Employees’ Provident Fund Scheme, 2026: Key Considerations For Private Employers

On 29 June 2026, the Ministry of Labour and Employment notified the Employees’ Provident Fund Scheme, 2026¹ (hereinafter ‘Scheme’) under Section 15 of the Code on Social Security, 2020², formally replacing the Employees’ Provident Fund Scheme, 1952³. At first glance, the notification appears to be a significant legislative shift. However, a closer reading reveals that the Scheme is less a departure from the existing provident fund regime and more a continuation of it under a new statutory framework.

For most private employers, the core obligations relating to provident fund contributions, employee membership and record maintenance remain substantially unchanged. The more meaningful changes lie in the Scheme’s emphasis on digital compliance, its alignment with the Code on Social Security, 2020⁴, and a more balanced enforcement framework that seeks to encourage compliance rather than merely penalise default.

Against this backdrop, employers should view the Scheme not merely as a replacement of the 1952 framework, but as an opportunity to reexamine internal compliance processes and governance mechanisms.

The New Legislative Framework

The most significant legal change introduced by the Scheme is structural rather than substantive. The new regime now derives its authority from the Code on Social Security, 2020 instead of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952⁵.

This transition aligns provident fund administration with the broader objective of consolidating India’s labour laws into a unified statutory framework⁶. While the legislative foundation has changed, the fundamental principles governing employer contributions, employee membership and provident fund administration continue to remain largely intact.

For private limited companies already compliant under the previous regime, the transition should therefore be viewed as a process of adapting to a new legal framework rather than rebuilding existing compliance systems from the ground up.

Digital Compliance

One of the defining features of the 2026 Scheme is its emphasis on digital administration. The Scheme integrates several compliance obligations through an electronic platform, reinforcing the Government’s continued shift towards paperless labour law administration. Employers are required to undertake a range of statutory filings digitally, including enrolment of new employees, reporting employee exits, filing ownership details and maintaining updated employee records through the designated portal.

While electronic compliance has evolved gradually through administrative circulars over the years, the Scheme now embeds these mechanisms within the statutory framework itself⁷. For employers, this represents more than a technological upgrade. It requires HR, payroll and compliance teams to ensure that employee onboarding, UAN generation, Aadhaar integration and monthly reporting operate seamlessly. Inaccurate employee data or delays in digital filings may now expose employers to unavoidable compliance risks despite otherwise timely payment of provident fund contributions.

Balanced Penalty Regime

The most significant feature of the Scheme is the revision of the penalty framework applicable to delayed remittances. Earlier, delayed deposit of provident fund contributions exposed employers to substantial financial liability, often resulting in prolonged litigation concerning the quantum of damages. The 2026 Scheme replaces this with a graded damages structure linked to the duration of default, substantially reducing the potential financial exposure arising from delayed remittances.

Although employers should not treat this as a relaxation of statutory obligations, the revised framework reflects a noticeable policy shift towards proportionality. Rather than imposing punitive consequences irrespective of the nature of the default, the Scheme introduces a balanced mechanism that distinguishes between shorter and prolonged delays⁸.

For businesses managing large payrolls or complex contractor arrangements, this change may significantly reduce litigation risk while continuing to incentivise timely compliance.

Principal Employer Liability

Companies relying extensively on contract labour should not assume that responsibility for provident fund compliance rests solely with contractors. The Scheme continues to recognise the principal employer as the person exercising ultimate control over the affairs of the establishment. Consequently, where contractors fail to discharge their provident fund obligations, principal employers may continue to face statutory liability for unpaid contributions.

This reinforces an important compliance principle that businesses frequently overlook—outsourcing payroll functions does not amount to outsourcing statutory responsibility⁹. Accordingly, companies engaging manpower contractors should strengthen contractual safeguards, conduct periodic compliance audits and regularly verify contribution records submitted by contractors.

Exempted Provident Fund Trusts

For larger corporate groups operating exempted provident fund trusts, the Scheme introduces several notable developments. The exemption framework has been retained but accompanied by additional governance requirements relating to trustee composition, investment management and financial health. In particular, continued exemption is linked to the financial stability of the establishment, with sustained negative net worth potentially affecting renewal¹⁰.

Alongside these changes, the Scheme introduces an Amnesty, 2026 permitting eligible establishments to regularise existing private provident fund arrangements subject to prescribed conditions. For companies operating exempted trusts, these provisions warrant careful review, particularly where exemption renewals are approaching or historical compliance issues remain unresolved.

The Employees’ Enrolment Campaign: An Opportunity to Regularise Past Non-Compliance

Another noteworthy feature is the Employees’ Enrolment Campaign, 2026. The campaign provides employers with a limited choice to voluntarily disclose previously uncovered employees or establishments, even in certain cases where inquiries are already pending. This initiative reflects the Government’s broader compliance-oriented approach by encouraging voluntary regularisation before resorting to enforcement action.

Businesses that have historically faced uncertainties relating to contractor engagement, employee classification or wage ceiling application should evaluate whether the campaign offers an opportunity to address legacy compliance issues. However, employers should exercise caution. The benefits of the campaign are unavailable where declarations are made through suppression or misrepresentation of material facts or where deducted employee contributions have not been deposited¹¹.

International Workers and Cross-Border Employment

The Scheme also continues to recognise the unique compliance considerations applicable to international workers. Companies employing expatriates in India or deputing Indian employees overseas under social security agreements should revisit existing employment structures to ensure continued compliance with the revised statutory framework. Although these provisions largely continue the earlier position, multinational employers should review assignment policies and payroll structures in light of the new Scheme.

Key Compliance Requirements

Although the Scheme does not fundamentally change the provident fund contribution mechanism, certain actions are to be complied by private employers:-

• review whether existing compliance processes align with the Code on Social Security, 2020 and the Employees’ Provident Fund Scheme, 2026;
• verify that digital filing systems accurately capture employee onboarding, exits and UAN-related information;
• reassess contractor management practices and strengthen compliance monitoring mechanisms;
• evaluate eligibility for the Amnesty, 2026 or the Employees’ Enrolment Campaign, where applicable; and
• update internal HR and payroll policies to reflect the revised statutory terminology and procedural requirements.

Footnotes

1. Employees’ Provident Funds Scheme, 2026, G.S.R. 525(E), Gazette of India, Extraordinary, Part II, sec. 3(i), Ministry of Labour & Employment (June 29, 2026).
2. Code on Social Security, No. 36 of 2020, § 15 (India).
3. Employees’ Provident Funds Scheme, 1952, S.R.O. 1509, Gazette of India, Extraordinary, pt. II, § 3 (Sept. 2, 1952).
4. Code on Social Security, No. 36 of 2020, India Code.
5. Employees’ Provident Funds and Miscellaneous Provisions Act, No. 19 of 1952, India Code (1952)
6. Ministry of Labour & Employment, Government of India, Code on Social Security, 2020: Statement of Objects and Reasons (2020).
7. Ministry of Labour & Employment, Government of India, Code on Social Security, 2020: Simplification and Digitisation of Social Security Compliance (2020).
8. International Labour Organization, World Social Protection Report 2020-22: Social Protection at the Crossroads (2021).
9. Code on Social Security, No. 36 of 2020, §§ 2(61), 16, India Code.
10. Organisation for Economic Co-operation and Development (OECD), OECD Core Principles of Private Pension Regulation 9–13 (2016).
11. Richard M. Bird, Administrative Dimensions of Tax Reform, 10 Asia-Pacific Tax Bulletin 134, 140-42 (2004).

Co Author: Shivi Garg, Intern