.
Same wages, two different limits
- What counts as wages: basic pay, dearness allowance and retaining allowance. Allowances such as HRA and conveyance are left out, but if they add up to more than half of total pay, the extra is added back.
- The PF ceiling (Rs 25,000) decides mandatory coverage. Contributions can be capped at Rs 25,000.
- The ESIC limit (Rs 21,000) decides whether an employee is covered at all. Covered employees contribute on their full wages.
| PF (EPF) | ESIC | |
|---|---|---|
| Wage limit | Rs 25,000 a month (from 17 Sep 2026) | Rs 21,000 a month (Rs 25,000 for persons with disability) |
| Wages measured as | Wages under the Code (50% rule applies) | Wages under the Code (50% rule applies, since 21 Nov 2025) |
| Employer contribution | 12% (8.33% of this goes to EPS) | 3.25% of wages |
| Employee contribution | 12% | 0.75% of wages (nil if average daily wage is up to Rs 176) |
| Applies to establishments with | 20 or more employees | 10 or more employees |
| Above the limit | Contributions can be capped at Rs 25,000 | Employee is not covered |
A simple example: three employees
| Employee | Gross pay | Basic + DA | Wages under the Code | PF? | ESIC? |
|---|---|---|---|---|---|
| A | Rs 18,000 | Rs 9,000 | Rs 9,000 | Yes | Yes |
| B | Rs 30,000 | Rs 12,000 | Rs 15,000 (Rs 3,000 added back) | Yes | Yes |
| C | Rs 46,000 | Rs 23,000 | Rs 23,000 | Yes | No |
Employee B is the case most payrolls get wrong. On the old gross pay test, B would be outside ESIC. Under the Code, B’s allowances are Rs 3,000 more than half of total pay, so wages are Rs 15,000 and B is covered by ESIC.
Employee C is in PF but outside ESIC, because wages of Rs 23,000 are above Rs 21,000.
Four mistakes to check for in your payroll
- Assuming ESIC also moved to Rs 25,000. If your payroll tool uses one “ceiling” value for both, employees with wages of Rs 21,001 to Rs 25,000 are being wrongly charged ESIC.
- Still testing ESIC on gross pay. Since 21 November 2025, ESIC uses wages under the Code. Some employees earning more than Rs 21,000 gross are now covered.
- Forgetting the 50% rule. If allowances are more than half of total pay, the extra counts as wages for both PF and ESIC.
- Stopping ESIC the month wages cross Rs 21,000. ESIC runs in two periods, April to September and October to March. If a covered employee’s wages rise above Rs 21,000, contributions usually continue until the period ends.
What to do before the next payroll run
- Recalculate wages under the Code for every employee, using the 50% rule.
- Apply two limits to those wages: Rs 25,000 for PF and Rs 21,000 for ESIC.
- Enrol anyone now covered by ESIC because their wages are Rs 21,000 or less, even if gross pay is higher.
- Tell employees whose deductions change before they see the payslip.
For the PF side, see our guide on the EPFO wage ceiling of Rs 25,000. Setting up ESIC for the first time? Our ESIC registration guide covers the steps.
Frequently asked questions
Has the ESIC wage limit been raised to Rs 25,000?
No. The Rs 25,000 change applies to the EPF wage ceiling from 17 September 2026. The ESIC limit remains Rs 21,000 a month, or Rs 25,000 for persons with disability. A higher ESIC limit has been discussed but not notified as of October 2026.
Is ESIC eligibility still checked on gross salary?
No. Since 21 November 2025, ESIC uses the definition of wages under the Code on Social Security: basic pay, dearness allowance and retaining allowance, with excluded allowances above half of total pay added back.
Can an employee earning more than Rs 21,000 gross be covered by ESIC?
Yes, if their wages under the Code are Rs 21,000 or less. For example, gross pay of Rs 30,000 with basic pay of Rs 12,000 gives wages of Rs 15,000.
Can an employee be covered by PF but not by ESIC?
Yes. Employees with wages between Rs 21,001 and Rs 25,000 must be in PF but are above the ESIC limit.
Team Management Services helps employers across India run payroll, PF and ESIC correctly every month. Talk to our team to review your payroll before the next cycle.
This article is general information based on the Code on Social Security, 2020, the EPF wage ceiling notification S.O. 5109(E) and ESIC guidance as of October 2026. It is not legal advice.