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This will incentivise employers to recruit unemployed persons and also bring into books the informal employees.
To create new jobs, the government has decided to pay 8.33 per cent of wages to EPS on behalf of employers for workers during first three years of employment, and has given Rs 1,000 crore (Rs 10 billion) for the same.
The decision will be a big relief for employers as they are required to make mandatory contribution of 8.33 per cent of employees' basic wage towards employees' pension scheme.
"In order to incentivise creation of new jobs in the formal sector, the government will pay 8.33 per cent to EPS for all new employees enrolling in EPFO for the first three years of employment," Finance Minister Arun Jaitley announced in his Budget speech.
This will incentivise employers to recruit unemployed persons and also bring into books the informal employees, he said.
"In order to channelise this intervention towards target groups of semi-skilled and unskilled workers, the scheme will be applicable to those with the salary of up to Rs 15,000 per month. I made a provision of Rs 1,000 crore (Rs 10 billion) for this scheme," the minister said.
The Budget 2016-17 also proposed to bring in liberalised scope of employment generation incentives available under 80JJAA of the Income Tax Act.
The minister said that the deduction will be available not only to assesses deriving income from manufacturing of goods in factory but all assessee subject to statutory audit.
"Thus deduction of 30 per cent on the emoluments paid to such employees can be claimed for three years. This minimum number of days for which they should be employed during the years is proposed to be reduced from 300 to 240 days," he added.
However, no deduction will be allowed in respect of employees whose emoluments exceed Rs 25,000 per month and also for whom the government is paying the entire EPS contribution, the minister clarified.
The minister also proposed 100 model career centres by the end of 2016-17 and interlinking of state employment exchanges with National Career Service portal.
For creating more jobs in retail sector, the minister proposed to circulate model Shop and Establishment Bill which can be adopted by states on voluntary basis.
"Many more jobs are created provided the regulations are simplified. If shopping malls are kept open all seven days a week why not small and medium shops. These shops should be given a choice to remain open on all seven days on voluntary basis," he said. The interest of workers in terms of mandatory weekly holiday and number of working hours per day too have to be protected, he said.