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Guide

Provident fund, pension and insurance

Who must join, what the employer and employee pay, when it is due, and how money can be taken out under the Code on Social Security, 2020 and the Schemes of 2026.

Last checked 1 Nov 2026 · written from the official text · not reviewed by a lawyer · follows the Central Rules

For employers and HR

In short

  • Provident fund applies to every establishment in which twenty or more employees are employed First Schedule.
  • The employer and the employee each pay twelve per cent of wages S.O. 3582(E).
  • Contributions stop at the wage ceiling, which is ₹25,000 a month S.O. 5109(E).
  • Out of the employer’s share, eight and one-third per cent of wages goes to the Pension Fund S.O. 3580(E).
  • The employer pays a further one-half per cent of wages to the Insurance Fund S.O. 3581(E).
  • Pay within fifteen days of the close of each month G.S.R. 525(E), paragraph 28.
  • The employer’s share cannot be taken from the employee’s wages G.S.R. 525(E), paragraph 21, and wages cannot be cut because of the employer’s liability to contribute s. 124.

Does this apply to you?

  • The provident fund Chapter applies to every establishment in which twenty or more employees are employed First Schedule.
  • If the employer and most employees agree, the Central Provident Fund Commissioner may apply it to a smaller establishment s. 1(5).
  • The Central Government may also apply the Code to an establishment after two months’ notice s. 1(6).
  • It does not apply to a co-operative society employing less than fifty persons and working without power s. 20(1)(a).
  • It does not apply to a Government establishment, or an establishment set up under a law, whose employees have a contributory provident fund or old age pension under a scheme or rule of its own s. 20(1)(b)–(c).

What the law requires

Who must join

  • An employee becomes a member from the day the Scheme applies to the establishment or the date of joining, whichever is later G.S.R. 525(E), paragraph 9.
  • An existing member under the earlier Scheme is a member of the new Scheme G.S.R. 525(E), paragraph 9.
  • An employee whose wage is above the ceiling when otherwise entitled to join is an “excluded employee” G.S.R. 525(E), paragraph 2.
  • An excluded employee and the employer may jointly choose in writing to enrol the employee; the employer then pays the administrative charges and follows all the statutory provisions G.S.R. 525(E), paragraph 9.
  • An apprentice is not an employee under the Code s. 2(26).

How much

  • The employer pays twelve per cent of wages and the employee pays an equal amount G.S.R. 525(E), paragraph 18.
  • That rate is deemed to apply from 21 November 2025 S.O. 3582(E).
  • The notification leaves some establishments out of the twelve per cent rate: those with a resolution or repayment plan approved under the Insolvency and Bankruptcy Code, and those in the jute, beedi or brick industry, the coir industry other than spinning, or guar gum factories S.O. 3582(E).
  • The rate for those is ten per cent of wages s. 16(1)(a).
  • Work out contributions on wages actually drawn or payable in the month, rounded to the nearest rupee G.S.R. 525(E), paragraph 18.
  • Wages under this Code means basic pay, dearness allowance and retaining allowance. If the excluded payments exceed one-half of total remuneration, the excess is added back s. 2(88). The Code on Wages has the same rule, and this calculator works it out.
  • Where wages exceed the ceiling, both contributions are limited to what is payable on the ceiling G.S.R. 525(E), paragraph 18 G.S.R. 703(E).
  • An employee may choose to pay more on wages above the ceiling. You need not match it, but you pay extra administrative charges on those wages G.S.R. 525(E), paragraph 19.

Example An employee’s wages are ₹30,000 a month, so contributions stop at ₹25,000. The employee pays 12% = ₹3,000 and the employer pays ₹3,000. Of the employer’s share, 8⅓% of ₹25,000 = ₹2,083 goes to the Pension Fund and ₹917 stays in provident fund. The employer also pays ₹125 to the Insurance Fund, and administrative charges.

Pension

  • From the employer’s contribution, send eight and thirty-three hundredths per cent of wages, up to the wage ceiling, to the Pension Fund G.S.R. 527(E), paragraph 4.
  • The Central Government adds its own contribution, limited to wages up to ₹15,000 a month from 17 September 2026. The limit on the employer’s share stays at the wage ceiling G.S.R. 890(E).
  • The Pension Scheme covers an employee who joins the provident fund with wages at or below the ceiling, and a member of the earlier pension Schemes G.S.R. 527(E), paragraph 7.

Insurance

Deducting the employee’s share

Workers through a contractor

  • The principal employer is responsible for paying contributions for employees engaged through a contractor G.S.R. 525(E), paragraph 20.
  • The contractor is jointly and severally responsible with the principal employer G.S.R. 525(E), paragraph 27.
  • The employer may recover the amount from the contractor s. 17(1).

If payment is late

  • Simple interest runs at twelve per cent a year from the date the amount fell due S.O. 2698(E).
  • Damages may also be levied, at the monthly percentage of arrears the Scheme sets for the length of the default, and not more than the arrears G.S.R. 525(E), paragraph 23.
  • Late returns carry a fee of ₹500 a day, up to the administrative charges for that month G.S.R. 525(E), paragraph 29.
  • Failing to pay, deducting the employer’s share from wages, or failing to file a return are offences s. 133.
  • An appeal against an order on dues or damages goes to the Tribunal s. 23(1).

Numbers at a glance

What Figure Where
Establishment size twenty or more employees First Schedule
Employer and employee rate twelve per cent each S.O. 3582(E)
Rate for those left out of it ten per cent each s. 16(1)(a)
Wage ceiling ₹25,000 a month S.O. 5109(E)
To the Pension Fund, from the employer’s share eight and one-third per cent S.O. 3580(E)
To the Insurance Fund, from the employer one-half per cent S.O. 3581(E)
Interest on late amounts twelve per cent a year S.O. 2698(E)
Late fee for returns ₹500 a day G.S.R. 525(E), paragraph 29

Records and deadlines

  • Within fifteen days of the Scheme applying to the establishment, send the Commissioner a consolidated return in Form V, or a nil return if no employee is required or entitled to join G.S.R. 525(E), paragraph 24.
  • Within fifteen days of the close of each month, upload on the portal the employees who joined and left, and the contribution details in the Electronic Challan-cum-Return in Form VII G.S.R. 525(E), paragraph 24.
  • File the ownership return in Form VI, report changes within fifteen days, and display an extract at the entrance and on the website G.S.R. 525(E), paragraph 24.
  • A principal employer declares its contractors in Form X, and sends the monthly abstract in Form XII within twenty days of the close of the month G.S.R. 525(E), paragraph 27.
  • A claim that cannot be filed online comes to you: verify it and forward it within five days G.S.R. 525(E), paragraph 54.
  • Dues are determined by an Authorised Officer, and no proceeding can start more than five years after the amount was due s. 125(1).

Not covered here

  • An establishment running its own provident fund under an exemption s. 143.
  • International workers, who have their own paragraphs in the Scheme G.S.R. 525(E).
  • The later corrections to the Schemes, which change many words and forms. Read them with each Scheme G.S.R. 703(E) G.S.R. 704(E) G.S.R. 705(E).

For workers

In short

Does this apply to you?

What the law requires

What goes in

  • You and your employer each pay twelve per cent of your wages S.O. 3582(E).
  • In some industries, such as jute, beedi and brick, the rate is ten per cent s. 16(1)(a) because the twelve per cent notification leaves them out S.O. 3582(E).
  • If your wages are above ₹25,000 a month, the contribution is normally worked out on ₹25,000 S.O. 5109(E) G.S.R. 703(E).
  • You may choose to pay more on wages above that. Your employer need not match it G.S.R. 525(E), paragraph 19.
  • Your employer must not cut your wages because of its own contribution s. 124.

Example Your wages are ₹30,000 a month, so contributions stop at ₹25,000. You pay 12% = ₹3,000, and your employer pays ₹3,000. Of your employer’s share, ₹2,083 goes towards your pension and ₹917 stays in your provident fund.

Pension

Life cover

  • Your employer pays for this and cannot take it from your wages G.S.R. 526(E), paragraph 8.
  • If you die in service after a continuous twelve months in employment, the amount for your family is at least ₹2,50,000. It depends on your wages and your account balance G.S.R. 526(E), paragraph 21.

Taking out part of your money

Taking out all of your money

  • You can withdraw everything if you retire after the age of fifty-five, if you cannot work again because of permanent and total incapacity, or if you are moving abroad to settle or work G.S.R. 525(E), paragraph 49.
  • You can also withdraw everything if you lose your job through retrenchment, or leave under a voluntary retirement scheme G.S.R. 525(E), paragraph 49.
  • In other cases, you must have been out of covered employment for a continuous twelve months before applying. That wait does not apply to a woman who resigns to get married G.S.R. 525(E), paragraph 49.
  • If you withdraw this way and later join a covered workplace, you start again as a fresh member G.S.R. 525(E), paragraph 49.

Changing jobs

If you die

Numbers at a glance

What Figure Where
Your share, and your employer’s twelve per cent each S.O. 3582(E)
Wage ceiling ₹25,000 a month S.O. 5109(E)
Membership needed for most part-withdrawals twelve months G.S.R. 525(E), paragraph 46
Must stay in the account twenty-five per cent G.S.R. 525(E), paragraph 46
Service for a monthly pension ten years G.S.R. 527(E), paragraph 12(1)
Time to settle a complete claim twenty days G.S.R. 525(E), paragraph 54

What to do if it isn’t followed

  • Check your statement on the portal. Tell the Commissioner about any error within three months of the statement being published G.S.R. 525(E), paragraph 30.
  • A question about whether you should be a member goes to the Regional Provident Fund Commissioner, and must be raised within five years G.S.R. 525(E), paragraph 11.
  • An Authorised Officer can decide what your employer owes, up to five years after the amount fell due s. 125(1).
  • A complete claim must be settled within twenty days. The Commissioner may be charged penal interest of twelve per cent a year for delay without good reason G.S.R. 525(E), paragraph 54.
  • Taking the employer’s share from your wages, or not paying contributions, is an offence s. 133.

Not covered here

What the Labour Ministry says

This is the Ministry's explanation, not the law. Its FAQs and Handbook say the Codes prevail.

Compliance obligations on this topic (5)

All compliance obligations and the checklist

Provisions cited (23)

Official text reproduced from the Gazette of India, India Code and State Government sources. This is not legal advice; check the source PDF before relying on any provision.