Business Laws and Ethics · Employees Provident Fund and Miscellaneous Provisions Act, 1952

EPF Applicability and Definitions under the Code on Social Security, 2020

Updated 10 October 2026 · Fact-checked

The Code on Social Security, 2020 is meant to replace the EPF Act, 1952 for provident fund. Chapter III applies as the First Schedule sets, or by agreement through the CPF Commissioner. Once covered, an establishment stays covered. Note that item 3 of section 164(1), repealing the EPF Act, was not in the 21 November 2025 notification.

Understand Code on Social Security 2020: EPF Applicability and Definitions

Before the Code, provident fund was governed by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The Code on Social Security, 2020 merges nine labour laws, including that Act, the ESI Act, 1948 and the Payment of Gratuity Act, 1972, into one Code. Provident fund now sits in Chapter III of the Code.

Who is covered. The Code extends to the whole of India. Which establishments fall under Chapter III is decided by the First Schedule, which sets the applicability of each Chapter. Two routes add to this. First, if the employer and the majority of employees of an establishment agree, the Central Provident Fund Commissioner may notify that Chapter III applies to it. The employer can later apply to come out, but only if the Commissioner is satisfied that employer and majority of employees agree. Second, the Central Government may, after at least two months' notice, apply the Code to any establishment employing not less than the number of persons it specifies.

Once covered, always covered. If an establishment is covered at the first instance, it stays covered even if its headcount later falls below the First Schedule threshold. Students often miss this rule.

Definitions. The two definitions that matter most are employee and wages. The Code uses one wide idea of employee, covering people employed for wages in an establishment, whether directly or through a contractor. The definition of wages is built on basic pay, dearness allowance and retaining allowance, with listed items excluded (such as house rent allowance, bonus, conveyance allowance and employer's contributions to provident fund or pension). If the excluded items together exceed one half of total remuneration, the excess is added back to wages. Check the exact list of exclusions in your ICMAI study material.

What changed from the 1952 Act. Section 164(1) lists the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (item 3) among the nine enactments repealed. The Code can come into force on different dates for different provisions. The 21 November 2025 notification brought into force items 1, 2 and 4 to 9 of section 164(1), but item 3 (the EPF Act) was not among them. So check the latest notification before you state that the repeal of the EPF Act has taken effect.

Section 164 also saves what was done under the old Acts. Actions, rules, notifications, schemes and benefits are treated as done under the matching provisions of the Code until the appropriate Government repeals them. The Employees' Provident Funds Scheme, 1952, the Employees' Deposit Linked Insurance Scheme, 1976, the Employees' Pension Scheme, 1995 and the Tribunal (Procedure) Rules, 1997 remain in force, to the extent they are not inconsistent with the Code, for one year from the date of commencement of the Code (the relevant provision).

Transitional bodies. Under section 153, the old Central Board and Executive Committee under the 1952 Act continue, after commencement, to exercise the powers and discharge the functions of the corresponding bodies under the Code (the Central Board of Trustees and its Executive Committee). The same applies to the ESI Corporation, the Medical Benefit Council, the Standing Committee of the Corporation and the Board under the Building and Other Construction Workers Act, 1996. They continue until the corresponding bodies are constituted under the Code or their time period under the repealed enactments expires, whichever is earlier.

Key rules to remember

Coverage of Chapter III (provident fund): Covered if: First Schedule applies, OR agreement notified by the CPF Commissioner, OR Central Government notification under the power to apply the Code; The Code extends to the whole of India. Commencement can be on different dates for different provisions.
Once covered, always covered: Establishment covered at the first instance stays covered even if employees fall below the First Schedule threshold; Applies to any Chapter, not only provident fund.
Wages: the one-half rule: If excluded items > 50% of total remuneration, wages = total remuneration − 50% of total remuneration; otherwise wages = total remuneration − excluded items; Total remuneration means everything paid or payable. Excluded items are those the definition lists. Use your ICMAI list of exclusions.
Repeal and savings: EPF Act, 1952 is item 3 of the repeal list in section 164(1); past acts deemed done under the Code; EPF Scheme 1952, EDLI Scheme 1976, EPS 1995 and Tribunal (Procedure) Rules, 1997 continue for one year from commencement of the Code to the extent not inconsistent; Section 164(2)(a) and (b). Exemptions already granted continue until they expire (section 164(2)(c)). Item 3 of section 164(1) was not in the 21 November 2025 notification, so check the latest notification for the EPF Act's repeal.
Transitional bodies: Old Central Board, Executive Committee, ESI Corporation, Medical Benefit Council, Standing Committee and BOCW Board continue to exercise the powers and functions of the corresponding bodies under the Code until those are constituted under the Code or the old time period expires, whichever is earlier; Section 153.

How to solve Code on Social Security 2020: EPF Applicability and Definitions questions

Use this order for any question on EPF applicability, definitions or the change from the 1952 Act.

1Read the question and mark what it asks: coverage, a definition, repeal and savings, or a calculation of wages.
2For coverage, test the three routes in order: First Schedule threshold, agreement notified by the CPF Commissioner, and Central Government notification.
3Check whether the establishment was covered at the first instance. If yes, a later fall in headcount does not take it out.
4For wages, list every pay component, separate the included items (basic, dearness allowance, retaining allowance) from the excluded ones, then apply the one-half rule.
5For repeal questions, say that the 1952 Act is repealed, past actions are saved, and the old Schemes continue for one year to the extent not inconsistent.
6Write the conclusion in one sentence and cite the Code and the relevant section where you are sure of it.

Quickest way: Three-line answer for coverage and wages

When to use it: Use when you have little time, such as an MCQ or a short note of 3 to 4 marks.

Coverage: First Schedule, agreement via the CPF Commissioner, or Central Government notification. Covered once means covered later too.
Wages: total remuneration minus excluded items, but excluded items are capped at 50% of total remuneration.
Repeal: the EPF Act, 1952 is in the section 164(1) repeal list, actions are saved, and the EPF Scheme 1952, EDLI 1976, EPS 1995 and Tribunal (Procedure) Rules, 1997 continue for one year from commencement of the Code to the extent not inconsistent.

Common mistakes in Code on Social Security 2020: EPF Applicability and Definitions

Saying an establishment leaves the provident fund net as soon as its employee count drops below the threshold.
Students remember the threshold but forget the continuity rule.
Fix: Recall that an establishment covered at the first instance continues to be covered even if the number falls below the First Schedule threshold.
Saying an employer alone can opt out of Chapter III after joining by agreement.
Students read opting in as a one-sided choice.
Fix: Opting in and opting out both need agreement between employer and majority of employees, and the Commissioner must be satisfied of it.
Computing wages as basic pay only, or as the total pay.
The one-half rule is skipped.
Fix: Subtract only the listed exclusions, then test whether they exceed 50% of total remuneration. Add the excess back to wages.
Saying that repeal of the 1952 Act cancels everything done under it, including the EPF Scheme.
Repeal is confused with a clean slate.
Fix: State the savings: past actions are deemed done under the Code, and the EPF Scheme 1952, EDLI Scheme 1976, EPS 1995 and Tribunal (Procedure) Rules, 1997 continue for one year from commencement of the Code (the relevant provision) to the extent not inconsistent with the Code.
Treating the whole Code as in force on one date.
Students assume one commencement date.
Fix: The Code allows different dates for different provisions. The text you have shows notified provisions from 21 November 2025, but it lists items 1, 2 and 4 to 9 of section 164(1), not item 3 (the EPF Act). Check the latest notification for the EPF Act's repeal date before stating it as a fact. The one-year period for the old Schemes and Rules runs from commencement of the relevant provision of the Code, so do not present it as settled without that check.
Naming the old Central Board as extinct from day one.
Students ignore the transitional rule.
Fix: Under section 153, the old Central Board and Executive Committee (and the ESI Corporation, Medical Benefit Council, Standing Committee and BOCW Board) keep exercising the powers of the corresponding bodies under the Code until those are constituted or the old time period expires, whichever is earlier.

Worked examples

Example 1

Sunrise Textiles Ltd, Coimbatore, was covered under Chapter III of the Code on Social Security, 2020 when it began. Later its headcount fell below the First Schedule threshold. The owner says it is now out of the provident fund scheme. Another unit, Kaveri Foods, is below the threshold but its employer and a majority of employees want cover. Advise both.

Show the solution

Sunrise: the Code says an establishment to which a Chapter applies at the first instance continues to be covered even if the number later falls below the First Schedule threshold.
So Sunrise cannot leave Chapter III only because its headcount has fallen.
Kaveri: the CPF Commissioner may, on an application or otherwise, notify that Chapter III applies if the employer and majority of employees have agreed.
Cover starts from the date of agreement or a later date specified in it.
If Kaveri later wants to leave, the employer must apply and the Commissioner must be satisfied that employer and majority of employees agree.

Answer: Sunrise Textiles stays covered. Kaveri Foods can be brought in by the CPF Commissioner's notification on the basis of agreement, and it can come out only on a similar agreement.

Example 2

Meera's monthly pay at Ganga Pharma is: basic pay ₹12,000, dearness allowance ₹3,000, house rent allowance ₹15,000 and conveyance allowance ₹10,000. Assume the allowances HRA and conveyance are excluded items. Find her wages for provident fund purposes.

Show the solution

Total remuneration = 12,000 + 3,000 + 15,000 + 10,000 = ₹40,000.
Excluded items = 15,000 + 10,000 = ₹25,000.
Half of total remuneration = 50% × 40,000 = ₹20,000.
Excluded items of ₹25,000 exceed ₹20,000, so the one-half rule applies.
Excess to add back = 25,000 − 20,000 = ₹5,000.
Wages = basic 12,000 + DA 3,000 + excess 5,000 = ₹20,000. Check: 40,000 − 20,000 = ₹20,000.

Answer: Meera's wages are ₹20,000 per month.

Exam tips

For a short note on repeal, name the 1952 Act among the nine repealed enactments in section 164 and give the savings in plain words.
In wages problems, show total remuneration, excluded items and the 50% check as separate lines. Step marks go to the check even if the final figure is wrong.
Do not quote the First Schedule threshold or section numbers of definitions unless your ICMAI material gives them clearly. Describe the rule in words.
In MCQs, watch for statements with 'only' or 'always'. The continuity rule and the one-year life of the old Schemes are common traps.
Mention that the Code can come into force on different dates for different provisions when a question asks 'is it in force'.

Practice questions from Employees Provident Fund and Miscellaneous Provisions Act, 1952

Code on Social Security 2020: EPF Applicability and Definitions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Code on Social Security 2020: EPF Applicability and Definitions: frequently asked questions

Is the EPF Act, 1952 repealed by the Code on Social Security, 2020?

Section 164(1) lists it as item 3 among nine enactments to be repealed. However, the 21 November 2025 notification brought into force items 1, 2 and 4 to 9 of section 164(1), not item 3. So check the latest notification for the date from which the repeal of the EPF Act takes effect. Past actions, rules and schemes are saved under the matching provisions of the Code.

Which establishments are covered for provident fund under the Code?

Those the First Schedule makes subject to Chapter III, those brought in by notified agreement of the employer and majority of employees through the CPF Commissioner, and those to which the Central Government applies the Code by notification. An establishment covered at the first instance stays covered even if its headcount falls.

How is wages defined for provident fund under the Code?

Wages are built on basic pay, dearness allowance and retaining allowance, with listed items excluded. If the excluded items exceed half of total remuneration, the excess is added to wages. Learn the exclusion list from your ICMAI study material.

Do the EPF Scheme 1952 and the Employees' Pension Scheme, 1995 stop after the Code?

No. Under section 164(2)(b), these, the Employees' Deposit Linked Insurance Scheme, 1976 and the Tribunal (Procedure) Rules, 1997 stay in force for one year from the date of commencement of the Code, to the extent they are not inconsistent with it.