The Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), an Employment-Linked Incentive (ELI), approved by the Union Cabinet on 1 July 2025 is a central scheme administered by EPFO to incentivize formal job creation during 1st August 2025 to 31st July 2027. Total outlay of the scheme is Rs 99,446 crore. The scheme involves convergence with portals such as GST, CBDT, MCA, ESIC, and Udyam for data sharing and validation.
This guide outlines key features, eligibility, compliance requirements, and tax implications for professionals advising clients on job-linked benefits.
About PM-VBRY Scheme
The scheme is divided into two parts:
Part A (Employees – “First-Timers”):
One month’s EPF wage, capped at Rs 15,000, paid in two instalments (after 6 and 12 months), with a mandatory financial literacy module; a portion is parked in a savings instrument. Applies to first-time EPFO contributors earning up to Rs 1,00,000 per month.
Part B (Employers – “Additional Jobs”):
Monthly incentives per additional employee based on EPF wage slab, for two years; manufacturing establishments receive the same incentive extended to years 3–4.
Manufacturing is defined with reference to Section 2(72), CGST Act, 2017, as adopted in PM-VBRY guidelines.
Eligibility & Computation – Practical Details
Employees (Part A)
i) Who qualifies? A “first-timer” who has never contributed to EPF before 1st August 2025, joins between 1st August 2025 and 31st July 2027, and earns below Rs 1,00,000 (gross) per month at joining. UAN must be Aadhaar-authenticated (FAT via UMANG), and the employer must file ECRs for the required months.
ii) Payouts: Instalment 1 after 6 continuous months (or 6 months within 12 for seasonal industries); Instalment 2 after 12 months (within 18 months) plus financial literacy course completion, with part of the incentive held in a savings instrument as notified. ABPS is used for DBT to employee accounts.
Employers (Part B)
i) Who qualifies? EPFO-registered establishments that create “net additional employment” over their baseline and maintain at least 6 months’ sustained employment for each eligible new hire. Payments are made to PAN-linked bank accounts. Incentives are not available if pending EPFO inquiries, fraud FIRs, or irregularities under other schemes exist.
ii) Baseline determination: Generally, the average number of employees per monthly ECR from August 2024 to July 2025 (special rules for entities with shorter EPFO history: average available months; fixed at 20 for new establishments; averages rounded to nearest integer). Only headcount above baseline is incentivized. ECRs for baseline months must be filed by 31st January 2026.
iii) Minimum additions:
• Baseline fewer than 50 employees → add ≥2 employees
• Baseline 50 or more employees → add ≥5 employees
iv) EPF wage vs. Gross wage:
• Gross wage at joining must be below Rs 1,00,000.
• Incentive slab uses EPF wage, reverse-computed from actual contribution (using 24% or 20% as combined employee + employer rate to derive EPF wage). This does not mean a 24% reimbursement; the incentive is a fixed amount as per slab.
v) Incentive slabs (per employee per month):
| EPF wage slab | Incentive |
|---|---|
| ≤ Rs 10,000 | Up to Rs 1,000 (10% of EPF wage) |
| Rs 10,001 ~ Rs 20,000 | Rs 2,000 |
| Rs 20,001 ~ Rs 1,00,000 | Rs 3,000 |
vi) Sectoral extension: Manufacturing establishments receive the same incentive extended to the 3rd and 4th year for eligible hires.
Documentation & Compliance Checklist (for CAs/Payroll/HR)
i) EPFO code & PAN-linked bank account for the establishment; ensure Aadhaar seeding, UAN generation (via FAT on UMANG App), and ABPS readiness for employee payouts.
ii) ECR filings: Accurate monthly Electronic Challan-cum-Return (employee and employer contributions) for baseline and ongoing months; exempted establishments must file specified returns in EPFO and maintain trust records.
iii) Baseline working papers: Document the August 2024 to July 2025 average headcount, with reconciliation to ECRs and payroll; retain evidence of net additions beyond baseline.
v) Wage controls: Maintain clear mapping from payroll gross wage to EPF wage (reverse computation from contributions). Avoid misclassification of allowances that could distort EPF wage reporting.
vi) Employee eligibility file: Track first-timer status, UAN Aadhaar authentication, service tenure (6/12 months), and financial literacy course completion for Part A claims.
vii) Anti-fraud readiness: Expect cross-verification with GST, CBDT, MCA, ESIC, Udyam portals; implement internal controls to prevent artificial headcount inflation or wage misreporting.
Tax Treatment & Accounting
i) Taxability: In the absence of a specific exemption, government cash incentives/subsidies are taxable income. Recognize employer receipts under Profits & Gains (Sections 2(24)(xviii); 28) and plan disclosures accordingly, with timing in the year of receipt per Section 145B(3). Alignment with ICDS-VII (Government Grants) should be considered for computation.
ii) Employee receipts: The Part A incentive is a government DBT to employees; payroll teams should not net this off against wages or EPF contributions. Treat it as a government transfer, not employer payroll. (Taxability for employees should follow CBDT guidance, if any, upon notification; monitor updates.)
iii) Accounting: For employers, present PM-VBRY receipts separately as other operating income/government incentive; ensure audit trail per PM-VBRY monitoring and audit sections. Consider disclosures akin to Ind AS-20 (Government Grants) even though PM-VBRY is an incentive, not a grant reducing asset cost.
Frequently Misunderstood Points (Corrections)
i) No “24% EPF reimbursement”: The incentive to employers is fixed per-employee and based on EPF wage slabs; EPF wage is derived from contributions for computational consistency—not reimbursed at 24%.
ii) No special extension for “>1,000 hires”: The extension to years 3–4 applies to manufacturing sector, not to any headcount threshold.
iii) LIN: Useful for unified labour compliance on the Shram Suvidha portal, but not an express PM-VBRY eligibility requirement; focus on EPFO code, PAN, ECR, UAN/Aadhaar.
iv) No incentives if pending EPFO inquiries or fraud FIRs: Establishments with unresolved inquiries under EPF Act sections or fraud-related FIRs are ineligible.
Illustration (Scale of Benefits)
Public reports and analysis estimate that hiring 100 additional employees can yield Rs 72 lakh over two years (non-manufacturing) and Rs 1.44 crore over four years (manufacturing), assuming all employees fall in the top slab, sustain qualifying service for at least 6 months per half-year, and no cessations. Use cautiously as illustrative; apply the official slab rules to actual EPF wages.
Action Points for CAs
i) Set up controls: Wage structuring (gross vs EPF), ECR accuracy, baseline documentation.
ii) Align payroll & HRIS: Tag first-timers, track service milestones (6/12 months), ensure financial literacy completion; integrate with payroll software for automated tracking.
iii) Tax planning: Recognize employer incentives as income; monitor any CBDT notifications for employee tax treatment.
iv) Audit readiness: Maintain evidence for cross-portal verification and be prepared for PM-VBRY monitoring/audit queries.
Key Dates
i) Benefits apply to jobs created: During 1st August 2025 to 31st July 2027.
ii) Portal & registration: PM-VBRY portal live; one-time employer registration; UAN generation (FAT via UMANG).
iii) ECR filing deadline for baseline: 31st January 2026.
Conclusion
To sum up, PM-VBRY is a key move to increase formal jobs in India with real benefits being given to both employees and employers and at the same time some strong ways of ensuring compliance through the EPFO are being integrated. CAs are instrumental in assisting their clients in checking eligibility, maintaining correct records, understanding tax implications, and minimizing risks. Firms can improve their employee count and budgeting by using this plan in the right way. Professionals should keep an eye on EPFO and MoLE notifications for any changes to stay updated with the latest guidelines from time to time.