Capital City
New Delhi
Currency
Indian Rupee
(
₹
)
Timezone
GMT +5:30
Payroll Frequency
monthly
Tax Year
1 April - 31 March
Employer Tax
16.75%
Languages
Hindi
Capital City
New Delhi
Currency
Indian Rupee
(
₹
)
Timezone
GMT +5:30
Payroll Frequency
monthly
Tax Year
1 April - 31 March
Employer Tax
16.75%
Languages
Hindi
Minimum Wage: The statutory minimum wage in India is typically based on the national floor level minimum wage of 178 INR per day, which translates to approximately 22 INR per hour for an 8-hour workday, amounting to ~4,628 INR per month for a typical work month.
Working Hours: India's labor laws, including the Factories Act, 1948, and the Occupational Safety, Health, and Working Conditions Code, 2020, establish clear guidelines for working hours and overtime to protect employee welfare.
Payroll Taxes: In India, employers contribute about 5% in payroll taxes, which typically cover social security, health care, and other statutory benefits.
Average Salary: The average salary in India is approximately ₹4.
Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.
However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.
Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.
From compliant contracts to competitive benefits, Playroll’s EOR services keep you aligned with local labor laws and regulations, safeguarding your business, so you can focus on growth.
Book a DemoBusinesses can only operate smoothly in India if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in India below, to avoid any compliance issues.
In India, though written employment contracts are not mandatory, the Industrial Employment Act of 1946 requires documentation of specific formalities. Fixed-term contracts are allowed for short-term roles, but consecutive short-term contracts are not permitted. Employment agreements must include the following:
We can help you get a new employee started in India quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
The average salary in India in 2025 is approximately ₹4.2 lakh per year, or about ₹35,000 per month. Salaries vary significantly based on experience, industry, and location - entry-level positions in smaller towns may start around ₹15,000–₹20,000 per month, while experienced professionals in fields like IT, finance, and healthcare in metro cities like Bengaluru or Mumbai often earn substantially more. Tier-1 cities typically offer 20–30% higher salaries than smaller cities. Economic conditions such as persistent inflation and rising living costs are affecting real wage growth, though projected salary hikes of around 9–9.5% aim to maintain employees’ purchasing power.
India's labor laws, including the Factories Act, 1948, and the Occupational Safety, Health, and Working Conditions Code, 2020, establish clear guidelines for working hours and overtime to protect employee welfare. Standard working hours are capped at 9 hours per day and 48 hours per week, with any additional hours classified as overtime, which must be compensated at twice the regular wage rate.
Specific provisions exist for different industries and employee categories, such as managerial roles and certain sectors like healthcare and transportation. Employers are responsible for ensuring compliance with these regulations, including providing adequate rest periods and adhering to rules regarding night shifts and weekend work. Non-compliance can result in substantial penalties, including fines and imprisonment. Understanding and implementing these laws is vital for maintaining a lawful and productive work environment in India.
The minimum wage for employees in India is typically ₹178 per day, amounting to ₹5,340 per month. This serves as a baseline, and actual minimum wages are often higher, depending on regional economic conditions and specific job requirements.
For example, in Delhi, the minimum wage for unskilled workers is set at ₹18,456 per month as of August 2025, with higher wages for semi-skilled and skilled workers. Minimum wages are periodically reviewed and adjusted by state governments to account for inflation and the cost of living.
Employers must stay informed about the latest wage rates and state-specific labor laws to ensure compliance. Additionally, India is transitioning towards a living wage system by 2025, with assistance from the International Labour Organization (ILO), however, this has yet to be implemented. This shift aims to provide workers with an income sufficient to cover essential living expenses, including housing, food, and healthcare. Employers should monitor these regulatory changes closely to align with evolving labor laws and fair wage practices.
Setting up a local legal entity in India can be time-consuming and expensive. It often involves complex paperwork, local representation, banking, registrations, and ongoing tax filings, which isn't cost-effective if you're simply looking to hire a few employees or test the market. An Employer of Record removes these barriers entirely. Instead of spending months establishing a presence, an EOR lets you hire and onboard employees within days while staying fully compliant.
This enables faster market entry and greater agility. Whether you’re launching a pilot program, supporting a regional client, or adding specialized talent, you don't need to commit to long-term infrastructure to explore new business opportunities. The EOR handles local employment logistics while you retain day-to-day oversight of your hires. This model lets you scale up or down based on business needs, giving you more flexibility with less overhead and risk.
1 April - 31 March is the 12-month accounting period that businesses in India use for financial and tax reporting purposes.
The payroll cycle in India is usually monthly, with employees being paid on or after the 28th of each month.
The minimum wage for employees in India is typically based on the national floor level minimum wage of 178 INR per day, which translates to approximately 22 INR per hour for an 8-hour workday, amounting to ~4,628 INR per month for a typical work month.
Low-income workers in India are required to receive 13th-month salary, calculated as a percentage of their annual income and paid within eight months after the financial year concludes.
Employer payroll contributions are generally estimated at an additional 16.75% on top of the employee salary in India.
In India , the typical estimation for employee payroll contributions cost is around 18.08%.
In India, individual income tax is determined using progressive rates, ranging from 5% to 30%. There are two regimes available: the New Personal Tax Regime (NPTR) outlined below, and the old regime, allowing taxpayers to opt for either of the two.
In India, the retirement age - set between 58 and 60 years - is regulated by the Employees Provident Fund Act of 1952 and the Industrial Employment Act of 1946. Both employer and employee contribute 12% to the Employees Provident Fund Scheme (EPFS) and other funds, covering pension and deposit-linked insurance for the employee.
Employers in India must navigate several key payroll taxes, including Tax Deducted at Source (TDS) on salaries, Employees' Provident Fund (EPF) contributions, and, in certain states, professional tax. TDS requires employers to deduct income tax from employees' salaries based on applicable income slabs and remit it to the government.
The EPF mandates both employer and employee to contribute 12% of the employee's basic salary and dearness allowance towards retirement savings. Professional tax, where applicable, is a state-level tax deducted from employees' salaries, with rates varying by state. To ensure compliance with these obligations and streamline payroll processes, employers can utilize payroll management software, which helps consolidate payroll data and adhere to India's regulatory requirements.
One of the biggest risks in global hiring is payroll mismanagement. In India, even small errors in tax reporting or social contribution payments can trigger audits, fines, or reputational damage. For companies without in-country expertise, the risk isn’t worth taking. An Employer of Record removes this burden by owning the legal responsibility of payroll, executing every step with built-in compliance.
Key Ways an EOR Supports Payroll in India:
Make better business decisions by consolidating global payroll data, while seamlessly syncing your existing payroll operations.
Book a DemoIn India, work permits and visas are essential for employers hiring foreign nationals. The process involves submitting applications, providing supporting documentation, and meeting specific eligibility criteria. The primary visa types include the Employment Visa for skilled foreign workers, the Business Visa for business-related activities, the Project Visa for government-related projects, and the Intern Visa for internships. Employers play a crucial role in sponsoring and supporting these applications to ensure compliance with Indian labor laws and avoid penalties.
To obtain a work visa, applicants must provide documents such as a valid passport, employment contract, and proof of qualifications. Processing times vary, with Employment Visas typically requiring applicants to earn at least US$25,000 annually, with exceptions for ethnic cooks, language teachers (other than English), and embassy staff. Employers must also assist foreign workers with post-arrival registration at the Foreign Regional Registration Offices (FRRO). Foreign employees planning to stay for over 180 days must register with the FRRO within 14 days of their arrival in the country, though registration is not required for Employment Visas issued for 180 days or less. Understanding these requirements helps ensure a smooth hiring process and compliance with Indian regulations.
The annual leave entitlement in India is 15 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
In India, public holidays differ across states, typically outlined in employment contracts. However, many states mandate 10 public holidays annually, including paid time off for voting. Some are obligatory national holidays, while employers choose others from a broader list provided by the state. The prescribed holidays in India are as follows:
The employment contract in India mandates a minimum of 15 days of paid leave annually after completing 240 days of employment. Additional leave days and rules for carryover can be negotiated in the contract. Paid time off requests must be made 15 days in advance and require approval from the employer, works committee, and manager for work continuity.
Expectant mothers can take a 26-week maternity leave for their first two children, reduced to 12 weeks for subsequent births. During the six weeks post-birth or miscarriage, working is prohibited. Compensation is 100% of the regular salary, contingent on 80 days of employment within the 12 months preceding the due date.
Government workers are entitled to a 15-day paternity leave. There is no legally mandated paternity leave regulations for private sector employees.
Employees are generally entitled to 5 - 12 days of paid sick leave per year under state laws or employer policies, typically after a short service period. Sick leave is usually paid at the full daily wage, though requirements may vary by sector and employer. A medical certificate is often required for absences longer than 2–3 days, rather than a strict 48-hour rule. In the private sector, employers bear the cost, while provisions for factory and shop employees are governed by the respective Factories Act or Shops & Establishments Acts, which set minimum sick leave entitlements separately.
There is no statutory provision for shared parental leave in India.
In India, leave entitlements are governed by both central and state laws, leading to variations across regions and industries. Under the Factories Act of 1948, adult workers are entitled to one day of leave for every 20 days worked, totaling approximately 15 days of annual leave per year. These leaves are exclusive of public holidays, which are provided separately. Sick leave provisions typically range from 5 to 12 days per year, depending on state regulations, and often require a medical certificate for extended absences.
The Maternity Benefit Act grants female employees 26 weeks of paid maternity leave for the first two children, with reduced entitlements for subsequent children. For women who are having two or more surviving children, the duration of paid maternity leave is 12 weeks. Employers must ensure compliance with these regulations and clearly communicate leave policies to employees to foster a fair and supportive work environment.
Employers in India are required to provide mandatory benefits such as the Employees' Provident Fund, Employees' State Insurance, gratuity, and maternity leave to ensure the financial and social security of their employees.
To attract and retain top talent, many employers also offer supplemental benefits like private health insurance, additional retirement plans, performance-based incentives, and initiatives promoting work-life balance. Understanding and implementing these benefits, while adhering to legal requirements, is crucial for employers operating in India.
In India, benefits play a central role in attracting and retaining top talent. Employees often expect more than just a paycheck – they're looking for stability, healthcare coverage, pension plans, and other perks that show a company is invested in their well-being. If you're not familiar with what’s standard or required, you risk falling short. An Employer of Record helps bridge that gap by administering a locally competitive benefits package that meets both legal requirements and employee expectations.
An EOR doesn't just check boxes, they make sure your employees receive benefits that are timely, properly communicated, and well-managed from the moment they’re onboarded. From managing healthcare contributions to adjusting for regional differences in leave or bonus entitlements, an EOR acts as both a legal and operational partner. The result is a better employee experience, less administrative burden on your internal team, and greater confidence that your offer is aligned with what top candidates in India actually want and need.
In India, employment termination is governed by a robust legal framework designed to protect employees while allowing employers to manage workforce needs. Employers must adhere to notice period requirements, which vary depending on whether the employee is classified as a 'workman' under the Industrial Disputes Act, 1947.
Workmen are generally entitled to a notice period ranging from 30 to 90 days, while non-workmen follow the terms of their employment contracts. In cases of gross misconduct, termination can occur without notice, provided a fair inquiry is conducted. Severance pay, or retrenchment compensation, is mandatory for workmen with at least one year of continuous service, calculated at 15 days' average pay for each completed year of employment. Non-workmen may receive severance based on their contract or company policy.
The termination process includes reviewing the employment contract, conducting inquiries if needed, issuing proper notice, settling final dues, and providing necessary documentation such as termination letters and tax forms. Employees have legal protections against unfair dismissal, and those terminated without valid reason or due process may challenge their dismissal in labor courts. Employers handling redundancies must follow specific legal procedures, including prior notice, severance pay, and, in some cases, government approvals. Under the Industrial Relations Code, companies with up to 300 workers in the manufacturing sector can implement redundancies without government approval, an increase from the previous threshold of 100 workers.
Employers with at least 10 employees must notify the Ministry of Manpower within five working days if they make at least five employees redundant over a six-month period. Adhering to these legal obligations ensures compliance and minimizes risks of disputes.
In India, employment termination can be executed "at-will" or without cause; primarily determined by the terms of the employment agreement, provided that adequate notice and severance pay are given. Compliant termination include:
The minimum notice period for regular dismissal typically ranges from 30 days to 3 months, depending on the specific regulations in each state of India and factors such as length of service. For employees categorized as "workmen" under the Industrial Disputes Act, Section 25F mandates one month's notice for retrenchment. You can get in contact with us if you'd like more information on this!
Employees may be eligible for severance pay depending on the cause of termination:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
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As of January 1, 2025, India’s minimum wage rates are:
The average salary in India in 2025 is about ₹4.2 lakh annually (₹35,000 per month), with notable variations based on experience and region - metro areas and skilled sectors tend to offer higher pay.
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