Employment linked incentive scheme rewards India employers who add formal jobs
The employment linked incentive scheme pays India employers up to ₹3,000 a month for each additional formal hire, for two years, and four years in manufacturing. It covers jobs created between 1 August 2025 and 31 July 2027, so the clock is already running. If you’re adding headcount in India, you need to know whether you can claim it, or whether your provider will.
Officially it’s the Pradhan Mantri Viksit Bharat Rozgar Yojana. The Cabinet cleared it in July 2025 with an outlay of ₹99,446 crore, and the Prime Minister’s office announced about ₹2,400 crore in disbursements for 19 June 2026. Here’s how the employer half works, and where it gets tricky.
What the employment linked incentive scheme pays employers
Part B of the scheme pays employers a monthly amount for every additional employee, based on that person’s EPF wage. The Cabinet release sets three wage slabs.
Part A is the other half. It pays first-time employees up to one month’s wage, capped at ₹15,000, in two instalments. You don’t claim it, but it’s the reason the scheme cares about first-time formal jobs.
| Employee’s EPF wage | Monthly incentive to employer | Ceiling over 2 years (our arithmetic) |
|---|---|---|
| Up to ₹10,000 | Up to ₹1,000, proportional | Up to ₹24,000 |
| ₹10,001 to ₹20,000 | ₹2,000 | ₹48,000 |
| ₹20,001 to ₹1,00,000 | ₹3,000 | ₹72,000 |
The third column is simple multiplication, not an official figure. Manufacturers get years three and four as well, which doubles the ceiling. Payments go to a PAN-linked bank account.
The thresholds that decide whether you qualify
You can’t claim for a single hire. Establishments with fewer than 50 employees need at least two additional hires, and those with 50 or more need at least five. Each hire must also stay employed for a minimum of six months, and the employer must be registered with EPFO.
Those numbers come from the Ministry of Labour and Employment’s Cabinet note. Read them as a floor. The operating rules sit on the EPFO portal, and they matter more than the headline.
Why manufacturers and team builders should look closest
Manufacturers get the strongest deal, because four years of payments on one hire adds up. The wage slab does the rest, so a factory floor hire on a modest EPF wage earns less per month than a senior engineer.
Teams adding people in batches also cross the thresholds more easily. A group scaling toward a Global Capability Centre in India will clear five hires quickly. A startup adding one engineer won’t clear two, so the scheme simply won’t apply to it yet.
Where the paperwork trips employers up
Most lost incentive won’t come from ineligibility. It’ll come from late registration and messy monthly filings.
One practitioner guide, ComplianceAge’s employer walkthrough, summarises the EPFO guidelines like this: your baseline headcount comes from your earlier monthly returns, every new hire needs face authentication of their UAN through the UMANG app, and any gap in monthly filings resets the six-month clock. It also warns that months you hire in but don’t register for can be lost for good.
That’s a secondary source, and we haven’t matched every line against the EPFO portal. Treat it as a checklist of questions, then confirm each one against your own login.
Three habits protect your claim:
- Register on the scheme portal as soon as your first eligible hire joins, not at quarter end.
- File your electronic challan-cum-return every month, on time, with no exceptions.
- Get face authentication done in the first week, before payroll closes.
Meanwhile, keep your PAN, GSTIN and bank details identical across every record. Mismatches are the dullest way to lose money.
Cash timing needs a mention too. The same guide says incentives arrive roughly every six months, starting after six completed wage months. So don’t book the money as monthly income, and don’t promise it to finance before the first instalment lands.
Does the employment linked incentive scheme reach EOR hires?
Probably, but the money may not land with you. The incentive goes to the EPFO-registered establishment, and under an Employer of Record arrangement in India, that’s the provider, since it’s the legal employer running PF and payroll.
Whether you see any of it depends on your contract. No official guidance we’ve found says how a client should share it, so it’s a commercial question, not a legal entitlement.
Consider a company that adds six engineers through an EOR, each on an EPF wage above ₹20,000. At ₹3,000 a month each, the ceiling is ₹18,000 a month, or ₹4,32,000 over two years, before any threshold or baseline test. It’s illustrative, not a forecast, and it’s small next to six engineering salaries.
Three questions to put to your provider in writing
First, is the provider registered for the scheme, and has it filed the required baseline? Second, will it claim on your hires, and how will any payout be credited to you? Third, does it hold face-authenticated UANs for every new joiner?
If the answers are vague, that tells you how closely they track compliance. Our 50 questions guide to Employer of Record services in India covers what else to ask before you sign.
How to time hires around the July 2027 cut-off
Hire sooner rather than later, but never for the incentive alone. The scheme counts jobs created up to 31 July 2027, and each hire must then complete six months of employment before anything is paid. A hire made in the final weeks still qualifies, yet it leaves you little room for filing errors.
Batching helps. If you already plan to add five or six people this year, aligning their start dates lets you register once, file once, and authenticate everyone in the same week. By contrast, scattering joiners across many months multiplies the admin and raises the odds of a missed return.
And if your plan is a single hire, skip the scheme entirely and focus on getting that one contract right.
Treat it as a bonus, not a business case
Don’t plan hiring around ₹3,000 a month. A wrong location or a weak candidate costs far more than the incentive returns, and the scheme ends for new jobs in July 2027.
But don’t ignore it either. It rewards what you should be doing anyway: putting people on the formal payroll with Provident Fund in place. Our guide to statutory benefits in India shows what that formal cover includes, and the monthly payroll and tax cycle explains where the filings come from.
Here’s our read, and it’s an opinion, not an official position. The scheme pays for formalisation, so it quietly raises the cost of staying informal. Companies that already run clean employment contracts benefit twice: they qualify, and they carry less exposure if regulators look harder at contractor arrangements. Our guide to employee misclassification penalties in India shows what that exposure looks like.
One open question deserves care. If you’re moving contractors onto employment, ask whether those conversions count as additional employees. We haven’t seen official wording that settles it, so get the answer in writing. Our piece on converting contractors to full-time employees covers the mechanics.
Your next step this week
Email your EOR or payroll partner the three questions above and ask for a dated reply. Then check the registration date on your own EPFO login. If either one is later than your first eligible hire, you’ve already left money on the table, and every further week adds to the gap.