Complete Guide to the ELI Incentive Scheme for Employers and Employees 2026–27
Welcome to our blog! This is your Complete Guide to the ELI Incentive Scheme for Employers and Employees 2026–27. The ELI (Employment Linked Incentive) Scheme is a government program that helps create more jobs, supports first-time workers, and encourages businesses to hire by offering financial benefits and incentives. The 2026–27 update makes it easier for everyone, with simpler eligibility rules, updated salary limits, better benefits, and a smoother application process. In this guide, we’ll explain everything you need to know — who can apply, what benefits are available, required documents, how to apply, and the key differences from last year’s scheme.
What Is the ELI Incentive Scheme 2026–27?
The ELI (Employment Linked Incentive) Scheme 2026–27 is a government-backed initiative introduced under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, and implemented by the EPFO. This scheme aims to promote formal employment by supporting new workers and reducing the financial burden on employers. Under the program, the government contributes to the EPF wages of eligible first-time employees, helping them build savings from the very beginning of their careers. It also ensures that workers entering the organized sector receive better financial protection and long-term retirement benefits.
For employers, the scheme offers hiring-based monetary incentives that reduce the cost of recruiting and onboarding new staff. By lowering PF-related expenses, companies are encouraged to hire more employees, expand their workforce, and provide stable job opportunities. The 2026–27 update brings clearer guidelines, higher coverage, and a smoother approval process, making the scheme more accessible to businesses of all sizes. Overall, the ELI Scheme plays an important role in boosting employment, strengthening the organized workforce, and supporting economic growth.
Latest Updates in the ELI Scheme for 2026–27
ELI Scheme for 2026–27 brings a few important changes to make the process smoother and more transparent for everyone. While the main benefits remain the same, the government has added better verification steps to ensure only eligible workers and genuine employers receive incentives. Employees must now have fully updated EPF KYC details, and employers need to maintain proper digital records of new hires. These updates help prevent errors, remove fake claims, and make the overall system more reliable and faster.
Key Highlights of the 2026–27 Updates
✔ Easier and faster online verification for EPF details
✔ Stricter KYC checks for employees and employers
✔ Better tracking of employee joining and continuity through EPFO
✔ Updated salary and benefit checks to avoid incorrect claims
✔ Faster online approval with automated document validation
✔ More transparency with digital attendance and salary proof uploads
Purpose of the ELI Scheme: Why the Government Introduced It
Encourage more job creation across India by lowering hiring costs for employers.
Support first-time workers entering the organized sector with EPF-backed benefits.
Reduce unemployment by motivating companies to hire more candidates.
Provide financial assistance to MSMEs and large establishments to expand their workforce.
Promote long-term job stability through continuous employment incentives.
Strengthen the organized workforce by bringing more employees under EPFO coverage.
Improve financial security for new employees with government-supported PF contributions.
Boost skill development by encouraging companies to train new hires.
Help businesses reduce onboarding and PF-related expenses.
Support overall economic growth by increasing formal employment across sectors.
Increase transparency in hiring through digital verification and EPF tracking.
Encourage companies to offer stable, compliant, and long-term employment.
Reduce informal or unregistered employment by bringing workers into the PF system.
Make it easier for small businesses to grow by lowering early-stage employee costs.
Encourage youth participation in the workforce with added financial benefits.
Who Can Apply for the ELI Incentive Scheme? (Employees + Employers)
| Employees | Employers |
|---|---|
| New workers joining an EPFO-registered company for the first time. | Companies registered under the EPFO Act. |
| Individuals with no previous EPF account or recent contributions. | Businesses hiring new employees or expanding their workforce. |
| Must fall within the eligible salary/wage limit under the scheme. | Must maintain proper digital salary records and submit timely EPF filings. |
| KYC details (Aadhaar, bank, etc.) must be verified in EPFO. | MSMEs, startups, and large companies complying with EPFO rules. |
| Must join during the official scheme period. | Must meet the minimum number of new hires required under the scheme. |
| Eligible for both full-time and part-time roles. | Ensure PF compliance for all eligible new employees. |
| Should not have been employed in a PF-covered organization in the last 12 months. | Can claim incentives only for employees who meet EPF criteria. |
| Must provide valid identity and employment documents. | Submit required documents, including salary and employment proof, to EPFO. |
| Employees from all eligible sectors can apply. | Track employee continuity to remain eligible for incentives. |
Step-by-Step Process to Claim ELI Incentives
| Employees | Employers |
|---|---|
| Step 1: Join an EPFO-registered company as a first-time employee. | Step 1: Ensure the company is EPFO-registered. |
| Step 2: Verify KYC details (Aadhaar, bank account, etc.) in EPFO. | Step 2: Hire the required number of additional employees: minimum 2 if staff <50, minimum 5 if staff ≥50. |
| Step 3: Complete 6 months of employment → receive first installment via DBT. | Step 3: Ensure newly hired employees remain on payroll for at least 6 months. |
| Step 4: Complete 12 months of employment and attend a financial literacy program → receive second installment. | Step 4: Maintain accurate digital records of salary and attendance for new hires. |
| Step 5: Savings portion is deposited into the designated account for long-term benefits. | Step 5: File accurate monthly EPFO returns reflecting new hires. |
| Step 6: Maintain continuous employment during the eligibility period to claim full benefits. | Step 6: Ensure all new employees have Aadhaar-verified KYC data and receive monthly incentives in the PAN-linked bank account. |
Salary Limits, Eligibility Criteria & Key Conditions
To benefit from the ELI Scheme 2026–27, both employees and employers need to meet certain conditions:
For Employees:
Monthly salary should be up to ₹1,00,000.
Must be a first-time EPFO employee.
Required to complete at least 6 to 12 months of service.
KYC details like Aadhaar and bank account must be verified in EPFO.
For Employers:
Must hire additional staff beyond current employees:
At least 2 new employees if the company has less than 50 staff.
At least 5 new employees if the company has 50 or more staff.
Must maintain accurate digital records and submit EPFO filings showing continuous employment.
Compliance with EPFO rules and timely submission of documents is required to claim incentives.
Benefits Under the ELI Scheme for Employers (Monthly Incentives)
Under the ELI Scheme, employers receive monthly financial incentives for each new employee hired. The incentive depends on the employee’s EPF wage and is credited directly to the employer’s PAN-linked bank account.
EPF Wage of New Employee
Up to ₹10,000
₹10,001 – ₹20,000
₹20,001 – ₹1,00,000
Employer Incentive
Up to ₹1,000 Per Month
₹2,000 Per Month
₹3,000 Per Month
Key Points:
Incentives are valid for 2 years for all sectors.
The manufacturing sector receives incentives for the 3rd and 4th years as well.
Incentive amounts are directly credited to the employer’s PAN-linked bank account.
Employers must ensure employees remain on the payroll to continue receiving the benefits.
Comparison With Previous Year’s Scheme (2025–26 vs 2026–27)
To help employers and employees quickly understand the changes, here’s a comparison of the ELI Scheme updates. While the core benefits remain the same, the 2026–27 version introduces stronger verification, faster processing, and improved coverage to make the scheme more efficient and transparent.
🔹 Key Improvements in 2026–27
Stronger verification to prevent fake employment claims.
Improved EPFO tracking using Aadhaar and e-KYC for better transparency.
Stricter rules for continuous service to ensure genuine employment.
Faster DBT processing so employees receive incentives quickly.
Incentive extension clarity for the manufacturing sector, covering 3rd and 4th years.
Simplified documentation for employers to reduce processing delays.
Wider coverage for various sectors, making more employees eligible.
Enhanced monitoring for compliance and fraud prevention.
🔹 What Remains the Same
Salary limits for employees remain unchanged.
Two-installment model for employee incentives (after 6 and 12 months).
Monthly employer incentives continue as before.
EPF-linked eligibility conditions remain in place for both employees and employers.
Eligibility is based on first-time EPF enrollment for employees.
Support for MSMEs and large establishments in hiring additional staff.
Get Expert Assistance for the ELI Incentive Scheme 2026–27
Are you looking to maximize the benefits of the ELI (Employment Linked Incentive) Scheme for 2026–27? Whether you are an employer aiming to hire additional staff or a first-time employee seeking EPF-linked incentives, LegalRaja is here to guide you through the entire process. Our team provides step-by-step assistance to help you understand eligibility, complete documentation, and claim incentives without any hassle.
Connect with us today to get personalized support for the ELI Scheme. Visit our website at www.legalraja.com or call us directly at +91 97263 65904 for expert guidance and quick assistance.
