Submit RFP

      The Union Cabinet in India issued a press release on 1 July 2025, approving the Employment Linked Incentive Scheme, officially named Pradhan Mantri Viksit Bharat Rozgar Yojana (“PMVBRY” or the “Scheme”).1 Subsequently, the Ministry of Labour and Employment, Government of India released guidelines for PMVBRY.2

      While the press release and guidelines outlined the broad objectives, the Government of India has now released the Standard Operating Procedure (SOP)3 for calculating incentives under PMVBRY. The SOP should be read together with the Scheme and earlier guidelines because the terms used in the SOP carry the same meaning as defined in the Scheme and guidelines.

      WHY THIS MATTERS

      The SOP provides clarity on the Scheme’s operational details—threshold checks, payment cycles, and eligibility conditions. By incorporating illustrations and case studies, it simplifies interpretation and addresses queries raised after the initial press release. This structured guidance fosters transparency, consistency, and ease of implementation, enabling employers to align with the Scheme’s objectives.

      Key Highlights

      Incentive Calculation – Part A of the Scheme

      • All “First-Timers” with gross monthly wages up to INR 100,000 at the time of joining the employer will be eligible for incentives, which will be payable in two instalments.
      • The first instalment will be a maximum of INR 7,500. It will be calculated as half of the average wage (reported for provident fund purpose) for six continuous completed months.
      • Instalment will be payable once employer has filed Electronic Challan-cum-Return (ECRs) along with contributions for six continuous months.
      • ECRs must be filed for all 12 months within a period of 18 months from date from which such employee joined the establishment for the employee to receive the second instalment.
      • The second instalment will be equal to the average of the first 12 completed months’ provident fund wage reduced by the amount of first instalment and restricted to a total incentive of INR 15,000.
      • If a first timer employee leaves an establishment and joins another establishment, he or she becomes ineligible to receive such incentive.

      Incentive Calculation – Part B of the Scheme

      • Employees Provident Fund Office (EPFO) will check the eligibility of the establishment for receiving the incentive based on the ECRs.
      • EPFO will identify the eligible employees who have joined the establishment during the Scheme registration period and compute the net additional employment for the month. Net additional employment is defined as any new employment generated during the scheme registration period over and above the baseline number.
      • EPFO will calculate the total monthly incentive under Part B by taking the average monthly incentive (total incentives divided by the number of eligible employees, as per the table below) and then multiply it by the net additional employment:    

      EPF Wage

      Incentive to employer

      Up to INR 10,000

      10 percent of wage up to INR 1,000

      More than INR 10,000 up to INR 20,000

      INR 2,000

      More than INR 20,000 up to INR 100,000

      INR 3,000

      • Employees joining during the registration period with gross wages more than INR 100,000 per month will be counted for net additional employment calculation, but incentives will only be paid for those joining during the registration period with gross wages up to INR 100,000 per month. 

      Establishments not eligible to receive incentives

      • Establishments with pending section 7A, 7B, and 7C inquiries under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
      • Establishments where the above-mentioned inquiries have been concluded but:
        • appeals are pending in a legal forum; or
        • orders have not been appealed but remain non-compliant.
      • Establishments against which First Information Report (FIR) has been filed by EPFO for fraudulent practices or activities.
      • Establishments with pending or adverse decisions on inquiries related to Atmanirbhar Bharat Rozgar Yojana or any other fraudulent practice/activity.

      Payment cycle

      • First Cycle: Incentive for the first six months is calculated monthly but paid as a lump sum after completion of six months, i.e., only employees completing the qualifying period within this cycle are included.
      • Subsequent Cycles: Subsequent payments are made monthly. At the end of each cycle, the total incentive is re-calculated, and the remaining amount is paid after deducting the previous payments.

      KPMG INSIGHTS

      As per KPMG in India:

      • The SOP provides much-needed clarity on operational aspects of the Scheme especially around threshold checks, payment cycles, and eligibility conditions. By incorporating illustrations and case studies, the SOP aims to simplify interpretation. This structured guidance addresses queries that emerged following the initial press release, thereby promoting transparency, consistency, and ease of compliance.
      • Employers may wish to consider the following steps:
        • Update Permanent Account Number (PAN), Goods and Services Tax (GST), and bank details on EPFO portal.
        • Facilitate timely filing of ECRs and Aadhaar authentication for employees.
        • Monitor baseline and threshold compliance to maximize benefits.
        • Make replacement hirings that satisfy the eligibility criteria and maximum incentive benefits.
      • Employers are also encouraged to review the SOP carefully and align their internal processes accordingly to maximize the benefits offered under the Scheme.

      If assignees and/or their programme managers have any questions or concerns about the scope of the update, its application and potential impacts, and appropriate next steps, they should consult with their qualified professional with KPMG in India (see the Contacts section).

      FOOTNOTES:

      1  For more information, see “Government approves employment-linked incentive schemes,” published on 3 July 2025 in Tax Flash News, a publication of KPMG Assurance and Consulting Services LLP.

      2  For more information see “Government of India issues guidelines on employment-linked incentive schemes,” published on 20 August 2025 in Tax Flash News, a publication of KPMG Assurance and Consulting Services LLP.

      3  See “SOPs issued by the Ministry of Labour and Employment, Government of India,” available at https://pmvbry.labour.gov.in/guidelines. 

      Contacts

      Parizad Sirwalla
      Parizad Sirwalla

      Partner and National Head – Tax, Global Mobility Services

      KPMG in India

      More Information

      pdf

      Download PDF

      Download and save the PDF version of this GMS Flash Alert.

      Download

      GMS Flash Alert reports on recent global mobility-themed developments from around the world to help you better understand what has changed and what that means for you.

      Subscribe now

      GMS Flash Alert

      Shedding light on evolving policies affecting international assignees and employers, helping make sense of it all.

      Visit GMS Flash Alert home
      alt
      Disclaimer

      * Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.

      The information contained in this newsletter was submitted by the KPMG International member firm in India.

      GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

      © 2025 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.