Setting up and running India payroll
India is one of the fastest-growing and potentially lucrative countries for foreign organizations looking to expand. With a population of well over 1 billion that will soon overtake that of China, a burgeoning education system, and a large number of highly qualified young people, India is an employer’s dream.
But hiring in India can be a complicated and difficult-to-navigate process. The country’s business and employment regulations can be confusing, and progress is often slow, so it is always a good idea to do thorough research and consult experts.
At Horizons, we specialize in helping organizations progress their expansion by providing an efficient system for India payroll outsourcing. Our services are perfect for any organization, whether you already have an entity registered in India or not.
Why choose the Horizons payroll solution?
If you have an entity
Have you already registered an entity in India? We can quickly and efficiently help you to establish and run your India payroll, giving you the option to bypass the complex regulations and compliance work.
This service is a good choice for large-scale businesses and those looking to build a long-term presence in India.
If you don’t have an entity
Are you yet to register an entity in India? We can provide our standard tailored payroll outsourcing, offering the additional use of our India PEO to act as your employer of record.
This service is ideal for any organization looking for a low-risk, flexible, and rapid route into the Indian marketplace.
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India payroll guide
What are the regulations for tax and withholdings in India?
India follows a progressive income tax model, where employees contribute more to tax as they earn more. The tax rates are set between 0% and 30%, depending on income level. Beyond this, employers may need to contribute to three separate government schemes for employees. These are the Employee Pension Scheme (for government employees), the Employee Provident Fund, and the Employee’s Deposit Linked Insurance fund.
Corporate tax for foreign companies is fixed at a general rate of 40%, and a lower rate of either 25% or 30% for domestic companies.
Pension (Provident Fund)
|
8.33% or 1,800 INR
|
Health insurance
|
4.75%
|
Total Employment Cost
|
13.08% |
Pension (Provident Fund)
|
12%
|
Healthcare
|
1.75%
|
Total Employee Cost
|
13.75% |
0 Rs – 2,50,000 Rs | 0% |
2,50,001 Rs – 5,00,000 Rs | 10% |
5,00,001 Rs – 10,00,000 Rs | 20% |
Over 10,00,000 Rs | 30% |
Entitlements and terminations in India
Any organization employing staff in India should be sure to provide a formal contract of employment detailing the entitlements and terminations terms of each employee, such as maternity leave, vacations, and sick leave.
For terminations in India, notice periods will generally be between 15 and 30 days, and employees of over five years are entitled to severance pay. The usual probation period is between three and six months, depending on the specific contract.
How to establish India payroll outsourcing
To establish India payroll outsourcing, you will need to gather various information about your potential employees. This information includes things like references from previous employers, identifying information, and so on. You should also produce a formal employment contract.
Additionally, you will need to register with the relevant authorities, such as the tax office, and for social security.
Manage payroll in India
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.