The Employees’ Provident Fund Organisation (EPFO) has issued a new circular regarding the Employment Linked Incentive (ELI) Scheme, emphasizing the importance of accurate wage reporting. The ELI Scheme is a government initiative designed to encourage employment by offering financial incentives to both employers and eligible employees.
Starting August 2025, employers must ensure that the ‘gross wages’ they report in the Electronic Challan-cum-Return (ECR) are correct for their employees to avail benefits under the scheme.
So, what exactly does this mean for employees and employers? Let’s break it down in simple terms.
What is the ELI Scheme and Why Does it Matter?
The Employment Linked Incentive (ELI) Scheme is a government initiative designed to encourage both employers and employees by offering financial incentives. The latest directive aims to streamline the process for availing benefits under the ELI scheme by ensuring the data submitted by employers is accurate.
Key Takeaways
- New Eligibility Cap: To be eligible for incentives under the ELI scheme, an employee’s gross monthly wage must not exceed ₹1,00,000. This wage ceiling ensures that the benefits are targeted effectively.
- Mandatory Gross Wage Reporting: Starting from August 2025, it will be mandatory for all employers to furnish accurate gross wages of their employees in the ECR.
- Accuracy is Key: The EPFO has explicitly urged all establishments to ensure the correct reporting of gross wages. This means any incorrect reporting in the ECR could result in loss of benefits for eligible employees and non-compliance risks for employers.
Impact on Employees
This circular is great news for employees. It creates a transparent and straightforward path to receiving financial incentives they are entitled to:
1. Clear Eligibility
With the ₹1,00,000 gross wage cap, employees can easily determine if they qualify for the scheme. If your gross monthly earnings are within this limit, you could be eligible for ELI benefits.
2. The Power of Accurate Data
If your gross wage is reported accurately in the ECR, the system will automatically identify you as eligible for the incentive. An error in reporting could lead to you missing out on these financial benefits, even if you qualify.
3. What You Can Do
Employees should review their payslips to understand their gross wage structure and discuss any discrepancies with their HR department to ensure correct data is being filed.
Impact on Employers
For employers, this circular highlights the critical importance of meticulous payroll management and ECR compliance. While it places a new responsibility on your shoulders, getting it right comes with significant advantages:
➔ The Compliance Mandate
The primary responsibility lies with the employer to update their payroll processes and ensure that the gross wage figure submitted in the monthly ECR is 100% accurate for every employee.
➔ Benefits of Correct Reporting
- Employee Morale: Timely and precise wage reporting improves employee satisfaction, retention, and overall morale.
- Employer Incentives: The ELI scheme also provides benefits to employers, and maintaining compliance is the first step to availing them.
- Smooth Operations: Accurate reporting prevents future complications, notices from the EPFO, and the administrative burden of rectifying past returns.
➔ Risks of Incorrect Reporting:
- Inaccurate ECR filings can lead to penalties and scrutiny from the EPFO.
- Employees may be wrongfully excluded from benefits, leading to grievances and disputes.
- Your organisation could be disqualified from participating in the EPFO ELI scheme.
How Pocket HRMS Ensures Seamless Compliance
Manually calculating gross wages and preparing ECR files for a large workforce is prone to human error. This is where modern HR technology like Pocket HRMS becomes a non-negotiable asset.
Pocket HRMS is designed to keep you ahead of the curve, and our system is already equipped to handle the new gross wage reporting requirements for the ELI scheme.
Here’s how Pocket HRMS ensures you are always compliant:
- Automated & Accurate Payroll: Our powerful smHRt® Payroll engine automates complex salary calculations, ensuring the ‘gross wage’ for each employee is computed accurately every single time, in line with statutory guidelines.
- Error-Free ECR Generation: Say goodbye to manual data entries as Pocket HRMS automatically generates ready-to-upload ECR files with the correct gross wage data populated in the required format. This reduces the risk of errors to virtually zero.
- Up-to-Date Statutory Compliance: We monitor all regulatory changes from bodies like the EPFO, ESI, and IT Department. Our payroll software is continuously updated to reflect the latest laws, so you don’t have to.
- Centralised Data & Reporting: With all employee and payroll data securely stored in one place, you can easily access, audit, and verify information for complete peace of mind.
- Automated Payslips Distribution: Your employees can access and download their payslips from the ESS portal and Pocket HRMS mobile app, helping them understand their salary structure, building trust and confidence.
Conclusion
The EPFO’s new circular on the ELI Scheme is a positive step towards ensuring employees receive their due benefits. By complying with these guidelines, businesses can help their employees access valuable incentives while maintaining regulatory peace of mind.
With the August 2025 deadline approaching, now is the perfect time to audit your systems and eliminate any room for error.
Don’t let manual processes put your business at risk. Switch to a smHRter, automated solution that guarantees compliance.
Ready to streamline your EPFO reporting and ensure seamless ELI scheme compliance?
Book a FREE demo of Pocket HRMS today!
