EPF Rules 2026: 3-category withdrawal system and new voluntary top-up limits explained
On 29 June 2026, the government announced a major labour reform. The Ministry of Labour and Employment announced the Employees’ Provident Funds Scheme, 2026, which replaces the earlier Employees’ Provident Funds Scheme, 1952. In this article, we will examine the important provisions of the new Act.
Contribution
The employee’s and employer’s contributions will be at 12% of the employee’s wages. The government has notified the current wage ceiling at ₹15,000 per month. As per the current wage ceiling, the employee’s contribution will be ₹1,800 per month. The employer makes a matching contribution.
An employee may voluntarily opt to make an additional contribution on wages exceeding ₹15,000 at 12% or a higher rate. The employer may make a matching contribution to the employee’s voluntary contribution. However, the employer is under no obligation to match the employee’s additional voluntary contributions.
The employee or employer may at any time opt to reduce or stop making the additional voluntary contributions. If an employee with a salary above the ₹15,000 wage ceiling decides to limit their contribution to ₹1,800, they will have a higher take-home salary. However, it will lead to the accumulation of a smaller retirement corpus. So, an employee will have to choose between a higher salary now with a lower EPF contribution or a bigger retirement fund in the future with a lower salary now.
Partial withdrawals
An EPF member can make partial withdrawals from the accumulated fund, subject to a minimum of ₹1,000 per withdrawal and maintaining the required minimum balance. The minimum balance is 25% of the aggregate of the total contributions made to the member’s EPF account up to the withdrawal date.
The total contributions include the employee’s share, the employer’s share, and the interest on them. The member can withdraw the ‘eligible member balance’, which is calculated by deducting the 25% minimum balance required to be maintained. The 25% minimum balance maintenance requirement ensures that retirement savings aren’t completely exhausted due to partial withdrawals.
A member can make a partial withdrawal for the following reasons.
Health, education, and marriage
A member can make a partial withdrawal for medical treatment for themselves and family members. The withdrawal amount can be 100% of the ‘eligible member balance’. The member must have completed 12 months of the EPF membership.
A member can make a partial withdrawal for educational purposes for themselves and family members. The withdrawal amount can be 100% of the ‘eligible member balance’. The member must have completed 12 months of the EPF membership and can make partial withdrawals up to 10 times.
A member can make a partial withdrawal for marriage purposes for themselves and their family members. The withdrawal amount can be 100% of the ‘eligible member balance’. The member must have completed 12 months of the EPF membership and can make partial withdrawals up to 5 times.
Housing
A member can make a partial withdrawal for housing purposes. It includes flat or house purchase, site purchase for house construction, house construction, home loan repayment, and changes (additions, alterations, renovations, or improvements) to the existing house/flat. The member must have completed 12 months of the EPF membership and can make partial withdrawals up to 5 times.
Special circumstances
A member can make a partial withdrawal in special circumstances. The withdrawal amount can be 100% of the ‘eligible member balance’. The member must have completed 12 months of the EPF membership and can make partial withdrawals up to 2 times in a financial year.
The earlier EPF Scheme had 13 categories for partial withdrawals. The new EPF Scheme simplifies the partial withdrawal categories into just 3.
Full withdrawal
A member can make a full withdrawal of the amount accumulated in the EPF in the following circumstances:
- On retirement from service after attaining the age of 55 years
- On retirement on account of permanent and total incapacity for work
- Migration from India for permanent settlement abroad or for taking employment abroad
- On termination of service in the case of mass or individual retrenchment
- On termination of service under a voluntary scheme of retirement (VRS) framed by the employer and employee under a mutual agreement.
Withdrawal on leaving employment
When an individual has left employment, they can submit an application for withdrawing their EPF money. The individual will be eligible to withdraw if they remain unemployed for a continuous period of 12 months immediately preceding the withdrawal application date. The 12-month waiting period will not apply to female members who have resigned from their job for getting married.
How do the changes benefit employees?
Most of the changes introduced in the Employees’ Provident Funds Scheme, 2026, are employee-friendly. They allow employees with wages exceeding ₹15,000 to make a voluntary contribution at 12% or a higher rate.
The circumstances under which a member can withdraw the full amount have been specified. The partial withdrawal categories have been simplified into 3 categories from the earlier 13. Partial withdrawals are allowed, subject to maintaining a minimum balance of 25%. The minimum balance maintenance ensures the retirement fund doesn’t get exhausted due to partial withdrawals. Thus, the changes make EPF management simpler for employees.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached on LinkedIn.
