PMVBRY – Guidelines for calculating incentives under the Scheme.

Introduction

The grand vision of “Viksit Bharat @ 2047” is hoped to be achieved by the Employee Linked Incentive (ELI) Scheme under the name.  The “Pradhan Mantri Viksit Bharat Rosgar Yogana” announced by the Government of India in the Union Budget 2024-25. As you are aware, this scheme will complement the National Manufacturing Mission announced in the Union Budget 2025-26 by providing a boost to the ‘Make in India’ initiative.  The main objective of this scheme is to increase the contribution of the manufacturing sector to India’s GDP from 16% to 25% by 2025.

In this article we will dwell on the eligibility, benefits and the guidelines for calculating the incentives under the scheme.

 1.  Part A of the Scheme  – Eligibility of Employee under Part A:

All First timers are eligible to receive the benefits under the scheme subject to the establishment being covered under the EPF & MP Act, 1952. All First timers drawing gross wages up to ₹ 1,00,000/- at the time of joining the establishment registered with the EPFO will be eligible to receive the incentives under Part A of the scheme, subject to filing of ECRs with contribution for 6 continuous months.

First Timers employed in establishments which are part of the seasonal industry as defined under the EPF & MP Act, 1952 can be considered as eligible if the ECRs are filed over 6 months during a period of 12 months irrespective of continuity, and if the First timer is employed in the same establishment for the entire period.

Exempted establishments should provide details of all employees, including the First timers for whom the contributions are being deposited in their PF Trust, along with the filing of ECRs without contributions to EPFO.

The First timer in an Establishment is eligible to receive the 2^nd instalment of the incentive under Part A of the scheme when all the 12-month ECRs have been filed within a period of 18 months from date of joining the establishment.

2. Calculation of Incentives:

Under Part A, the First timer can receive an incentive that is equivalent to one completed month EPF wage, subject to a maximum of ₹ 15,000/-.

The incentives will be paid in two instalments.  The first instalment will be half of the average EPF wage for 6 continuous months subject to a maximum of ₹ 7,500/-.  This instalment will be paid after filing of six completed months’ ECR’s along with the contributions.  The second instalment will be invested in an appropriate saving instrument/deposit account for a period to be specified by M/o L & E in due course.   The First timer will be eligible to receive this part of the incentive only after completion of the Financial Literacy program and filing of 12 completed months’ ECR’s along with contribution by the establishment.

Part B of the Scheme:

The benefits under Part B will be paid to the employers in respect of the First timers and Re-joinees subject to fulfilling the threshold criterion.

Incentive Amount and Periodicity

The incentives to employers under Part B will be paid for 4 years for manufacturing industry and 2 years for others at the following rates in respect of employment generated over and above the baseline fulfilling the threshold level. Where the baseline is less than 50, at least 2 additional employments are required for eligibility, and where the baseline is 50 & above, at least 5 additional employments are required for eligibility.

The incentives to employers will be as under:

• * Where the employees get EPF wages less than ₹ 10,000, the incentive at the rate of 10% of EPF wage will be provided.
• *Incentives will be paid to new employees with EPF wages up to ₹ 1,00,000/- at the time of joining the establishment.

These incentives will be paid to all eligible establishments in lump-sum payments every six months, after filing for six completed months ‘ECR’s based on eligibility of the employer and employees.  Further, these benefits will be provided in respect of those first-timers and Re-joinees who complete 6 months of employment with the same employer.

In case the employer is not eligible as per the threshold criteria, the benefits will not be provided, and there will not be any extension to the incentive period.

Eligibility of Establishment under Part B

The eligibility of the establishment will be determined based on the threshold criteria as detailed below:

During the first 6 months of joining the scheme, the average number of employees in the establishment as per the ECRs filed for that period should be more than or equal to the Baseline plus the threshold limit.

Between the 7th and 12th month, the average number of employees in the establishment as per the ECRs filed from the 1st month up to the last month should be more than or equal to the Baseline plus the threshold limit.

From the 13th month onwards the average number of employees in the establishment should be more than or equal to the Baseline plus the threshold limit as per the ECRs filed from 1st month up to that month.

If any establishment registered with the EPF & MP Act, 1952 has pending inquiries under Section 7A/7B/7C of the Act and Para 26-B of EPF scheme; the incentives under Part B will be with held.  Also establishments against whom a FIR has been filed by EPFO for fraudulent practices or where inquiries relating to irregularities under the ABRY Scheme or any other scheme are pending or has been decided against the establishment, then the incentive will be with held.

Discontinuation of the Incentives

The Payment of Incentives under the scheme will be discontinued under certain conditions:

1.  In case the First timer leaves the employment on his own volition or otherwise.
2.  In case of any eventuality, like death, etc, of the beneficiary.
3.  If the establishment winds up.
4.  In the event of any misrepresentation or fraud.

Mode of Payment

1.  The incentives will be disbursed within 45 days, once the ECRs are filed and contributions paid as per the periodicity as defined under the respective Part of the scheme.
2. The incentives to the establishments shall be disbursed as Direct Benefit Transfer to the PAN-linked Bank Accounts of the Establishment.  In case a group of establishment under the same PAN are eligible for the incentives, then payment will be made to a single PAN-linked Bank account nominated by the group.
3. The incentives to the employees shall be paid through (Aadhaar Bridge Payment System) Direct Benefit Transfer to their Aadhaar-seeded Bank accounts.

In case the employees’ bank account is pending for Aadhaar seeding, then the payment shall remain suspended. However, the incentive would continue to accrue during this period and, once the bank account is Aadhaar-seeded, the payment, including arrears, would be released as per the scheme guidelines.

Other features of the Scheme

1.  Rounding Off:  All calculation to arrive at the Baseline, threshold, and average strength of employment may be rounded off to the nearest integer.
2.  Penalty for fraudulent activities:  Legal action may be initiated against establishments found indulging in fraudulent activities or availing incentives based on fictitious data or documents or otherwise.  The Ministry of Labour and Employment will issue a comprehensive Penalty clause to this effect.
3.  Communication strategy & Advocacy: A nation-wide multimedia outreach strategy using social media, traditional media, webinars, workshops etc., will be adopted to give wide coverage to the scheme.  For better advocacy of the scheme, the outreach will be done in multiple languages.

Monitoring and Evaluation

Monitoring

For purpose of monitoring the scheme, an inter-ministerial Steering Committee will be constituted by the Ministry of Labour and Employment.  The Steering Committee would provide recommendation on wide ranging functions of the scheme.  The Steering committee is scheduled to meet at least once every quarter or as decided by the Chairperson.

An Executive Committee under the Chairpersonship of CPFC will also be constituted by the Ministry of Labour and Employment.  To ensure proper implementation of the scheme, the Executive Committee will meet every month.

Evaluation

Based on the recommendations of the Steering Committee, a third party mid-term evaluation of the Scheme shall be undertaken for necessary course correction after one year of the start of the scheme.

A third-party end-term evaluation of the scheme shall be conducted three months prior to the closure of the scheme to assess the outcome of the Scheme.  The incidental costs of this evaluation will be met from the Administrative charges allocated for the Scheme.

 Administration and Grievance Redressal of the Scheme

The scheme shall be administered by the EPFO under the overall supervision of the Ministry of Labour and Employment.  EPFO shall provide an online facility to stakeholders to lodge grievances related to the scheme.  A Call Centre for PMVBRY will also be set up to assist stakeholders.

Financial Outlay of the Scheme

The Government has earmarked ₹ 99,446 Crores for the scheme, and this includes Administrative charges of ₹ 248 crores. EPFO aims to create 3.5 crore jobs during a 2 year period through this scheme.

Taxation

The incentives received under the scheme are taxed as they are subject to the provisions of the Income Tax Act, 1961.

Audit

The CAG will conduct a statutory audit of the Scheme, whereas, the Internal Audit Wing (IAW), M/o. L & E will conduct a non-statutory Audit.  Concurrently, an internal Audit will be conducted by EPFO.

Conclusion

The “Pradhan Mantri Viksit Bharat Rosgar Yogana” is the Employee Linked Incentive (ELI) Scheme announced by the Government of India in the Union Budget 2024-25.  The PMVBRY scheme not only incentivises both the employers and employees, but is a measure that focuses on creating a more inclusive and dynamic job market. The scheme hopes to significantly enhance the financial relief to employers especially SMEs, thus providing the right impetus for them to grow and hire, and will also support workforce expansion and formalization.

Getify, is fully equipped to provide all stakeholders of our continued support in fully utilising these initiatives to foster growth and job creation, and to ensure a thriving and sustainable business in the long term.  As one of the leading Payroll processing and HR management companies in the region we can assure all our clients of our professional support in benefitting from this scheme.