EPF Scheme 2026: New Withdrawal Rules and 25% Minimum Balance
Why in the news
The Labour Ministry brought in the Employees’ Provident Funds Scheme, 2026, effective 29 June 2026. It rewrites provident fund administration under the Code on Social Security, 2020, and makes digital-first working part of the law.
What stays the same
- Interest rate of 8.25% for FY 2025-26.
- Contribution of 12% by each side (10% for notified units such as startups, sick units and those with fewer than 20 staff).
- Wage ceiling of ₹15,000 a month.
- Employer share split: 8.33% to EPS and 3.67% to EPF.
- Tax treatment, nomination norms and transfer of balances are untouched.
Contribution rules
- Compulsory deposit is limited to ₹1,800 a month each (12% of ₹15,000); pay above the ceiling is expressly voluntary.
- Voluntary higher deposits (VPF-style) are allowed above the ceiling or above 12%, employers may match them, and they can later be lowered or stopped.
- In a pandemic, epidemic or national disaster the Centre may cut or defer contributions for up to 3 months by separate notification.
Withdrawal changes
The earlier 13 categories now fall into three groups: essential needs (illness, education, marriage), housing needs (purchase, construction, loan repayment, renovation) and special circumstances (disasters, pandemics and similar emergencies).
| Purpose | Limit | Condition |
|---|---|---|
| Illness | Up to 100% of eligible balance | 12 months of membership |
| Education | Permitted, max 10 times in career | After 12 months |
| Marriage | Up to 100% of eligible balance, max 5 times | Not specified |
| Housing | Up to 75% of total balance, max 5 times | After 12 months |
| Unemployment | Full withdrawal | After 1 year without work |
Minimum balance rule
- At least 25% of the combined employee and employer balance must stay in the account.
- Example: on ₹1 lakh, ₹25,000 is held back and ₹75,000 can be taken, subject to the rules.
- “Eligible member balance” means the amount left after this 25% is set aside.
Other provisions
- Principal Employer concept: the main employer is answerable for contract workers’ PF if a contractor fails; contractors normally deposit within 15 days of month end.
- Digital governance: Aadhaar-linked UAN and bank account, UPI withdrawals, online claims, e-statements and digital inspections; it writes EPFO 3.0 into law and supports 72-hour claim settlement.
- International workers covered under the 1952 scheme continue automatically; social security agreements with 20+ countries remain.
- Exempted trusts (private PF trusts) cannot declare interest more than 200 basis points above the rate set by the Centre.
- Transition measures: VISHWAS 2026 settles old disputes with EPFO, and AMNESTY 2026 lets employers fix past lapses without penalties.
About EPFO
- Employees’ Provident Fund Organisation, set up in 1952, headquartered in New Delhi, under the Ministry of Labour and Employment; the Labour Minister chairs the Central Board of Trustees.
- Over 135 regional offices; among the largest social security bodies in the world.
- Runs three schemes: EPF Scheme (1952, now replaced), Employees’ Pension Scheme (1995) and EDLI Scheme (1976).
Exam angle
- The EPS, 1995 continues; only the 1952 EPF scheme is replaced.
- Remember: 13 categories into 3; 25% retained; 200 bps cap for exempted trusts.
- Statutory backing has moved to the Code on Social Security, 2020.