I. Introduction

As India advances toward its Viksit Bharat@2047 vision, formal employment generation has become one of the top national priorities. The Government of India’s Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY), implemented through the Employees’ Provident Fund Organisation (EPFO), incentivises both employers and employees to fulfil its objective of promoting formal job creation, while also encouraging long-term employment by linking incentives to sustained EPF contributions. For businesses, it provides an opportunity to expand responsibly while optimizing hiring costs and improving EPFO compliance.

II. What Is Pradhan Mantri Viksit Bharat Rozgar Yojana?

Effective from 1 August 2025 to 31 July 2027, PMVBRY in alignment with India’s push for a digitally managed, productive labour ecosystem, is a dual-benefit programme which aims to provide:

• Direct financial assistance to first-time employees (Part A), and
• Incentives to employers who generate new formal jobs (Part B).

Let’s understand both these parts one by one:

A. Part A: Incentives for First-Time Employees

Part A of the scheme is for the first-time employees joining EPF-covered establishments during the scheme period and who earn up to ₹1 lakh per month (gross wage at the time of joining). 

How the incentive works:

• One-time incentive equal to one month’s EPF wage, up to a maximum of ₹15,000. This incentive is disbursed in two instalments.
• First instalment: 50% of the incentive after 6 continuous months of EPF contributions.
• Second instalment: Remaining amount after 12 continuous months of EPF contributions and completion of the Financial Literacy Programme (via EPFO portal).
• Payments are made directly to employee’s Aadhaar-linked bank account through Direct Benefit Transfer (DBT).
• Incentive stops if the employee resigns, is terminated, passes away, is involved in fraud, or if the establishment shuts down.

B. Part B: Incentives for Employers

Part B of the scheme incentivises employers, especially those in the manufacturing sector, to create sustained additional employment.

1. Employer Eligibility:

• Must be EPF-registered and compliant with monthly Electronic Challan-cum-Return (ECR) filings.
• Must not have any pending EPFO inquiries, unresolved legal cases or fraud-related FIRs.
• Must meet both baseline and threshold employment conditions.

2. Baseline Employment Criteria:
   Baseline employment numbers vary depending on the EPFO registration timeline of establishments, as detailed below:

3. Threshold Employment Criteria:

• At least 2 additional employees (if baseline < 50)
• At least 5 additional employees (if baseline ≥ 50)

Note: Additional employees are new employees (joined during the timeline with EPFO contributions) with gross wages below ₹1,00,000 per month at the time of joining.

4. Incentives per Additional Employee:

5. How the incentive works:

• Incentive amounts are calculated only for additional employees who have completed 6 continuous months with the employer.
• Incentives are paid every six months, based on successful (ECR) filings.
• Incentives are paid for 2 years for most sectors and 4 years for manufacturing establishments.
• Payments are credited to the establishment’s PAN-linked bank account within 45 days of meeting eligibility conditions.
• Incentives stop if the establishment is involved in fraud or misrepresentation, has unresolved legal cases or EPFO inquiries, or does not file ECRs on time.

III. A Few Illustrative Scenarios

To understand how the Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY) works in real, let’s look at few typical examples below showing how the thresholds and incentives are applied:

ABC Pvt Ltd, an EPF-registered establishment, has an average of 45 employees during Aug 2024 to Jul 2025, which becomes its baseline. Under PMVBRY, establishments with a baseline of fewer than 50 employees must add at least 2 additional employees to qualify for incentives. 

Possible Outcomes

1. If the company hires and retains 5 additional employees over a 6-month period, it crosses the threshold and becomes eligible for incentives for all 5 employees.

2. If the company hires 2 employees but can retain only 1 for 6 continuous months, it does not qualify, as the minimum threshold of 2 is not met.

3. If ABC hires 5 employees but only 1 completes 6 continuous months, the company will still qualify if the average headcount shows the threshold of +2 is met, but the incentive will apply only for that 1 employee who satisfied the 6-month requirement.

4. If ABC hires and retains 5 employees but its total headcount drops at any point such that the baseline requirement (45 employees) is not fulfilled, the company becomes ineligible despite adding new employees.

The incentive per employee depends on their respective EPF wage slab (₹1,000–₹3,000 per month) and continues for the eligible duration, provided ECR filings remain up to date.

IV. Business Impacts and Key Considerations

PMVBRY enables employers strengthen formal job creation while maintaining strong EPF compliance. By linking incentives to sustained employment, the scheme encourages organisations to expand their workforce responsibly and stay consistent with regulatory requirements.

However, certain aspects of the scheme still require some clarifications, such as 

• The exact methodology for calculating employer incentives, including when the 2-year / 4-year benefit period begins and how baseline and threshold eligibility will be applied in practice.

• The process and timelines for releasing the second instalment of the employee incentive, particularly its linkage to the Financial Literacy Programme and the proposed savings/deposit mechanism.

Therefore, until the detailed implementation guidelines are issued, employers should keep two foundational practices in place:

• Maintain accuracy in payroll and EPF-contribution records, as this will enable better tracking of employee eligibility and compliance under the scheme.

• Ensure prompt and complete filing of ECRs every month to safeguard eligibility under the scheme.

V. Way Forward

At Advith, we support organisations to build a strong payroll and EPF-compliance foundation, ensuring they are fully prepared to claim every eligible benefit under PMVBRY, including:

• Precise tracking and real-time monitoring of incentive eligibility and timelines,
• Structured EPF compliance processes with assistance in availing registrations, and
• Integrated HR and payroll workflows for a seamless compliance system.

With the right payroll foundation and compliance strategy, organisations can position themselves to fully leverage the PMVBRY scheme, support formal workforce expansion, and contribute to India’s broader progress in strengthening organised employment. 

Feel free to get in touch with us today for a free consultation so that you stay future-ready.

Also Read: What Is Virtual Finance Office?

Also Read: The Power of Virtual Finance Office (VFO)

Contributors:
N Srilatha Bhat- LinkedIn
Kuldeep Sarma- LinkedIn
Poonam Vernekar- LinkedIn

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