Asia

India

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Employer of Record (EOR) in India

What you'll learn

  • Country Introduction
  • Employment Terms
  • Minimum Wage and Working Hours
  • Statutory Leave Laws
  • Termination Process
  • Additional Information
India Introduction

India is a country in south Asia with the 2nd-largest population in the world. It is bordered by Pakistan, China, Nepal, Bhutan, Bangladesh, and Myanmar. India is a multilingual and multi-ethnic country with a fast-growing major economy, and has a growing hub for IT services, with many companies choosing to find great talent in India.

Employment Terms

Types of Contracts

  • Fixed term (3 months minimum)
  • Indefinite
  • Part time Contracts (in India, there are very few laws governing part-time employment, leaving the terms of engagement and working hours to be negotiated between the employee and the client. Typically, part-time employees in India work between 20-30 hours per week).

Working Hours

The standard working hours in India is 48 hours per week. There are no statutory rules governing overtime, this should be agreed upon in the employment contract.

Employees should be given time off instead if they work more than the agreed number of hours per week in their contract.

Minimum Wage

The minimum wage varies with between each state, but can be no lower than INR 178 per day.

Probation Period

The typical probation period in India is between 3 and 6 months. Probation periods can be extended based on employee performance and there is no maximum time for probation specifically written into statutory employment rules.

Taxes & Local Employment Costs

Employee Taxes & Contributions

Employees pay the following contributions from their salary:

  • Income Tax
  • Employee Provident Fund

Income Tax

Employees can be taxed according to the “old” and “new” tax regimes, which the employee can choose between. Below are the income tax slabs (bands) for 2023:

  • INR 0 - 250,000 = 0%
  • INR 250,000 to 5,00,000 = 5%
  • INR 500,000 to 7,50,000 = 10%
  • INR 750,000 to 1,000,000 = 15%
  • INR 1,000,000 to 1,250,000 = 20%
  • INR 1,250,000 to 1,500,000 = 25%
  • Above INR 1,500,000 = 30%

Employee Provident Fund

Employees can choose to have their contributions based on one of the following:

  • Basic monthly salary (40% of gross salary)
  • A fixed amount of INR 15,000

Employees pay 12% of their chosen amount into the Employee Provident Fund. Employees with a salary above INR 15,000 can opt out of the Provident Fund by writing to their employer.

Employer Taxes & Contributions

Employers match the contribution paid by employees into the Employee Provident Fund, which is 12% of either their basic salary, or INR 15,000.

Additionally, employers must pay an administration fee of 1% (which is paid to the government department administering the fund), resulting in a total of 13%.

Types of Leave

Annual Leave

Up to a statutory maximum of 45 days, annual leave accrues at a rate of 1 day for every 21 days worked, while agreements between employer and employee sometimes set a lower threshold.

Sick Leave

Sick leave is accrued at the rate of 1 day per completed month of service.

Employees are entitled to 100% of their average basic salary when taking sick leave, which the employer pays.

Maternity Leave

Employees who have completed at least 80 days of services in the previous year are entitled to a minimum of 26 weeks of paid maternity leave, 8 of which must be taken before the birth of the child. For any children born after the first 2, maternity leave decreases to 12 weeks.

The employer is responsible for paying the employee 100% of their average basic salary. The employee is entitled to take additional unpaid leave beyond 26 weeks.

Paternity Leave

Government workers are entitled to 15 days of paid paternity leave, but there is no statutory paternity leave for other sectors.

Public Holidays

Public holidays in India vary by region, between 10-15 public holidays each year. Most employers offer some extra days of paid time off in their contracts. Additional holidays vary by state, however, it is up to the employer whether to give them this time off (employee or employer state).

Benefits

Summary

Employers in India can typically offer the following benefits as part of the benefits structure in India. (This applies to full-time employees, not contractors).

  • Private Pension
  • Dental & Vision Plan

Termination Process

Notice Period

During probation, no statutory minimum notice period applies. After 1 year of service, employees are entitled to 1 month of notice. Payment can be made in lieu of notice.

Statutory Payments

If an employee has completed 5 years of service with the same employer, they are entitled to a payment at termination called “gratuity”. Gratuity is calculated as 15 days’ wages per completed year of service.

Any rules governing the payout of leave at the end of employment must be defined in the employment contract as there are no statutory rules governing this.

Additional Information

The 13th month salary bonus is usually mandatory in India, paid as a portion of the annual salary before the end of the year. India introduced a new tax regime in recent years that eliminated many tax exemptions, but also offered lower tax rates. Employees can decide which system they want to follow.

OVERVIEW
Language(s):
English, Hindi, Regional Languages
Currency:
Indian Rupee (INR)
Capital City:
New Delhi
Population:
1.4 Billion
Cost of Living Rank:
135th
VAT (Valued Added Tax):
0-18% (GST)
Employer TaxES
13%
(estimated)

★  12% - Employee’s Provident Fund

★  1% - Administration Fee

Get Started in 3 Steps

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 180+ countries
How Remofirst employs in India

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in India get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in India are paid on time in Indian Rupee (INR). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in India, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.