Employment Linked Incentive Scheme - Pradhan Mantri Viksit Bharat Rozgar Yojana

Background

The Pradhan Mantri Viksit Bharat Rozgar Yojana is a government initiative aimed at promoting employment generation and workforce formalisation in India. By providing targeted incentives to both employers and employees, the scheme seeks to encourage the creation of sustained additional employment opportunities and enhance overall employability.

The scheme will be implemented by the Ministry of Labour and Employment through the Employees' Provident Fund Organisation (EPFO).

The scheme consists of two parts:

• Part A focuses on the benefits to First-time Employees joining EPF on or after 1 August 2025, with gross wages up to INR 1,00,000 per month at the time of joining.
• Part B focuses on the benefits to Establishments or Employers hiring additional employees who are either first timers or re-joinees, subject to fulfilling the threshold criteria with gross wages up to INR 1,00,000 per month.

Under Part A, the scheme assists first-time employees in their learning by covering upskilling costs and promoting financial literacy to enhance their productivity and financial awareness.

Part B focuses on incentivising employment across all sectors, with special emphasis on the manufacturing sector, to build a more formal, dynamic, and youth-driven labour market.

Definitions

Aadhaar

Refers to the Aadhaar Number as defined under the Aadhaar Act, 2016.

Baseline

For establishments registered with EPFO for more than 12 months before August 1, 2025, it is the average number of employees during the previous 12 months.

For those registered for less than 12 months, before August 1, 2025, it is the average number of employees for all months up to July 31, 2025.

For new establishments, the baseline is fixed at 20 employees.

Completed Wage Month

It means a full calendar month for which ECR is duly filed with EPFO. It is used to determine the eligibility and calculation of incentive under the scheme.

• If joining is on or before the 5th of the month, then same month is treated as the first wage month.
• If after the 5th of the month, then next month is treated as the first wage month.

Electronic Challan-cum-Return (ECR)

It means filing monthly return online with EPFO along with the specified amount of contributions. The employees for whom contributions are not received will not be considered for benefits under parts A & B, however, for the purpose of calculating the baseline, all employees shall be counted.

Employee

A person covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ('EPF & MP Act, 1952'), and for whom the employer contributes to EPFO or an exempted trust.

New Employee: Joined between August 1, 2025, and July 31, 2027.

First Timer: Never contributed to EPFO before, joins during the scheme, and has UAN verified via Face Authentication on UMANG App.

Re-joinee: Previously contributed, rejoins during the scheme period, with Aadhaar-authenticated UAN.

Eligible Employee: Any new employee in respect of whom contribution is received in EPFO or Exempted Trust for at least 6 months for both the employee and the employer and whose gross wages at the time of joining the establishment is less than INR 1,00,000 per month, will be considered for incentive to Establishments under Part B of the scheme.

Old Employee: Joined before August 1, 2025, and continues, no incentive is provided under the scheme to employer.

EPF Wage

Wage on which EPF contributions are made under Section 6 of the EPF & MP Act. It is calculated as:

(Total Contribution × 100) / 24, or

(Total Contribution × 100) / 20, Note: The divisors 24 and 20 represent the combined percentage of employee and employer contributions, which may be 12% + 12% = 24% or 10% + 10% = 20%, respectively, depending on the category of establishment.

Establishment

Entity covered under EPF & MP Act with EPF code and PAN.

1. Existing Establishment: Registered with EPFO before August 1, 2025.
2. New Establishment: Registered with EPFO on or after August 1, 2025.

All the establishments with the same PAN as available with EPFO on or after August 1, 2025, would be considered as a single entity.

Exempted Establishment

An establishment allowed exemption under Section 17 of the EPF & MP Act, 1952, maintaining its own provident fund trust with benefits not less than EPF & MP Act.

Financial Literacy Course

A mandatory module providing training on personal finance, savings, investments, and financial planning, available on EPFO's portal.

Gross Wage

All emoluments received by an employee in cash or kind as per the employment contract.

Manufacturing

Covers activities defined under Section 2(72) of the Central Goods and Services Tax Act, 2017 and listed in the establishment's registration certificate.

Registration Period

It shall be from August 1, 2025, to July 31, 2027. Employees joining within this period count for incentives and threshold calculations. The scheme's effective date is August 1, 2025.

Universal Account Number (UAN)

A unique Aadhaar-authenticated number allotted by EPFO. From August 1, 2025, generation of UAN will require Facial Authentication via the UMANG App.

Interpretation Clause

Any term not defined in the scheme will have the meaning assigned under the EPF & MP Act, 1952, or any of the Schemes framed thereunder.

Applicability of the Scheme on Establishment

The scheme applies to all establishments, including new and exempted ones, that are covered under the EPF & MP Act, 1952, provided they regularly file ECRs along with contributions and comply with other conditions of the Scheme.

The registration period for both Part A & B of the scheme is from August 1, 2025, to July 31, 2027. Existing establishments already registered with EPFO and holding a valid employer code will be treated as deemed registered from August 1, 2025. However, they must furnish their PAN, GSTIN, and PAN-linked bank account details for validation under the scheme.

Determination of Baseline

The baseline under part B of the scheme for calculating the Net Additional Employment to avail the benefits are as follows:

• For Existing Establishments (registered before July 31, 2024), the baseline will be the average number of employees as per ECRs filed from August 1, 2024, to July 31, 2025. Establishments registered between August 1, 2024, and July 31, 2025, will have the baseline based on the average employees up to July 31, 2025.
• To qualify for benefits, establishments must file ECRs with contributions for all the months from August 2024 or from the date of registration in EPFO, whichever is later, up to July 2025. All these ECRs along with contributions are required to be filed by the establishments prior to January 31, 2026.
• For New Establishments registered between August 1, 2025, and July 31, 2027, the baseline is fixed at 20 employees for mandatory EPFO registration.
• Incentives will apply only for additional employees beyond the baseline of 20. The baseline will not change after 6 months from the start of the scheme, except in cases where higher number is shown in revised ECRs during the 6 months, the same will be considered for calculating baseline.

To read this article in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.