The Employees’ Provident Fund Scheme, 2026 gives the Central Government the power to temporarily defer or reduce EPF contributions from the employer, the employee, or both, for up to three months at a time during a pandemic, epidemic or national disaster.
The provision, under the third proviso to Paragraph 18(2) of the new scheme, allows the government to apply the measure across the whole of India or to a specific part of it, meaning it could be invoked selectively for a region hit by a disaster rather than nationwide. Under the standard EPF structure, both employer and employee generally contribute 12% of applicable wages, with a 10% rate for certain notified classes of establishments.
Importantly, the change does not take effect automatically. A separate government notification is required before any reduction or deferral applies, meaning employees’ monthly PF deductions remain unchanged unless and until such an order is issued.
The provision has precedent. During the Covid-19 pandemic in 2020, the government temporarily reduced the statutory EPF contribution rate from 12% to 10% for three months, for establishments not covered under the Pradhan Mantri Garib Kalyan Yojana package, to provide short-term cash-flow relief during the crisis.
Financial commentators note the trade-off for employees: a temporary reduction increases take-home pay in the short term but reduces the amount compounding in the PF account, with the long-term impact on retirement savings depending on how early in a person’s career the reduction occurs and how long it lasts.
