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India

Employer of Record India

Global Expansion's Employer of Record services provide the ability to quickly grow, manage, and pay international teams, without the need for a local entity. Our award-winning tech platform plus integrated support services make hiring, managing and paying your global workforce a breeze.

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Hiring in India

For companies that want to hire employees and run payroll in India without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR India). Our EOR services streamline and simplify the global hiring process. We handle the core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In India, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion, this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Need assistance hiring in India? Contact us about our International EOR Service

Labor Laws in India

Employment laws in India are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent. Get the details on India’s labor laws and India’s policies here.

Employment Contracts

There are four (4) types of employment contracts in India.

  1. Permanent contract

    Employees who work regular hours, either full-time or part-time, are given a permanent employment contract with no expiration date. It is in effect until either the employer or the employee chooses to terminate it.

  2. Fixed-term or open-ended contract

    Independent contractors receive fixed-term agreements that outline the expiration date, salary details, and rights of contractors in working for the employer.

  3. Casual employment contract

    This contract has a fixed number of work hours and an agreed end date.

  4. Zero-hour work contract

    Employees with this type of contract don't have a fixed number of work hours. They can also work for multiple employers simultaneously.

Employee Probation Period

Under Section 2 of the Model Standing Order, the probation period in India is usually 6 months. However, it can be extended by a period of 3 months at a time at the discretion of management.

Employees appointed for a permanent post are usually kept on probation for a period of six months to a year, during which the employee’s suitability for the job can be assessed. The law does not stipulate any maximum probation period.

Annual Leave in India

The Factories Act has provided annual/earned leave of 12 working days for all workers who have worked at least 240 days in a year. However, the duration of earned/annual leave differs for adult and young workers.

An adult worker is entitled to one day of earned leave for every 20 days of service while a young worker (under the age of 15 years) is entitled to one day of earned leave for every 15 days of service. Thus, the annual leave duration is:

  • 15 working days for adult workers
  • 20 working days for young workers

A worker is paid their full daily wages during the term of annual leave. Daily wages are the average of his total full-time earnings for the day on which he actually worked during the months immediately preceding his leave. Annual leave may be carried over, however, no more than 30 days can be carried over to the next year.

Holidays in India

Here is the full list of public holidays in India:

Republic Day 26th January
Good Friday 10th April
Ambedkar Jayanti 14th April
Eid al-Fitr 1st of Shawwal in the Islamic calendar
Eid al-Adha 10th of Dhu al-Hijjah
in the Islamic calendar
Indian Independence Day 15th August
Gandhi Jayanti 2nd October
Vijayadashami/Dussehra 10th of Ashvin
in the Hindu calendar
Prophet's Birthday/Mawlid 12th or 17th of Rabi' al-awwal in the Islamic calendar

Note*: Individual states and territories have additional holidays

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Maternity Leave India

The Maternity leave policy in India is a paid leave of absence from work that allows women employees the benefit of taking care of their newborn child, and at the same time retain their jobs.

In 2017, The Maternity leave Act was revised as The Maternity leave (Amendment) Bill 2017. The Act applies to women employees on a contract, permanent basis, or engaged with agencies. The Bill increased the right to paid maternity leave for working women from 12 weeks to 26 weeks.

Mothers are eligible for a total of twenty-six (26) calendar weeks of Maternity Leave. A mother may start her leave up to eight weeks before the expected delivery.

Paternity Leave India

Government Sector employees are entitled to 15 days of paternity leave.

Sick Leave in India

In India, employers must provide 6 days of sick leave a year. Some employers provide unpaid leave for long-term medical issues, but this is not mandatory.

Workers covered by the ‘Employee State Insurance Act’ are entitled to sick pay, but only a small proportion of the organized workforce is covered by social security legislation.

The amount of sick pay varies; it is around 70% of the average daily wage. The benefit is paid after a 2-day waiting period for up to 91 days in any two consecutive designated 6-month periods.

Working Hours in India

According to India's Labor Laws, a typical work week in India has 9 hours per day and 48 hours per week.

Overtime in India

Under Sec. 59 of the factories act 1948, where a worker works in a factory for more than 9 hours in any day or for more than 48 hours in any week. If a worker works in excess of a normal working day, they are entitled to overtime wage, which must be at least 200% of the normal wage rate.

Termination of Employment in India

There are several reasons why termination in India may occur. Below are some of the most common grounds for dismissal:

  • Charge of theft
  • Habitual negligence of duty
  • Disorderly behavior
  • Bribery
  • Lack of capability
  • Financial irregularities or subordination

In most cases the employee is entitled to warning prior to dismissal and a fair hearing. Company standing orders regulating dismissal must be approved by government authorities and typically severely restrict dismissal as result of disciplinary action.

Retrenchment

According to the The Industrial Dispute Act (IDA), 1947, "retrenchment means termination of service of a workman by an employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action.” For instance, termination (i.e. retrenchment) could be to reduce costs by reducing the workforce.

According to the IDA, retrenchment is not applicable in the following cases:

  • Termination due to a workman's voluntary retirement.
  • Retirement of a "workman" on reaching the age of superannuation.
  • Termination on the grounds of a workman's ill health.
  • Termination due to the non-renewal of a fixed-term contract on its expiry.

Dismissal is unfair if provisions for retrenchment or dismissal have not been properly followed, where the employee has not had an adequate opportunity to:

  • Defend him/herself.
  • During sickness.
  • Maternity leave.
  • In retribution for filing a complaint.
  • For taking part in peaceful trade union activities.
  • Discrimination.

For economic redundancies, in the absence of any agreement between the employer and dismissed worker, the employer should dismiss the worker who was the last person to be employed in the category.

Notice Period in India

In case of retrenchment: workers with no less than one year’s tenure are entitled to one month’s notice or payment in lieu of notice.

  • Establishments with 100 or more workmen are required to give workers three months’ notice or payment in lieu to workers with more than one year’s tenure.
  • The minimum notice period can be 30 days.

Severance in India

In accordance with the Payment of Gratuity Act 1972, a worker is entitled to a gratuity payment upon termination of his service after five years of continuous employment.

Amount of severance pay is equal to 15 days' wages for each completed year of service.

India Salary and Wages

Accurately estimate your costs when employing in India in 2023. Includes base salary, dependents, benefits, taxes, social contributions, and payroll costs. Monthly or yearly calculation period.

 

India Average Salary

There is no stipulated national Indian minimum wage. However, the Code on Wages Act 2019 allows state governments to establish their respective minimum wages but not lower than the floor-level wage of Indian rupee (INR) 178 (US$2.16) per day.

The average salary in India is approximately INR 387,500 annually ($4,802.60) or approximately INR 32,840 per month ($406.97).

The average wage in India for unskilled workers ranges from INR 2,250 to INR 70,000 ($27.92 to $868.60) monthly.

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India Salary Ranges

India lowest average wage

The lowest monthly salary in India is INR 8,080

India average wage

An average monthly salary in India is INR 31,900

India maximum average wage

The highest average monthly salary in India is around INR 143,000

This figure is not the actual maximum salary in India, but rather the highest average wage recorded.

India Salary Ranges Visualized

Lowest average wage
₹8,080
Average wage
₹31,900
Maximum average wage
₹143,000

India Salary Comparison

Regarding India’s wages, the higher your education, the higher your salary. A diploma holder or certified skilled worker earns 17% more than a high school graduate.

An employee with 2 to 5 years of experience earns 32% more than a worker without previous work experience. Meanwhile, someone working for 5 to 10 years can make 36% more.

13th Month Salary in India

13th month salary in India is applicable to every factory and to every establishment where 20 or more workers are employed on any day during an accounting year.

There are indications that government officials such as the police are entitled to the 13th month payment but there are calls to remove that benefit.

Income Tax in India

Residents are subject to taxes on their worldwide income. Persons who are residents but not ordinarily residents are taxed only on Indian-source income, income deemed to accrue or arise in India, income received in India or income received outside India arising from either a business controlled, or a profession established, in India.

Nonresidents are taxed only on Indian-source income and on income received, accruing or arising in India. Nonresidents may also be taxed on income deemed to accrue or arise in India through a business connection, through or from any asset or source of income in India, or through the transfer of a capital asset situated in India (including a share in a company incorporated in India).

The basic exemption limit for resident individuals who are 60 years of age or more but less than 80 years of age at any time during the tax year is INR 300,000. For resident individuals who are 80 years of age or more, it is INR 500,000.

Taxable Income (INR)

Tax Rate (%)

First 250,000 0
Next 250,000 5
Next 500,000 20
Above 1,000,000 30
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Alternate personal tax regime (APTR)

Effective 1 April 2020, an optional APTR, devoid of any deductions or exemptions, has been introduced with lower India tax rates that are spread across six income levels provided below:

Taxable income (INR)

Tax on column 1 (INR)

Tax on excess (%)

Over (column 1)

Not over

 

 
0 250,000 0 0
250,000 500,000 0 5
500,000 750,000 12,500 10
750,000 1,000,000 37,500 15
1,000,000 1,250,000 75,000 20
1,250,000 1,500,000 125,000 25
1,500,000   187.500 30

Under the APTR, the taxpayer is not eligible to claim certain exemptions/deductions/set-off of losses/carryforward of losses, such as:

  • Leave travel allowance.
  • House rent allowance.

Allowance under which incomes that do not form part of the total income of the Income-tax Act, except certain prescribed allowances.

  • Exemption of free food and beverages through vouchers provided by the employer.
  • Standard deduction of INR 50,000 and deduction for professional tax.
  • Deduction of interest payment on housing loans for self-occupied property and restrictions on set-off of loss from let out property.

All Chapter VIA deductions of the Income-tax Act available for expenditure by way of employee’s contribution to provident fund, children tuition fees, insurance premium, donations, medical premium, etc., except employer’s contribution to notified pension scheme, such as the National Pension Scheme (NPS).

The APTR option can be exercised for every financial year if the taxpayer has no business income. If the taxpayer has business income, the option, once exercised, will be mandatory for all subsequent financial years as well, with only a one-time change being permitted later.

Social Security in India

Social security in India is governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act).

The EPF Act contains the following three principal schemes:

  • Employees’ Provident Funds Scheme, 1952
  • Employees’ Pension Scheme, 1995
  • Employees’ Deposit-Linked Insurance, 1976

The EPF Act applies to the following establishments:

  • An establishment employing 20 or more persons engaged in a specified industry or an establishment or class of establishments notified by the central government
  • An establishment employing less than 20 persons that opts voluntarily to be covered by the EPF Act Covered employers must make a contribution toward the Employees’ Provident Funds Scheme and the Employees’ Pension Scheme for their eligible employees including International Workers.

EPF ACT Employer Requirements

Every covered employer is required to contribute 24% (12% each for the employer’s and the employee’s share) of the employee’s “monthly pay” (as defined) toward the Employees’ Provident Fund and Employees’ Pension Fund. The employer has the option to recover the employee’s share from the employee.

For employees who are existing members as of 1 September 2014, out of the employer’s 12% share of the contribution, 8.33% of monthly pay is allocated to the Employees’ Pension Fund. The balance of the contributions is deposited into the Employees’ Provident Fund.

For employees (including International Workers) who become members on or after 1 September 2014 and draw monthly pay exceeding INR15,000, the entire contribution is allocated to the Employees’ Provident Fund.

Local employees who draw a “monthly pay” of INR15,000 or more are excluded from the legislation unless they are already covered, but this exclusion does not apply to International Workers. Consequently, contributions are required for International Workers even if the monthly pay of the employee exceeds INR15,000.

The employer contributions are exempt from tax up to 12% of monthly pay. The aggregate employer contribution to the provident fund, national pension scheme, and superannuation fund in excess of INR 750,000, as well as any annual accretion on the excess contributions (in the form of dividends, interest, etc.), is a taxable perquisite for the employee.

Contribution

Group 1083

Social Security Contributions

Employer

Group 1083

12%

Employee

Group 1083

12%

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Deductible Expenses in India

Employment Expenses

A standard deduction of INR 50,000 is available while computing the taxable salary income.

Personal Deductions

A deduction from income is available of up to INR 150,000 for investments made in the tax year in certain eligible schemes in India, namely:

  • Life insurance premium on the life of oneself, spouse, or any child.
  • Contribution by employee to recognized provident fund.
  • Contribution to public provident fund/National Pension System (NPS).
  • Contribution to a tax plan of an Indian mutual fund.
  • Tuition fees of any university, college, school, or other educational institution in India for the purpose of full-time education of the individual, spouse, or any child.
  • Repayment of housing loan (principal), etc.

An additional deduction of up to INR 50,000 over and above the aforesaid limit of INR 150,000 will also be available on the individual’s contribution to a notified pension scheme of the government.

  • An additional deduction up to 10% (14% in case of contribution made by Central Government) of salary is available in respect of employer’s contribution to the NPS.
  • At the time of retirement in India, an individual can withdraw a lump-sum of up to 60% of the corpus fund and the balance of 40% is required to be invested in an annuity plan. Such withdrawal of up to 60% of the corpus fund is exempt from tax.

This applies to all subscribers. Further, nothing would be taxable if the amount is received by the nominee due to death. In case of partial withdrawal from the NPS by employees, 25% of their own contribution is exempt from tax in the year of withdrawal.

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Charitable Contributions

On donation of a certain amount to certain approved funds, charitable institutions, etc., an individual can claim a deduction of 50% to 100% of the amount donated, subject to restrictions provided by the law. A deduction for funds and charitable institutions in excess of INR 2,000 is to be allowed only if the donation is made otherwise than in cash.

Education Expenses

An individual can claim a deduction for interest paid on a loan taken for the purpose of his/her higher education or of his/her relative (spouse, children, or student for whom the individual is the legal guardian).

Medical Insurance Premium

A deduction is available for health insurance premiums or contributions made to an approved insurance scheme by an individual for ensuring the health of oneself, spouse, and dependent children. The deduction available is up to INR 25,000 (INR 50,000 where any of the insured persons is a senior citizen).

Further, an additional deduction of INR 25,000 is available for insuring one’s parents (INR 50,000 where either of the parents is a senior citizen). An amount of up to INR 5,000 spent on preventive health check-up of oneself, spouse, dependent children, and parents is also eligible for deduction within the overall limit provided above.

The medical expenditure incurred for senior citizens (60 years and above) will be deductible up to INR 50,000 if no payment has been made towards any existing health insurance policy for such individuals.

Deductible Expenses

Employment Expenses
  • A standard deduction of INR 50,000 is available while computing the taxable salary income.
Personal Deductions
  • A deduction from income is available of up to INR 150,000 for investments made in the tax year in certain eligible schemes in India
  • An additional deduction up to 10% (14% in case of contribution made by Central Government) of salary is available in respect of employer’s contribution to the NPS.
  • At the time of retirement, an individual can withdraw a lump-sum of up to 60% of the corpus fund and the balance of 40% is required to be invested in an annuity plan. Such withdrawal of up to 60% of the corpus fund is exempt from tax. 
Charitable Contributions
  • On donation of a certain amount to certain approved funds, charitable institutions, etc., an individual can claim a deduction of 50% to 100% of the amount donated, subject to restrictions provided by the law.
  • Deduction for funds and charitable institutions in excess of INR 2,000 is to be allowed only if the donation is made otherwise than in cash.
Education Expenses
  • An individual can claim a deduction for interest paid on a loan taken for the purpose of his/her higher education or of his/her relative (spouse, children, or student for whom the individual is the legal guardian).
Medical Insurance premium
  • The deduction available is up to INR 25,000 (INR 50,000 where any of the insured persons is a senior citizen).
  • Further, an additional deduction of INR 25,000 is available for insuring one’s parents (INR 50,000 where either of the parents is a senior citizen).
  • An amount of up to INR 5,000 spent on preventive health check-up of oneself, spouse, dependent children, and parents is also eligible for deduction within the overall limit provided above.
  • The medical expenditure incurred for senior citizens (60 years and above) will be deductible up to INR 50,000 if no payment has been made towards any existing health insurance policy for such individuals.

Immigration India

Learn about migration in India, including:

  • Immigration laws in India
  • Immigration requirements in India
  • Work visa requirements in India
  • Work permits and more
Need assistance hiring in India? Contact us about our International EOR Service

Temporary work permits and process

Employment visas are granted to foreign nationals who want to come to India for the purpose of employment. Employment visas are not granted for jobs for which a large number of qualified Indians are available to fill the position or for routine, ordinary, secretarial or clerical jobs.

An employment visa is granted to a foreign national if his or her salary exceeds INR 1,625,000 per year. However, the salary threshold of INR 1,625,000 (this limit includes all cash payments and perquisites that are taxed in India) does not apply to certain individuals, such as the following:

  • Ethnic cooks employed by foreign missions in India (this does not include ethnic cooks employed in commercial ventures)
  • Language teachers (other than English-language teachers) or translators (this will not include teachers employed to teach particular subjects in a foreign language)
  • Staff working for an embassy or high commission in India
  • Foreigners seeking honorary work for no salary with non-governmental organizations (NGOs) registered in the country
  • Foreign teaching faculty employed in the South Asian University and the Nalanda University
  • Circus artists

A change of employer in India is generally not permitted during the duration of the employment visa except for a change of employment from a registered holding company, joint venture or consortium, and its subsidiaries and vice versa, or between subsidiaries of a registered holding company, joint venture or consortium.

  • Change of employment is permitted at a senior level (for example, a managerial or a senior executive position) and/or at a skilled position (for example, a technical expert).
  • The intended legal entity and the location of work in India must be clearly specified when applying for an employment visa.

Business visa India

Under visa guidelines issued by the MHA, a business visa may be issued to a foreign national visiting India for the purpose of carrying activities in the following categories:

  • Conducting business-related activities in the very broad sense
  • In-house training for professional skills
  • Activities covered by the Global Initiative for Academic Networks
  • Actitivites related to travel, holidays and flight

Accompanied legal spouses and dependents of business visa holders can come to India with a Business Visa-Dependent Visa.

Business visas and employment visas may be issued only by the Indian missions from the country of origin or from the country of domicile of the foreign national, provided that the period of permanent residence of the foreign national in such country is at least two years.

Visa requirements India overview

Below outlines information about the India work visa, along with the visa policy in India, and all the ways to obtain a regular and/or work visa for India.

Employment Visa

Vector 75

Business Visa

Vector 75
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India VAT (Value Added Tax in India)

India introduced its Goods & Services Tax (GST) on 1 July 2017. The Indian GST is a combination of the CGST (Centre or federal governments) and SGST (state). The dual GST is levied with the sales price, collected by the vendor and then paid separately to the Centre and appropriate State(s).

India operates 4 GST rates. Certain goods and services are also zero rated and exempt. The key rates are listed below:

Higher Standard Rate

Group 1083

28%

Standard Rate 1 Group 1083 18%
Standard Rate 2 Group 1083 12%
Reduced rate Group 1083 5%
Zero rate Group 1083 0%

Withholding Tax in India

Dividends

Dividends paid to an Indian resident generally are subject to withholding tax at 10%; the rate is temporarily reduced to 7.5% for dividends paid as from 14 May 2020 through 31 March 2021.

  • As from 1 April 2020, dividends paid to a nonresident generally are subject to withholding tax at 20%.
  • The rate is 10% for dividends paid on foreign currency bonds or global depository receipts.
  • The withholding tax rate in India on dividends paid to nonresidents are subject to any applicable surcharge and cess and may be reduced under a tax treaty.
  • Prior to 1 April 2020, Indian companies were required to pay DDT at a rate of 15% (an effective rate of approximately 20.56%, including a 12% surcharge, and a 4% cess) on dividends declared, distributed, or paid to shareholders, and the dividend income was exempt from tax in the hands of the shareholders.

Interest

Interest paid to an Indian resident generally is subject to withholding tax at 10%; the rate is temporarily reduced to 7.5% for interest paid as from 14 May 2020 through 31 March 2021. Interest paid to a nonresident on a foreign currency borrowing or debt generally is subject to a 20% withholding tax, plus the applicable surcharge and cess.

A 5% withholding tax, plus the applicable surcharge and cess, applies to certain types of interest paid to a nonresident, including interest paid on specific borrowings made before 1 July 2023 in foreign currency and interest on investments made before 1 July 2023 by a foreign institutional investor or a qualified foreign investor in a rupee-denominated bond of an Indian company, or in a government security.

If the interest income derived by a nonresident does not fulfill certain prescribed conditions for concessional withholding tax rates, a withholding tax rate of 30% (for individuals and entities other than a foreign company) or 40% (for a foreign company), plus the applicable surcharge and cess, will apply.

Royalties

Royalties paid to an Indian resident generally are subject to withholding tax at 2% where the royalty is in the nature of consideration for the sale, distribution, or exhibition of cinematographic films; otherwise, the rate is 10%. The rates are temporarily reduced to 1.5% and 7.5%, respectively, for royalties paid as from 14 May 2020 through 31 March 2021

Royalties paid to a nonresident are subject to a 10% withholding tax, plus the applicable surcharge and cess. This rate may be reduced under tax treaty. If a treaty applies, but the nonresident does not have a PAN, tax must be withheld at the higher of the applicable tax treaty rate or 20%; however, this does not apply if the payments are in the nature of royalties and the foreign taxpayer furnishes the prescribed documents to the payer

Technical Service Fees

Technical service fees paid to an Indian resident generally are subject to withholding tax at 2%; the rate is temporarily reduced to 7.5% for fees paid as from 14 May 2020 through 31 March 2021.

Technical service fees paid to a nonresident are subject to a 10% withholding tax, plus the applicable surcharge and cess. The rate may be reduced under tax treaty.If a treaty applies, but the nonresident does not have a PAN, tax must be withheld at the higher of the applicable tax treaty rate or 20%; however, this does not apply if the payments are in the nature of technical service fees and the foreign taxpayer furnishes the prescribed documents to the payer

Withholding Tax

Rates

Types of Payments

Residents

Nonresidents

 

Company

Individual

Company

Individual

Dividends 10%/7.5% 10%/7.5% 10%/20% (plus surcharge and cess) 10%/20% (plus surcharge and cess)
Interest 10%/7.5% 10%/7.5% 5%/20%/40% (plus surcharge and cess) 5%/20%/30% (plus surcharge and cess)
Royalties 2%/1.5%/10%/7.5% 2%/1.5%/10%/7.5% 10%/20% (plus surcharge and cess) 10%/20% (plus surcharge and cess)
Fees for technical services 2%/1.5% 2%/1.5% 10%/20% (plus surcharge and cess) 10%/20% (plus surcharge and cess)

Mandatory Benefits in India

These are mandatory benefits as postulated by law, and include probationary period, annual leave, public holidays, India sick leave, maternity leave, paternity leave, overtime pay, notice period, severance pay in India, 13th month pay social security benefits.

Employers can provide financial aid for employees to obtain their health insurance in India or provide a plan directly. Employers in India must contribute a portion of each employee's salary to the Employees' Provident Fund, Employees' Pension Scheme, and Employees' Deposit Linked Insurance Scheme.

The Employees' Compensation Act requires employers to compensate employees in the event of death or disability due to workplace injuries.

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Mandatory Benefits overview

  • Probationary period

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Paternity Leave

  • Sick Leave

  • Overtime Pay

  • Notice Period

  • Severance Pay

  • 13th Month Pay

  • Social Security Benefits

India Payroll

Here’s what you need to know to run payroll in India. All income is taxed using a tax year from 1 April to 31 March. All taxpayers, including nonresidents, must file returns if their taxable income exceeds the exempt amount.

Resident and ordinarily resident individuals who have an asset (including a financial interest in an entity) located outside India, signing authority in an account outside India or income from any source outside India must file a return even if they do not have any taxable income.

In regard to paying taxes in India, the following taxpayers must file returns if any of the following conditions are met during the tax year:

  • The taxpayer’s deposits in one or more current accounts exceeds INR 10 million.
  • The taxpayer’s expenditure incurred on foreign travel exceeds INR200,000.
  • The taxpayer’s electricity expenditure exceeds INR100,000.
  • Other prescribed conditions are satisfied.

Income tax returns India

Income tax returns in India for salaried income must be filed by 31 July; returns for self-employment or business income must also be filed by 31 July or, if the accounts are subject to a tax audit, by 30 September. Taxpayers who are ordinarily resident in India and have additional disclosure requirements relating to foreign assets held by them for the purpose of investment are also required to file their returns electronically.

India does not have a concept of joint filing. As a result, married persons are taxed separately.

Taxpayers with employment income pay tax through tax withheld by employers from monthly salaries each pay period. Taxpayers with tax liability exceeding INR10,000 must make advance payments, after deducting credit for tax withheld, in four installments on 15 June, 15 September, 15 December and 15 March.

Nonresidents are subject to the same filing requirements as residents.

Payroll Accrual in India

Country Accruals Additional Information

12

Social security

23.07

Maternity

8.33

Christmas Bonus

7.4

Vacations

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Description

Indian social security is broadly governed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (PF Act) and schemes made thereunder, namely the Employees’ Provident Fund Scheme (EPF) and the Employees’ Pension Scheme (EPS). The Employees’ Provident Fund Organization (EPFO), a statutory body established by the government of India, administers social security regulations in India.

Currently, Indian social security regulations apply mandatorily to an establishment in India employing 20 or more persons or where an establishment voluntarily seeks registration with the authorities. Employees (including foreign nationals) working with an establishment in India to which the PF Act applies are liable to contribute towards the provident fund at the fixed rate of 12% of salary.

The employer is required to make the matching contribution and deposit both the employer’s and employee’s contributions (i.e., 24%) to the provident fund of the employee by the 15th day of the following month. Out of the employer’s contribution of 12%, an amount equal to 8.33% of salary (salary capped at INR 15,000 per month in respect of Indian employees) is allocated to the pension fund of the employee.

Payroll Accruals Additional information

Annual Leave

Vector 75

Maternity Leave

Vector 75

Paternity Leave

Vector 75

Sick Leave

Vector 75

Overtime

Vector 75

Severance

Vector 75

13th Month Pay

Vector 75

Social Security

Vector 75

Accrued Benefits in India

Christmas Bonus % 0%
Christmas Bonus Over Vacations % 0%
Severance per Year%

Employees are entitled to severance pay that equals 15 days of pay for each completed year of service (4.28% of annual salary)

4.28%
Of annual
salary
Vacations %

The annual leave duration is 15 working days (4.28% of annual salary)

4.28%
Of annual
salary
Notice %

Employees are entitled to 30 days of notice period for one year of service or more

8.24%
Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum

16.89%

Why use Global Expansion to hire in India

Establishing a branch office or subsidiary in India can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Indian labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Indian law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into India. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Indian Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

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