Payroll in India

Payroll in India

Local Information

Local Time (LIVE):2:31 AM
Local Currency:$1 = ₹75.14
Business Language(s):Hindi, English
Tax Year Dates:1st April– 31st March

 

As one of the fastest growing economies in the world, India offers a host of opportunities to businesses looking to expand overseas. To attract foreign investment, India have simplified entry options, introduced incentives, and overhauled the complicated tax regime to be replaced by a unified tax structure.

With a population of 1.3 billion people, India is predicted to be the fifth largest consumer market in the world in 2025. So, it’s no wonder businesses are looking to expand into the country. However, it doesn’t come without its difficulties.

If you’re looking to expand your business to India, there are a number of payroll considerations to think about to remain compliant. Fortunately, IRIS FMP are experts when it comes to international payroll and can help streamline the transition and beyond. Speak to one of the team and start your expansion today.

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Details correct at time of publication. You should not rely on these details without first seeking professional international advice.

Employer Must-Dos

In India, the following reports must be submitted to strict deadlines.

  • ITR 6 & ITR 7 Returns
  • Tax audit

Payroll Compliance in India

What are the regular working hours in India?

In India, adults over the age of 18 cannot work for more than 48 hours a week over a period of 4 weeks. Overtime is allowed in some instances depending on employment agreements; however, overtime cannot be forced and must be taken voluntarily.

Business hours vary in India, however in office environments, business hours are generally between 9am/11am and close around 6pm/8pm.

Working Overtime

Through Section 51 of the Factories Act, employees under contract are not supposed to work over the threshold of 48 hours per week. Furthermore, section 59 states that employees are not supposed to work over 9 hours a day. Any time worked that goes beyond 48 hours weekly, or 9 hours daily, then this is considered overtime. Employees can expect to receive twice the standard wage.

Vacation and illness

According to India’s ‘Factories Act’, employees that work at least 240 days a year get 1 day’s annual leave for every 20 days worked a year. Mine workers below the ground get 1 day for every 15 days work, whilst employees above ground get 1 day for every 20 days work. Those working in sales and news, get one month for every 11 months worked.

When it comes to sick leave sales and news-based employees are entitled to one-month sick leave for every 18 months’ work and apprentices are entitled to 15 days’ sick leave.

India’s Maternity Benefit

Amended in 2017, the Maternity (Amendment) Bill 2017 – which updates the Maternity Benefit Act, 1961 – extends maternity benefit to working women for up to 26 weeks paid leave, which protects their employment during this maternity leave. The eligibility for this benefit is available to those who work in establishments with 10 or more employees.

Sick Leave

State laws typically provide employees with 15 days of earned leave (EL) annually. Additional paid leave, employees can expect to benefit from 10 days of sick leave or medical leave (SL/ ML) and the possibility of a further 10 of casual leave (CL).

Termination

Unlike other countries, India does not have a standard process for terminating an employee. They may be terminated depending on the individual contract signed between employee and employer. However, there are still powerful labor laws in place, which must be adhered to as they supersede the contracts put in place by employers.

What tax considerations are there?

Employees in India are taxed on their income at a rate dependent on the ‘Income Tax Slab’ they fall into. Tax is deducted up to a rate of 30% for the highest earners. Non-residents must pay taxes on their Indian income only, whereas residents must pay tax on both their Indian and Foreign income.

At the time of publish, corporate income tax has been cut from 30% to 22% for existing companies in India, and 15% from 25% for new manufacturing companies.

Employees and employers must contribute towards social security in India – this is taxed at a rate of 12% of an employee’s income.

Find Out More About International Payroll

Download our international payroll guide for more information on international payroll and discover key considerations.

Download Our Guide

Payroll in Mumbai, New Delhi, and Bengaluru

Business opportunity in India’s biggest cities, and capital, can expect to enjoy a promising and growing marketplace, especially for talent acquisition. Parts of India like Bengaluru, which has been known as India’s answer to Silicon Valley, has been identified as a conducive business setting for trade and digitalisation. This is just one example of how technology and innovation alike are changing and accelerating the growth of India and emerging its cities and markets as a exciting spots to do business.

Payroll in Mumbai

IRIS FMP’s Indian Payroll Solutions

No matter if you need payroll Mumbai, New Delhi or Kolkata, IRIS FMP’s international experts are here to help. Our country experts can help with all aspects of Indian payroll, to make sure your staff are paid correctly, on time, and in compliance with India’s regulations. Our international services include but are not limited to:

  • Employment Contracts
  • Payroll Processing
  • Year End Income Tax Reconciliation
  • Regulatory Compliance
  • Benefits Administration
  • Multi-currency Salary Payments and Bonuses
  • Payroll Audit Services
  • Email Payslip Services
  • Pension Administration
  • Employee Local Tax Administration
  • Tax and Labor Consulting
  • Legal representation / Assistance
  • Handling of confidential Payroll

Maintain Compliance with Your Indian Payroll

Get your expansion off to a good start with IRIS FMP. Our experts are here to take the pain out of international payroll, and make sure your processes remain compliant and efficient.

Start your International Expansion Today