India’s Payroll Landscape 2025: Key Updates on ELI Scheme, SPREE & PAN-Aadhaar

Announced in Budget 2024-25 and approved by the Union Cabinet in July 2025, the Employment Linked Incentive (ELI) Scheme is a historic initiative by the Government of India to promote employment and formal workforce augmentation. With an ambitious goal of creating over 35 million jobs in only two years and a budget of INR 1 trillion, the programme supports employers who are enrolled with the Employees’ Provident Fund Organisation (EPFO) as well as new hires by providing dual incentives.

The Employees’ State Insurance Corporation (ESIC) has introduced the Scheme for Promotion of Registration of Employers and Employees (SPREE) 2025 to support this drive, while the Central Board of Direct Taxes (CBDT) has declared a significant reduction in the TDS/TCS deduction for inoperative PANs. When taken as a whole, these initiatives represent a revolutionary move towards economic sustainability and equitable employment.

What is the Employment Linked Incentive Scheme?

A recent effort by the government to increase job creation is the ELI Scheme. It was introduced in Budget 2024–2025 and provides employers and new hires who have registered with EPFO with financial incentives. The following are some brief details about the plan:

• The Union Cabinet gave its approval in July 2025.
• Covers positions created from August 1, 2025, to July 31, 2027.
• Has two sections: Part A is devoted to newcomers, while Part B is devoted to employers.

Part A: First-time employee incentive:

This part will provide a one-month Employees’ Provident Fund (EPF) wage up to INR 15,000 in two instalments to attract new employees who have enrolled with EPFO. Workers earning up to INR 100,000 will be qualified. After six months of employment, the first instalment will be due, and after twelve months of employment and the employee’s successful completion of a financial literacy course, the second instalment will be due. A portion of the incentive will be held in the deposit account’s savings instrument for a predetermined amount of time in order to promote saving, and the employee may take it out at a later time.

Under Part A of the Scheme, all payments to new hires will be made via the Aadhaar Bridge Payment System (ABPS) under the Direct Benefit Transfer mode. Employers will get payments under Part B straight into their PAN-linked accounts.

Part B: Encouragement for employers:

Generations of new jobs in all industries will be covered in this section, with a particular emphasis on manufacturing. Employees earning up to INR 100,000 will qualify for incentives from their employers. For every additional employee who has been employed continuously for at least six months, the government would provide employers with incentives of up to INR 3,000 per month for two years. Incentives for the manufacturing sector will also be available during the third and fourth years.

Businesses that are registered with EPFO will have to hire at least two more workers (for businesses with fewer than fifty employees) or five more workers (for businesses with fifty or more employees) continuously for at least six months.

What is the employer expected to do?

• Quickly finish the joining procedures by creating a UAN.
• Complete Aadhaar seeding for employees
• From the wage month of August 2025 onwards, make sure the gross salary is accurately stated in the Electronic Challan cum Return (ECR).

SPREE 2025: An ESIC one-time project:

The ESIC’s special effort, SPREE, provides a one-time opportunity from July 1 to December 31, 2025, for employers to register their factories or establishments and all qualified employees without having to pay past-due fees.

Eligibility:

• Businesses with 10 or more workers located in implemented areas that are not yet registered under the ESI Act, despite being eligible, include employers of factories or establishments (stores, hotels and restaurants, movie theatres, road motor transport establishments, newspaper establishments, private medical facilities, educational institutions, and contract and casual employees of municipal corporations).
• Companies that have failed to register all qualified workers under the ESI Act, including contract, temporary, and casual workers

Why should companies sign up for SPREE 2025?

Employers are not required to examine previous records or request payment for periods before the employer’s announced date of registration under this system. No obligation to make contributions during the previous time frame.

Benefits:

Employees (insured individuals) have access to the following as soon as their employer registers: 

• Medical attention for their families as well as themselves. 
• Cash benefits under the ESI Act of 1948 provide long-term security in the event of illness, pregnancy, injury, or death brought on by one’s job.

Conclusion:

Higher TDS/TCS would not be applied if PAN is connected to Aadhaar before 30 September 2025, and tax will be deducted or collected at the stipulated standard rates for monies paid or credited between 1 April 2024 and 31 July 2025.

If a PAN is linked to Aadhaar within two months after the end of the month in which the amount is paid or credited, then increased TDS/TCS will not apply for amounts received or credited on or after August 1, 2025.

India implemented significant payroll compliance improvements in 2025 to increase employment and reduce regulatory costs. HR executives now have a strategic chance to match government-sponsored incentives with workforce planning thanks to these developments. This makes India an excellent location for multinational corporations to effectively hire and expand their personnel.