Formal employment is the backbone of a sustainable economy. But for millions of first-time workers in India, the step from informal work to a formal payroll has always felt abstract, distant, or administratively daunting. The Employment Linked Incentive (ELI) Scheme changes that by making it financially rewarding for both employees and employers to formalise work.
With a budget outlay of Rs 99,446 crore and a two-year registration window from August 2025 to July 2027, the ELI Scheme is one of the largest employment-linked financial interventions India has seen. This guide breaks down exactly who qualifies, how much you can receive, and what you need to do to ensure you do not miss out.
Launched by the Ministry of Labour and Employment, the ELI Scheme is an incentive-based programme designed to push more workers into the formal economy through EPFO registration. It works by offering direct financial benefits to first-time employees entering the EPFO system and to employers who create and sustain new formal jobs.
The scheme is not a subsidy that replaces wages or contributions. It is an additional, time-bound benefit layered on top of the existing EPF structure to reduce the friction that keeps workers and businesses out of the formal sector.
India has a large informal workforce. Despite a growing economy, many workers are employed without EPF registration, leaving them without retirement savings, insurance, or social security coverage. The ELI Scheme addresses this by giving both sides of the employment relationship a financial reason to formalise.
For employers, especially MSMEs and startups, every new hire carries a cost. The Rs 3,000 per month per employee incentive under Part B directly offsets that cost for the first six months. For first-time employees, the one-month wage credit under Part A is a tangible welcome bonus for joining the formal economy.
- Must be a first-time member of EPFO with no prior UAN.
- Must activate their UAN during the scheme window (1 Aug 2025 to 31 Jul 2027).
- KYC must be complete: Aadhaar, PAN, and bank account linked and verified.
- Must be employed with an EPFO-registered employer who is compliant under the scheme.
- Must be registered with EPFO and compliant with ECR (Electronic Challan-cum-Return) filings.
- Must register under the ELI Scheme separately within the registration window.
- The new employee must be a net addition to headcount, not a replacement for an existing role.
- The new employee must be retained for a minimum of 6 months.
- The employee's monthly wages must fall within the scheme's eligible wage bracket.
Part A of the ELI Scheme is a direct financial benefit for workers joining the formal workforce for the first time. The government's goal is to make the act of entering the EPFO system immediately rewarding.
| Monthly EPF Wage | Incentive Amount | Payment Structure |
|---|---|---|
| Up to Rs 15,000 | Equal to 1 month's EPF wage | Paid in 2 instalments |
| Above Rs 15,000 | Capped at Rs 15,000 | Paid in 2 instalments |
The incentive is equivalent to one month's EPF wage, subject to a maximum of Rs 15,000. If your monthly salary is Rs 10,000, you receive Rs 10,000. If your salary is Rs 1,00,000, the incentive is still capped at Rs 15,000.
The incentive is not paid directly by the employer. It is credited by EPFO into the employee's verified bank account in two instalments after UAN activation and KYC verification. Employees do not need to file a separate application.
- Step 1: Activate your UAN on the EPFO member portal.
- Step 2: Complete your KYC by linking Aadhaar, PAN, and your bank account.
- Step 3: Ensure your employer has registered under the ELI Scheme and is filing ECR correctly.
- Step 4: EPFO processes the benefit automatically once all conditions are met.
Part B is designed for employers who bring new workers into formal employment and retain them. It functions like a job creation subsidy, directly reducing the cost of each new hire for the first six months.
| New Employees Added | Incentive Per Employee | Minimum Retention | Total Per Employee |
|---|---|---|---|
| Any eligible new hire | Up to Rs 3,000 per month | 6 months | Up to Rs 18,000 |
The incentive is paid monthly for each new employee retained for at least 6 months. If the employee leaves before 6 months, the employer is not eligible for the incentive for that employee.
- The new employee must be a net addition, not a replacement for a departing employee.
- The employee must be registered in EPFO under the employer's establishment.
- ECR filings must be accurate and timely throughout the retention period.
- The employer must register separately under the ELI Scheme within the registration window.
MSMEs and startups stand to benefit most from Part B, as it meaningfully offsets the compliance and salary cost of bringing first hires into the formal system. If you need help ensuring your EPF filings are accurate before registering, speak to a FinRight expert.
The single most common reason workers miss out on EPF benefits is an incomplete or unverified UAN. The ELI Scheme is no exception. Both Part A and Part B eligibility hinge entirely on the employee's UAN being active and KYC being fully verified.
If you are a first-time employee, start by activating your UAN. If your UAN exists but KYC is incomplete or mismatched, follow this step-by-step KYC update guide before your employer registers under the scheme.
KYC mismatches, especially name discrepancies between Aadhaar and EPFO records, are the most frequent cause of rejected benefits. Check your PF account status on CheckMyPF to identify and fix issues before they cost you your incentive.
| Phase | Duration / Condition |
|---|---|
| Scheme Registration (Employers) | 1 August 2025 to 31 July 2027 |
| Part A Disbursal (Employees) | In 2 instalments after UAN activation and KYC verification |
| Part B Incentive (Employers) | Monthly, for each new employee retained for 6 or more months |
| Maximum incentive per employee | Part A: Rs 15,000 | Part B: Rs 18,000 over 6 months |
| Common Issue | Who It Affects | How to Avoid It |
|---|---|---|
| UAN not activated before employer registration | Employee loses Part A benefit | Activate UAN immediately on joining |
| KYC mismatch (name, Aadhaar, bank) | Benefit transfer fails or is delayed | Verify KYC through EPFO portal before scheme window closes |
| Employer files incorrect ECR | Part B incentive disqualified for that month | Ensure payroll team files accurate ECR each month |
| New hire is actually replacing an exiting employee | Part B not payable | Document headcount properly; net addition must be genuine |
| Employee leaves before 6 months | Employer forfeits Part B for that employee | Build retention plans; do not hire solely for incentive |
| Employer does not register under ELI Scheme | Neither party receives benefits | Register separately within the window even if EPFO compliant |
First-time formal sector employees: If you are entering a formal job for the first time and have never had a UAN, do not delay. A two-instalment credit of up to Rs 15,000 is available simply for completing onboarding correctly.
MSMEs and manufacturing units: Smaller businesses that have historically avoided EPFO registration due to compliance costs now have a direct financial offset. The Rs 3,000 per month per employee incentive significantly reduces the net cost of formalising even a five-person operation.
Startups in early hiring phases: If you are scaling from 5 to 20 employees during 2025-27, the Part B incentive can generate lakhs in cost savings while building a compliant, EPF-registered workforce.
Labour-intensive sectors: Textile, logistics, retail, and hospitality businesses with high volumes of first-time hires will benefit disproportionately from both parts of the scheme.
Whether you are an employer setting up ECR filings for the first time, or a first-time employee trying to activate a UAN and complete KYC, FinRight's EPF experts can guide you through the process. Getting the groundwork right is the only way to ensure your ELI incentive is not delayed or rejected.
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- The Employment Linked Incentive (ELI) Scheme is a Government of India initiative under the Ministry of Labour and Employment with a total outlay of Rs 99,446 crore.
- Registration window: 1 August 2025 to 31 July 2027.
- Part A targets first-time EPFO members: one month's EPF wage as incentive, capped at Rs 15,000, paid in two instalments.
- Part B targets employers: up to Rs 3,000 per month per new employee retained for at least 6 months.
- Both parts require the employee's UAN to be active and KYC (Aadhaar, PAN, bank account) to be fully verified.
- The scheme does not alter existing EPF contributions; it offers additional incentives on top of the regular structure.
- Employees do not apply directly; benefits are routed through EPFO once UAN and KYC are verified.
- Employers must register under the scheme separately and maintain EPF compliance to claim Part B incentives.
"},"visual_summary":null,"faq_id":{"_id":"699320276bd959d84ebbf22e","faqs":[{"question":"Do I need to apply separately to claim the ELI incentive?","answer":"Employees do not apply individually. The Part A benefit is automatically routed by EPFO once UAN is activated and KYC is verified. Employers must register separately under the ELI Scheme and ensure their ECR filings are accurate.
","_id":"699320276bd959d84ebbf22f"},{"question":"Can someone who already has a UAN from a previous job get the Part A benefit?","answer":"No. Part A is only for first-time EPFO entrants.
","_id":"699320276bd959d84ebbf230"},{"question":"Can someone who already has a UAN from a previous job get the Part A benefit?","answer":"No. Part A is exclusively for first-time EPFO entrants who have never previously held a UAN. If you have a UAN from a prior job, even if the account is inactive, you do not qualify for Part A. You may still benefit indirectly if your new employer qualifies for Part B.
","_id":"699320276bd959d84ebbf231"},{"question":"Will the ELI Scheme change my regular PF contributions or account structure?","answer":"No. The ELI Scheme offers additional incentives layered on top of your existing EPF structure. Your regular contributions remain unchanged. The incentive is paid as a separate credit to your bank account (Part A) or to the employer (Part B).
","_id":"6a69174163115311a589ac3d"},{"question":"What happens if my employer is EPFO-registered but has not registered under the ELI Scheme?","answer":"Being EPFO-registered is a prerequisite, but not sufficient on its own. The employer must also register separately under the ELI Scheme within the window. If they do not, neither party can claim the ELI incentive, even if all other conditions are met. Employees should check this with their HR department proactively.
","_id":"6a69174163115311a589ac3e"},{"question":"What is the deadline to register under the ELI Scheme?","answer":"The registration window is 1 August 2025 to 31 July 2027. There is no indication that the window will be extended, so both parties should act early.
","_id":"6a69174163115311a589ac3f"},{"question":"Can employers claim Part B if an employee resigns before completing 6 months?","answer":"No. Part B requires the new employee to be retained for a minimum of 6 months. If an employee leaves before completing 6 months, the employer is not entitled to the incentive for that individual.
","_id":"6a69174163115311a589ac40"},{"question":"Are there any sectors specifically targeted by the ELI Scheme?","answer":"The scheme is open across sectors for EPFO-registered employers, but is designed to have the largest impact on labour-intensive industries such as textiles, manufacturing, logistics, retail, and hospitality, where a high volume of first-time formal workers are onboarded.
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