PF Ceiling Is Now ₹25,000, but ESIC Is Still ₹21,000: What It Means for Your Payroll

Last Updated on October 28, 2026 by Abhijit Divekar

Short answer: Since 17 September 2026, PF is compulsory for employees with PF wages up to ₹25,000 a month. The ESIC limit has not moved: it is still ₹21,000 a month (₹25,000 for employees with a disability). So employees earning between ₹21,001 and ₹25,000 now pay PF but not ESIC. Both limits are checked on wages (mainly basic pay plus DA), not on CTC or gross salary.

Why the two limits are now different

For years, many payroll teams treated PF and ESIC as a pair. That shortcut no longer works.

• PF (EPF, EPS and EDLI): the wage ceiling went from ₹15,000 to ₹25,000 a month on 17 September 2026, under Gazette notification S.O. 5109(E). Full details are in our EPF wage ceiling guide.
• ESIC: the coverage limit is still ₹21,000 a month, in force since 1 January 2017. ESIC’s own coverage page still shows this figure, and no revision has been notified. A rise to ₹30,000 has been discussed, but there is no circular. See our ESIC wage ceiling guide.

The result is a new salary band, ₹21,001 to ₹25,000, where the two schemes now treat the same employee differently.

Who pays what: the three salary bands

Two points that trip up small employers:

1. Wages, not CTC. Both limits are checked on wages as defined in the Code on Social Security, 2020, which mainly means basic pay plus DA. If the allowances you leave out come to more than half of total pay, the extra counts as wages. An employee with a CTC of ₹35,000 can easily fall in the ₹21,001 to ₹25,000 band.
2. ESIC works in six-month periods. The contribution periods are April to September and October to March. If an employee was covered at the start of a period and crosses ₹21,000 during it, ESIC continues until that period ends.

Worked examples: monthly cost per employee

Rates used: PF 12% from the employee and 12% from the employer (your real cost is about 13% once EDLI and admin charges are added). ESIC 0.75% from the employee and 3.25% from the employer, each rounded up to the next rupee.

In the ₹23,000 example, the employee’s take-home falls by ₹960 a month compared with a capped ₹15,000 PF deduction (₹2,760 instead of ₹1,800). The money goes into their own PF account, but tell them before payday so the payslip does not come as a surprise.

What to check in your next payroll run

• List everyone with wages between ₹21,001 and ₹25,000. They need PF (and a UAN), but not ESIC unless they have a disability.
• Do not stop ESIC mid-period. Someone covered on 1 October stays in ESIC until 31 March, even after a raise.
• Recheck the wage split. If allowances are more than half of pay, the wage figure for both PF and ESIC goes up.
• Update payslips and offer letters. Show PF and ESIC on wages, not on CTC.
• Mind the deadlines. PF and ESIC for each month are due by the 15th of the next month.

Common mistakes to avoid

Most errors with the two limits come from habits built when PF and ESIC moved together. Watch for these four:

• Checking the limit against CTC. A ₹30,000 CTC can still mean wages of ₹22,000. Always check basic pay plus DA, and add back any excess allowances.
• Dropping ESIC the month a raise crosses ₹21,000. Coverage runs to the end of the contribution period, so an October raise does not stop ESIC until April.
• Treating the ₹21,001 to ₹25,000 band as “no statutory deductions”. PF is now compulsory for this band. Missing it means arrears, interest and damages later.
• Forgetting employees with a disability. Their ESIC limit is ₹25,000, so someone in this group earning ₹24,000 needs both PF and ESIC.

FAQ

Is the ESIC limit going up to ₹25,000 or ₹30,000?
No revision has been notified. As of 28 October 2026, ESIC’s coverage page shows ₹21,000 a month (₹25,000 for persons with disability). Treat ₹21,000 as the operative limit until a notification appears on esic.gov.in.

An employee earns ₹22,000. Do I deduct both PF and ESIC?
PF yes, ESIC no, unless the employee has a disability (ESIC limit ₹25,000) or was already covered at the start of the current ESIC contribution period.

Does the new PF ceiling change the ESIC rates?
No. ESIC stays at 0.75% from the employee and 3.25% from the employer.

Does the ₹25,000 ceiling apply to the pension (EPS) part too?
Yes. Notification S.O. 5109(E) applies the ₹25,000 ceiling to EPF, EPS and EDLI. See our EPF wage ceiling guide for how the employer share is split.

We have fewer than 10 employees. Does any of this apply?
ESIC generally applies once you have 10 or more employees, and EPF registration is generally required at 20 or more, though smaller businesses can register voluntarily. If you are registered, the limits above apply to every employee on your rolls.

Let us handle the two limits for you

Getting PF and ESIC right for every salary band is exactly the kind of detail that slips in a busy month. HRTailor runs payroll, PF, ESIC and statutory filings for teams of 5 to 100 staff. See our payroll plans or get my payroll quote. We reply within 1 business day.

Sources: ESIC coverage page (esic.gov.in/coverage), Gazette notification S.O. 5109(E) of 17 September 2026 (labour.gov.in), EPFO FAQs on the new wage ceiling (epfindia.gov.in).