PMVBRY

PMVBRY – Guidelines for calculating incentives under the Scheme.

by with No Comment BusinessNews & Updates
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 2nd 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:
EPF Wage slabs of Additional employees Benefit to the Employers in ₹.  (Per additional employment per month as per prescribed criteria)
<= ₹ 10,000* Up to ₹ 1,000
₹20, 000 to ₹ 1,00,000** ₹3,000
  • * 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.

 

Employee Linked Incentive (ELI) Scheme – Benefits, Eligibility & Impact

Employee Linked Incentive (ELI) Scheme – Benefits, Eligibility & Impact

by with No Comment Labour ActNews & Updates
Introduction:

The Employee Linked Incentive (ELI) Scheme is a major initiative launched by the Union Government in the Union Budget 2024-25, to address the country’s growing unemployment challenges. India is currently facing high levels of unemployment among the youth, underemployment, and a mismatch between the skills and industry demand. The ELI scheme is proposed to stimulate the private sector to participate in job creation and workforce development. The scheme seeks to incentivize and motivate employers to hire more youth, especially freshers while encouraging skill development and enhancing job retention.

The ELI Scheme is a package of 5 schemes to create more job opportunities and improve the livelihood of people across the country. The scheme envisages providing employment, skilling, and other opportunities for 4.1 crore youth over five years with a total central outlay of ₹ 2 lakh crore. Out of this, 1.07 crore is allocated to implement Plan A, B, and C, ₹63,000 crore for Plan D to provide an Internship programme for skilling 1 crore youth in 5 years, and ₹30,000 crore for Plan E for upgrading of Industrial Training Institutes (ITI’s) across the country.

The package highlights the government’s strong commitment to tackling unemployment and boosting economic recovery, especially after the challenges posed by COVID – 19 pandemic.

The Objectives:

The ELI Scheme hopes to address the country’s growing unemployment by incentivizing the private sector for job creation, skill development, and retention.

The main objectives are:

  1. Promote the employment of youth: The scheme primarily aims to reduce unemployment among the youth by encouraging organizations to recruit youngsters especially those joining the workforce for the first time.
  2. Encourage job retention: The ELI scheme has features to encourage job retention by offering incentives to employers who maintain higher workforce levels over a period of time, especially those who recruit beyond a specified threshold.
  3. Encourage Skill Development: Skilling has been the Government’s objective, and this initiative aligns with this aim. This is achieved by encouraging skill development among the youth, by motivating employers to invest in training and skill development of their workforce.
  4. Enhance Formal Employment: Historically, industries have depended on informal labour. This scheme aims to formalize employment by incentivizing employers who transition workers into the formal economy by providing social security such as Provident Fund (PF) coverage.
  5. Boost employment in the Manufacturing Sector: The Scheme has features that target the Manufacturing Industry to boost job opportunities by promoting the recruitment of first-time-employees.
  6. Reduce Economic Disparity: the Scheme aims at reducing economic disparity and improve social mobility by prioritizing on job creation and skill enhancement for youth especially those from the underprivileged backgrounds.
  7. Assist Employers in recruitment: The programme aims to lower the expenses of employers and motivate them to increase their employment levels by providing financial assistance such as reimbursing employers for their PF contributions towards new hires.
The Schemes

The Employment Linked Incentive Schemes encompass 5 programs aimed at employment generation, retention, workforce formalization, skill development, and enhancing full compliance with all statutory rules and regulations.

The total outlay for the entire scheme is ₹2 lakh crores for 5 years. Out of this, ₹1.07 lakh crore is allocated for Scheme A, B, and C to generate employment for 3.1 crore new employees, ₹ 63,000 crore is allocated for Internship Programme for skilling 1 crore youth in 5 years, and ₹30,000 crore for upgrading of Industrial Training Institutes (ITI’s)

Scheme A: First-time Employees Support Scheme

This scheme is designed for youth who are entering the formal workforce for the very first time. All newly joined employees in the formal sector will receive one month’s salary up to ₹15,000 to be disbursed through direct transfer in 3 installments. The first-time employment scheme is expected to benefit around 210 lakh youth over 2 years. The Central outlay for the scheme is ₹23,000 crores. Enrolment is open for 2 years and the expenditure coverage extends to 3 years. The subsidy paid under this scheme supports employees and boosts the hiring of first-time employees by employers.

The salient features of the scheme are briefed below:

  1. Applicable to all newly joined employees in the formal sector.
  2. Applicable to newly joined employees enrolled in EPFO and drawing a wage or salary of less than ₹ 1 lakh per month.
  3. Eligible employees will receive a subsidy of up to ₹ 15,000 directly in 3 installments.
  4. The eligible employee has to mandatorily undergo a financial literacy course to receive the second installment.
  5. The employer has to refund the subsidy to the employee if the employment ends within 12 months of recruitment.
  6. The scheme will be applicable for 2 years after enrolment with EPFO.
Scheme B: Incentives for Job creation in the Manufacturing Sector

This scheme is designed to enhance employment in the manufacturing sector. The scheme rewards both employers and first-time employees who contribute towards EPFO. The incentive will be paid at a specified scale to both the employee and employer directly based on the EPFO contributions made in the first 4 years of employment. The incentives will be paid partly to both the employees and employers for 4 years as detailed below:

Year Percentage
First year 24% shared equally between employee and employer
Second year 24% shared equally between employee and employer
Third year 16% shared equally between employee and employer
Fourth year 8% shared equally between employee and employer

This scheme is aimed at incentivizing employment in the manufacturing sector and is expected to benefit 30 lakh youth and their employers. ₹52,000 crore has been earmarked for this scheme. The program has a 2 year enrolment plan with the expenditure phase spanning 6 years. This will allow sustained support that will boost long term employment in the manufacturing sector.

The salient features of the scheme are briefed below:

  1. The scheme applies to first-time employees in the manufacturing sector.
  2. All corporate and non-corporate employers who have a 3-year track record with EPFO contributions will be eligible.
  3. Employees who contribute towards EPFO and who earn a wage or salary of up to ₹1 lakh per month will be eligible for this scheme.
  4. The employees must be directly employed by the organization that pays the salary.
  5. Where the salary of the employees exceeds ₹25,000 per month, the incentive will be calculated at the capped amount of ₹25,000 per month.
  6. If the employment ends within 12 months of recruitment, then the employer will refund the subsidy to the employee.
  7. The scheme requires the employer with a 3-year EPFO contribution to hire either 50 new employees or 25% of their workforce, whichever is lower to qualify for the incentive.
  8. Employers should maintain the enhanced level of employment throughout, failing which they will not receive the subsidy.
  9. The incentive will be paid over 4 years, shared equally between the employee and the employer as per the table given above.
  10. The scheme will apply to an employee for 2 years after enrolment with EPFO.
Scheme C: Support to Employers for EPFO contributions

The third scheme under the Employment Linked Incentive Scheme is to support employers who contribute towards EPFO. This is a fully employer focussed scheme that covers every additional employment within a salary of ₹1 lakh per month within all sectors.

The salient features of the scheme are briefed below:

  1. The scheme incentivizes employers who increase their workforce above the baseline (the previous year’s number of EPFO employees) by at least 2 employees for companies with less than 50 employees or 5 employees for companies with 50 or more employees and maintain this level.
  2. The scheme applies to employees earning up to ₹1 lakh per month.
  3. New employees need not be newly enrolled with EPFO.
  4. The EPFO will reimburse contributions paid by the applicable employer for the additional employees hired in the previous year up to ₹3,000 per month for 2 years.
  5. When the employer creates more than 1000 jobs, reimbursement will be done for every quarter.
  6. The subsidy will continue for the 3rd and 4th years on the same scale as employers benefit provided under job creation for manufacturing sector.
  7. The subsidy provided under this scheme is in addition to the subsidy provided under the first-time employment scheme.
  8. The scheme is applicable for 2 years after joining employment.

The Central outlay for this scheme is ₹32,000 crores and is expected to benefit 50 lakh youth. The program has 2 year enrolment duration and the expenditure duration is for 6 years.

Scheme D: Internship Scheme with Top Companies

The Internship Programme envisages skilling 1 crore youth aged between 21 to 24 years over 5 years in top 500 companies. The total outlay for the scheme is ₹63,000 crores.

The salient features of the scheme are briefed below:

  1. The duration of the Internship is 12 months with a monthly allowance of ₹5,000 and a one-time assistance of ₹6,000.
  2. Unemployed youth in the age group of 21-24 are eligible.
  3. The government will contribute significantly to the allowance costs, while the administrative and training expenses will be borne by the Company through CSR funding.
  4. Priority will be given to candidates with lower employability metrics.
  5. Actual skill training is mandatory with a focus on hands-on-work over classroom learning.
Scheme E: Skilling programme and upgradation of ITI’s

This is a scheme to skill youth with state and industry collaboration. This centrally sponsored scheme has a total outlay of ₹60,000 crores, where the Central Government spends ₹30,000 crores, the State Government spends ₹20,000 crores and the Industry ₹10,000 crores (this includes CSR funding).

The salient features of the scheme are briefed below:

  1. The objective is to skill 20 lakh youth so that industry standards can be met and employability enhanced.
  2. The programme envisages the upgradation and revamping of 1000 Industrial Training Institutes (ITIs), in a “hub and spoke” model with 200 hubs and 800 spokes nationwide with the cooperation of the industry.
  3. A complete Re-design and review of existing courses.
  4. Introduction of New courses with 1 and 2 year courses offered in all the 1000 ITI’s
  5. Offering specialized short-term courses in Hub ITI’s.
Key Takeaways of the Employment Linked Incentive Schemes

The ELI Scheme offers several key benefits and they are:

  1. Promoting Job Creation: the ELI scheme acts as stimulus to companies to hire more employees by offering incentives tied to EPFO Contributions. This will stimulate industrial growth and promote employment in various sectors.
  2. Supports fresh graduates and new entrants: The first-timers scheme helps to integrate fresh graduates and new entrants into the formal workplace. This scheme reduces the financial strain and ensures a smooth entry into the job market by providing a stable income at the start of a career.
  3. Strengthens financial security for employees: By incentivizing formal employment through EPFO contributions, the scheme ensures access to retirement benefits thus enhancing the long-term financial security of employees.
  4. Encourages workforce expansion for employe₹ The job creation in the Manufacturing sector scheme encourages employers to expand their workforce by linking incentives to EPFO contributions. This reduces the financial barrier for employers to hire more workers, helping the companies to meet the increasing demand and grow in the process.
  5. Reduces the financial burden of the employe₹ The Support to Employers scheme reimburses a portion of the EPFO contributions for newly hired employees. This specifically helps Small and Medium-sized Enterprises (SMEs) to reduce the cost of hiring, making it more viable for SMEs to expand their workforce.
  6. Boosts Economic growth: By creating more job opportunities and incentivizing businesses to hire, the ELI scheme ensures that the growth driven by other manufacturing incentives such as the PLI scheme, translates into actual long-term employment gains.
  7. Encourages the formalization of the workforce: Incentivizing the formal sector employment, this helps to transition workers from the informal sector to the formal sector, providing greater stability and access to social security benefits.
Conclusion

The Employment Linked Incentive (ELI) Scheme is a strategic approach by the Central Government to address the unemployment problem in the country and to drive economic growth. The incentives targeted at both employers and employees aim to create a more inclusive and dynamic job market. The initiatives under the ELI scheme will not only support workforce expansion and formalization but will also significantly enhance the financial relief to employers, especially SMEs, thus making it easier for them to grow and hire.

GetifyHR, with its vast experience in Payroll processing and HR Management, assures all stakeholders of our continued support in helping them to make use of these schemes to foster growth and job creation, and to ensure a thriving and sustainable business in the long term.