India
Employer of Record (EOR) in India: Hire, Pay, and Stay Compliant
Hire employees in India without setting up a local entity. Meteors handles employment contracts, monthly payroll in INR, Tax Deducted at Source (TDS), Employees’ Provident Fund (EPF), Employee State Insurance (ESI), and full compliance with India’s labour codes. From $99/employee/month.
Quick facts for hiring in India
| Item | Detail |
|---|---|
| Capital | New Delhi |
| Currency | Indian Rupee (INR, ₹) |
| Official languages | Hindi, English (English used in all business and employment contracts) |
| Population | 1.45 billion (2024 est.) |
| Payroll cycle | Monthly (wages paid before the 7th of the following month) |
| Standard work week | Monday to Friday, 8 hours/day, 48 hours/week |
| Minimum wage | Varies by state. Delhi: ₹16,792/month. Karnataka: ₹12,385/month. Maharashtra: ₹13,472/month. |
| Income tax (new regime) | Progressive, 0% to 30% |
| Employer statutory cost | ~15.25% of salary (EPF 12% + ESI 3.25% for eligible employees) |
| GST | 18% standard rate |
| Meteors EOR fee | From $99/employee/month |
Why companies hire in India
India has the world’s largest working-age population. Over 600 million people are between 18 and 59. The country produces 1.5 million engineering graduates annually, more than any other nation.
Three things make India attractive for foreign employers.
Cost. A senior software engineer in Bangalore earns $1,500 to $3,000/month. The same role in San Francisco costs $12,000 to $20,000. India ranks among the most cost-effective hiring markets for English-speaking tech, finance, and operations talent.
Talent depth. India’s IT services sector employs over 5.4 million people. The country dominates in software development, data engineering, fintech, customer success, and back-office operations. Bangalore, Hyderabad, Pune, Chennai, Mumbai, and Delhi NCR each have deep, specialized talent ecosystems.
Time zone. India Standard Time (IST, UTC+5:30) overlaps with European business hours in the morning and APAC hours in the afternoon. Teams in Bangalore can collaborate with London from 1:30 PM IST and with Singapore until 6:30 PM IST.
The challenge: India’s employment law operates at both Union (central) and state levels. The Shops and Establishments Act varies across 28 states and 8 Union territories. You need to register with the Ministry of Corporate Affairs, the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC), and the relevant state’s Shop and Establishment authority. That process takes 3 to 6 months and costs $5,000 to $10,000.
An Employer of Record (EOR) in India removes all of that.
What is an Employer of Record (EOR) in India?
An Employer of Record in India is a company that legally employs workers on your behalf. You manage the person’s day-to-day work. The EOR handles everything else: compliant employment contracts, monthly payroll in INR, tax withholding (TDS), statutory contributions (EPF, ESI, gratuity), and employer registration with Indian authorities.
Meteors operates through its own entity in India. We use in-house teams (not third-party partners) to manage your employees. Every payroll cycle is processed by licensed Chartered Accountants. Every employment contract is reviewed against India’s four labour codes and the applicable state-level Shops and Establishments Act.
Here’s how responsibility splits between you and Meteors:
| You | Meteors |
|---|---|
| Find and select the employee | Draft a compliant employment contract under Indian labour law |
| Define the role, responsibilities, and CTC structure | Register the employee with EPFO, ESIC, and state authorities |
| Manage daily work, tasks, and performance | Process monthly payroll in INR with correct TDS withholding |
| Decide on promotions, raises, termination | Calculate and remit EPF, ESI, Professional Tax, and gratuity accrual |
| Set working hours and expectations | File employer returns with the Income Tax Department |
| Approve leave requests | Handle onboarding, offboarding, and full-and-final settlement |
Ready to hire your first employee in India?
Send us the role, city, and CTC. We’ll return the full cost within 24 hours.
How Meteors EOR works in India
You share the role details. We send the full cost within 24 hours.
Tell us the country (India), the role, the city, and the monthly CTC. We’ll calculate the total employment cost: gross salary, employer contributions (EPF at 12%, ESI at 3.25% where applicable), gratuity accrual, Professional Tax, and our EOR fee. You’ll get a single number. No hidden charges.
We draft a compliant contract. Your hire signs.
Our Meteors Compliance-First EOR Framework generates employment contracts mapped to the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020, and the applicable state-level Shops and Establishments Act. Every contract covers:
- Designation and job description
- Cost to Company (CTC) structure with salary breakup (basic, HRA, special allowance, statutory components)
- Working hours (8 hours/day, 48 hours/week max)
- Leave entitlements (earned leave, casual leave, sick leave, public holidays)
- Probation period (3 to 6 months, standard practice)
- Notice period (30 to 90 days depending on role seniority)
- Termination conditions, retrenchment compensation, and severance calculations
- IP assignment and confidentiality obligations
Contracts are drafted in English. We send the contract within 3 to 5 business days of receiving all information.
Payroll runs. Every month. On time.
Our Meteors Payroll Accuracy System processes monthly payroll in Indian Rupees. Here’s what happens each cycle:
- CTC-to-net salary calculation with full salary breakup
- Income tax withholding (TDS) per the employee’s applicable slab under the new or old tax regime
- EPF contribution (employer 12% + employee 12% of basic wage, capped at ₹15,000 base)
- ESI contribution (employer 3.25% + employee 0.75% for employees earning up to ₹21,000/month gross)
- Professional Tax deduction (varies by state)
- Gratuity accrual at 4.81% of basic salary
- Net salary transfer to the employee’s bank account
- Contribution remittance to EPFO and ESIC before the 15th of the following month
- TDS deposit with the Income Tax Department by the 7th of the following month
- Payslip generation and record keeping per labour code requirements
You get one invoice in USD, EUR, or GBP. The invoice shows the employee’s CTC, employer-side statutory costs, and the Meteors service fee. One line item. One payment.
Employment law in India: what your EOR handles
Working hours and overtime
The Occupational Safety, Health and Working Conditions Code 2020 sets the standard at 8 hours per day and 48 hours per week. State-level Shops and Establishments Acts may set different limits. Overtime pay is twice the normal wage rate.
Meteors tracks working hours per the applicable state act and calculates overtime accordingly.
Probation periods
Probation isn’t mandated by a single national law, but it’s standard practice. Most companies set probation at 3 to 6 months depending on role seniority. During probation, notice periods are typically shorter (15 to 30 days). After probation, the employee is confirmed with full statutory protections.
Leave entitlements
| Leave type | Entitlement |
|---|---|
| Earned (annual) leave | 15 to 18 days per year (varies by state; Karnataka: 1 day per 20 working days) |
| Casual leave | 12 days per year (varies by state) |
| Sick leave | 12 days per year (varies by state) |
| Public holidays | 10 to 12 days per year (3 national holidays mandatory; rest selected by employer) |
| Maternity leave | 26 weeks for first two children (full pay, under Maternity Benefit Act 1961) |
| Paternity leave | No national statutory requirement (common practice: 5 to 15 days) |
State-specific acts apply. Karnataka, Maharashtra, Tamil Nadu, Delhi, and Telangana each have different leave rules. Meteors applies the correct state-level requirements based on where your employee is located.
Employees’ Provident Fund (EPF)
EPF is mandatory for establishments with 20 or more employees. Both employer and employee contribute 12% of basic wages (plus dearness allowance, if applicable). The employer’s 12% is split: 3.67% goes to the EPF account, and 8.33% goes to the Employees’ Pension Scheme (EPS), capped at a monthly wage ceiling of ₹15,000.
Contributions must be deposited by the 15th of the following month. Late deposits attract daily penalties under the EPF and Miscellaneous Provisions Act 1952.
Meteors handles EPF registration, enrollment, monthly contribution calculation, and remittance to the EPFO.
Employee State Insurance (ESI)
ESI is mandatory for employees earning up to ₹21,000/month gross. Employer contributes 3.25% of gross wages. Employee contributes 0.75%. ESI provides medical benefits, sickness benefits, maternity benefits, and disability coverage.
For employees above the ESI wage threshold, Meteors arranges group health insurance as a standard benefit.
Gratuity
Gratuity is payable to any employee who completes 5 or more years of continuous service, under the Payment of Gratuity Act 1972. Calculation: 15 days’ wages for every completed year of service (based on the last drawn salary, with each month counted as 26 working days).
The four new labour codes propose pro-rata gratuity for fixed-term employees regardless of tenure. As these provisions are implemented, Meteors updates employment terms accordingly.
Meteors builds gratuity accrual (4.81% of basic salary) into your employment cost structure from day one.
Professional Tax
Professional Tax is a state-level tax on employment income. It’s deducted from the employee’s salary. Maximum: ₹2,500 per year. Not all states levy it. States that do: Maharashtra, Karnataka, West Bengal, Tamil Nadu, Telangana, Andhra Pradesh, Gujarat, and others.
Meteors handles Professional Tax registration and monthly deduction based on the employee’s state of residence.
Income tax in India
India operates a progressive personal income tax system administered by the Income Tax Department under the Central Board of Direct Taxes (CBDT). The new tax regime (under Section 115BAC of the Income Tax Act) is the default regime for FY 2025-26.
Tax rates under the new regime (FY 2025-26)
| Annual taxable income (INR) | Tax rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000 for salaried employees under the new regime. Section 87A rebate: taxable income up to ₹12,00,000 is effectively tax-free (rebate of up to ₹60,000).
Health and education cess: 4% on total tax liability. Surcharge: 10% for income above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore (new regime cap). Non-residents: taxed at the same slab rates, with no basic exemption relaxation for senior citizens.
Meteors handles TDS calculation every month based on each employee’s applicable income tax slab and deposits TDS with the Income Tax Department by the 7th of the following month.
Termination and offboarding in India
India prohibits at-will termination. Ending an employment relationship requires documented grounds, written warnings, and adherence to proper process. Companies that skip these steps face labour court disputes and potential reinstatement orders.
Notice periods
| Role level | Notice period |
|---|---|
| During probation | 15 to 30 days (or as per contract) |
| Junior/mid-level (post-confirmation) | 30 days |
| Senior/leadership roles | 60 to 90 days |
| Payment in lieu of notice | Allowed with mutual agreement |
Severance and retrenchment compensation
Retrenchment compensation applies to ‘workmen’ (as defined under the Industrial Disputes Act 1947 and the Industrial Relations Code 2020): 15 days’ average pay for every completed year of continuous service.
Gratuity at exit
Gratuity is payable after 5 years of continuous service. Calculation: 15 days’ wages per completed year of service. For an employee earning ₹50,000/month basic salary with 6 years of service, gratuity equals approximately ₹1,73,077.
Full and final settlement
Meteors manages the full termination process: notice period calculation, retrenchment compensation (if applicable), gratuity settlement, leave encashment, final salary, TDS on final payment, and de-registration from statutory schemes.
Meteors vs setting up an India entity
| Factor | Meteors EOR | Local entity |
|---|---|---|
| Setup cost | $0 (from $99/employee/month) | $5,000 to $10,000 (MCA registration, PAN/TAN, EPFO, ESIC, state registrations) |
| Time to first hire | 3 to 7 days | 3 to 6 months (MCA incorporation alone takes 45 to 60 days) |
| Ongoing compliance | Handled by Meteors (in-house team in India) | You hire local HR, legal, accounting staff or multiple vendors |
| Legal liability | Meteors carries employer liability | Your entity carries all liability |
| Monthly admin | One invoice in USD, EUR, or GBP | Manage payroll, TDS, EPF, ESI, Professional Tax, gratuity, state-level filings yourself |
| Exit flexibility | Offboard employees, exit market, no wind-down | Winding down an Indian entity is a multi-month legal process with regulatory filings and tax clearances |
An EOR makes sense when you’re hiring 1 to 50 employees, testing the Indian market, or need someone working within days. Entity setup makes sense when you have a large permanent team (50+ employees) and the operational scale to justify the infrastructure.
EOR vs PEO in India: which do you need?
An Employer of Record (EOR) and a Professional Employer Organization (PEO) both help foreign companies manage employees. The difference is structural.
EOR: The EOR is the legal employer. You don’t need a local entity in India. The EOR handles all employment obligations: contracts, payroll, TDS, EPF, ESI, and compliance. You manage the employee’s daily work.
PEO: A PEO is a co-employment arrangement. You need your own registered entity in India. The PEO handles HR and payroll administration, but legal employment liability stays with your entity.
For most foreign companies hiring in India without an existing subsidiary, EOR is the right model. PEO only makes sense if you already have a registered Indian entity and want to outsource HR operations.
Meteors operates as an Employer of Record in India. We’re the legal employer. You don’t need an entity.
How to choose the best Employer of Record provider in India
Not all EOR providers in India work the same way. Some own their entity. Some use third-party partners. Some process payroll in-house. Some outsource it. Here’s what to check before you sign.
Own entity vs third-party network. Ask whether the EOR operates through its own registered entity in India or subcontracts to a local partner. Third-party arrangements add a layer of cost, create communication delays, and reduce your control over employee experience. Meteors operates through our own entity.
In-house payroll vs outsourced. India’s payroll is complex: CTC breakup, TDS calculation across two tax regimes, EPF/ESI contribution caps, Professional Tax by state, gratuity accrual. Ask who actually runs payroll. If it’s outsourced to a third party, errors get harder to trace. Meteors processes every payroll cycle with in-house licensed Chartered Accountants.
Multi-state coverage. India has 28 states and 8 Union territories, each with its own Shops and Establishments Act. If you’re hiring across Bangalore, Mumbai, and Hyderabad, your EOR needs to handle three separate state registrations and three sets of compliance rules. Not all providers do this well.
Clear pricing. Some EOR providers quote a low monthly fee but add charges for onboarding, offboarding, contract amendments, or currency conversion. Ask for a complete cost breakdown upfront. Meteors charges a flat fee per employee per month. No onboarding fees. No hidden charges.
Termination support. India prohibits at-will termination. The offboarding process involves notice period calculations, retrenchment compensation, gratuity settlement, leave encashment, and full-and-final settlement. Ask your EOR exactly how they handle terminations and what’s included in the fee.
Compare Meteors against your current shortlist
We’ll walk you through our entity, our payroll team, and our full fee structure.
Mistakes foreign employers make when hiring in India
1. Ignoring state-level Shops and Establishments Act differences
The Shops and Establishments Act is not a single national law. Every state has its own version with different rules on working hours, leave entitlements, overtime, and record-keeping. A company hiring across Bangalore, Mumbai, and Hyderabad is subject to three separate state acts simultaneously. Foreign employers often discover this only after a compliance audit.
2. Misclassifying employees as contractors
Indian labour law is strict about who qualifies as an independent contractor. If someone works exclusively for your company, follows your direction, and operates on your schedule, they’re classified as an employee regardless of what the contract says. Courts look at the substance of the relationship, not the contract label. Misclassification triggers backdated EPF and ESI contributions, interest, and penalties.
3. Structuring CTC without understanding the ‘wages’ definition
The Code on Wages 2019 defines ‘wages’ in a way that affects how basic pay is calculated relative to allowances. If basic pay falls below 50% of CTC, statutory contributions (EPF, gratuity) are calculated on a higher base. Foreign employers used to simpler salary structures often get this wrong and face under-contribution penalties.
4. Skipping gratuity accrual from day one
Gratuity is payable after 5 years, but the liability accrues from the start of employment. If you don’t accrue from the beginning, you face a lump-sum liability when the employee completes 5 years or when you terminate. At 4.81% of basic salary, this adds up fast.
5. Assuming a single national contract works across all states
A generic national contract that ignores state-specific rules on working hours, overtime, leave, and notice periods isn’t just incomplete. It’s unenforceable in the ways that matter most. You need contracts that reflect the specific Shops and Establishments Act of the state where your employee is located.
Who hires in India through Meteors?
European SaaS companies building engineering teams. Mid-sized software companies in Germany, the Netherlands, and the UK hire backend developers, QA engineers, and data engineers in Bangalore, Hyderabad, and Pune. A role that takes 3 to 4 months to fill in Berlin or Amsterdam often fills in weeks in India.
US and UK tech companies scaling operations and customer success. Series A to Series C companies building 10 to 30 person operations, customer support, or customer success teams in India. They need compliant employment structures, not contractor arrangements that create classification risk.
Fintech and healthtech companies hiring specialized roles. Companies at the 50 to 300 employee stage hiring compliance officers, data analysts, and finance specialists in Mumbai and Delhi NCR as part of broader international expansion.
SMEs testing market entry before committing to an entity. Companies from the DACH region, UK, or US hiring a local sales or business development lead to test the Indian market before committing to a subsidiary with its 45 to 60 day incorporation timeline and ongoing audit obligations.
National and public holidays in India (2026)
India has 3 mandatory national holidays. The remaining public holidays vary by state and employer selection.
| Date | Holiday | Type |
|---|---|---|
| January 15 | Makara Sankranti | Regional |
| January 26 | Republic Day | National (mandatory) |
| March 4 | Holi | Gazetted |
| April 3 | Good Friday | Gazetted |
| May 1 | May Day | State-specific |
| May 27 | Eid ul-Adha | Gazetted |
| August 15 | Independence Day | National (mandatory) |
| October 2 | Gandhi Jayanti | National (mandatory) |
| October 21 | Dussehra (Vijay Dashami) | Gazetted |
| November 10 | Deepavali | Gazetted |
| December 25 | Christmas | Gazetted |
Employers typically provide 10 to 12 paid holidays per year. The three national holidays (Republic Day, Independence Day, Gandhi Jayanti) are mandatory for all employers. The remaining holidays are selected based on the state and company policy. Meteors manages holiday selection and leave tracking per the applicable state act.
Get your free India cost breakdown
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FAQs: Employer of Record in India
An Employer of Record in India is a company that legally employs workers on your behalf. You manage daily work. The EOR handles employment contracts, payroll in INR, TDS withholding, EPF and ESI contributions, and compliance with India’s labour codes and state-level Shops and Establishments Acts. You don’t need a local entity to hire.
Meteors EOR fees start at $99/employee/month. The total cost includes the employee’s CTC, employer statutory contributions (EPF at 12%, ESI at 3.25% for eligible employees, gratuity accrual, Professional Tax), and the Meteors fee. We send a complete cost breakdown before you commit. No setup fees. No hidden charges.
3 to 7 business days from signed agreement to employee start date. We draft compliant contracts within 3 to 5 business days after receiving all required information. Compare that to 3 to 6 months for entity setup, with MCA incorporation alone taking 45 to 60 days.
No. Meteors acts as the legal employer in India through our own registered entity. We handle PAN/TAN registration, EPFO and ESIC enrollment, state-level Shop and Establishment registration, and all employer obligations. You don’t need to incorporate, open a bank account, or appoint a local director.
India prohibits at-will termination. Meteors handles the full process: documented grounds, notice period (30 to 90 days depending on role), retrenchment compensation for eligible employees (15 days’ average pay per completed year), gratuity settlement after 5 years, leave encashment, and full-and-final settlement with correct TDS.
An Employer of Record (EOR) is the legal employer in India. You don’t need your own entity. The EOR handles contracts, payroll, compliance, and all statutory obligations. A Professional Employer Organization (PEO) is a co-employment model where you still need a registered entity in India. For companies without an Indian subsidiary, EOR is the right choice.
Check three things. First, does the provider own its entity in India or use third-party partners? Own-entity providers give you more control and fewer delays. Second, is payroll processed in-house by licensed professionals? India’s CTC structure and multi-state tax rules require expertise. Third, ask for a complete cost breakdown upfront with no hidden fees for onboarding, offboarding, or amendments.