Your guide to doing business in India
India is the seventh-largest country in the world and, with a population of over 1.2 billion, is also the most populous democracy. At the heart of Asia, India has been an important international trade hub for centuries but, following rapid industrialisation, and free market reforms in the early 1990s, it also became one of the world’s fastest growing economies. With an average annual growth of 5.8%, India’s economy is currently worth around $2.183 trillion, and is built on historically important industries like agriculture and textiles, along with the emergent production of pharmaceuticals, petroleum, biotechnology, software and more. India plays a significant part on the international economic landscape - in 2011, it was the tenth-largest importer and the nineteenth-largest exporter of goods in the world. Analysis by PriceWaterhouseCoopers suggests India’s rapid economic growth could continue until 2050. India is a member of the United Nations and the Commonwealth of Nations - in 2018 it was ranked 100 on the World Bank’s Ease of Doing Business Survey.
India’s growth as a major international economy has attracted investment interest from sources around the globe. So, why invest in India?
The Indian economy is the tenth largest in the world in terms of purchasing power. As predicted by Goldman Sachs, by 2035 India is expected to be the third largest economy of the world - just behind the US and China. Foreign direct investment plays a huge part in the Indian economy’s success and the government is taking steps to increase its role: in 2014, the limit for FDI in the insurance sector was raised to 49% (from 26%), and by 2015, India was the number one FDI-investment location in the world. FDI in India flows into a spectrum of industries, including infrastructure and services, automotives, pharmaceuticals, textiles and airlines.
For the registration of a company please refer to the below site of ROC (Registrar of Companies):
The necessary steps required for registering a company in India are as follows:
Once the legal entity has been established, in order to process payroll in India, the company needs to have:
Registrations for Social securities like PF & ESI are taken care of by the company; it takes around 15-45 days for registrations to be complete. Other registrations such as PT and LWF are location specific.
Employee payments can be made from out with India, however it is mandatory to make payments to authorities/Government Departments from an in-country bank account. In some states, Professional Tax and Labour and Welfare Fund payments may need to be deposited manually. Payments can be made to the authorities using; PF – bank transfer, ESI – bank transfer, Income tax – bank transfer.
Bank transfers generally take 2-3 working days depending on the nature of payment.
Generally, banks are open Monday to Friday from 9.00 am to 4.00 pm for public and 9:00 am to 1:00 pm on 1st and 4th Saturday. All banks are closed on Sunday.
The Indian numbering system is specific to India and is also used in Bangladesh, Nepal, Pakistan and Sri Lanka. The term Lakh and Crore are commonly used in India to express large amounts. For example: -
Rs1,50,000 is equal to 1.5 Lakhs
Rs10,000,000 is equal to 1 Crore Rupees
In India, the normal working week is Monday to Saturday inclusive.
Standard working hours are 9.30 AM to 6.00 PM.
India is situated at the heart of sub continental Asia, with the Indian Ocean to the south, the Arabian Sea to the west, and the Bay of Bengal to the east. Its northern land border is shared with Pakistan, China, Nepal, Bhutan, Myanmar, and Bangladesh and, as home to over 1.2 billion people, it is the second most populous country on Earth. While traditional industries like textiles and agriculture remain important to the economy, modern India has been characterised by rapid industrialisation, urbanisation and technological progress. India comprises a wide variety of environments, from the snow-capped peaks of the Himalayas, to tropical coastal regions and arid central deserts. Warm, wet summer monsoon seasons contrast with periods of dry, sweltering heat, and the country has become extremely popular with tourists from all over the world.
General Population: 1.339 billion (World Bank, 2017)
Language: Hindi, English
Monetary Unit: Rupee
Main Exports: Software, Petrochemicals, Pharmaceuticals, Precious Stones, Textiles, Machinery, Iron Ore, Chemicals, Automobiles
Internet Domain: .In
International Dialling Code: +91
Good Morning Suprabhat
Good Evening Sama Acchā
Do You Speak English? Kya Āpa Aṅgrēzī Bōlatē Haiṁ
Good Bye Namaste
Thank You Dhan’yavāda
See You Later Phir Melange
The financial year in India runs from the 1st April to the 31st March. Income tax is payable by every employee at the rates fixed by the Finance Act on an annual basis.
Income tax in India must be paid by any individual, Hindu Undivided Family (HUF), company or organisation that generates income - it may be deducted at source, or returned to the Income Tax Department. Tax is due on any form of salaried income from an employer, any income from property, any business gains, capital gains, or income from other sources including dividends, gambling, and welfare schemes. Tax rates may vary for different levels of earnings, ranging from 10% at the lowest bracket (or ‘tax slab’), to 30% at the highest. India’s tax free allowance varies depending on age: the over-60s only pay tax on income over 3,00,000 rupees, while the over-80s only pay on income over 5,00,000 rupees. Various tax deductions are permissible, including contributions to pension funds, and life and health insurance schemes.
India’s social security system is built around a number of schemes, which broadly include pension plans, medical and health insurance, maternity leave, gratuity, and disability insurance.
India’s tax year runs from the 1st of April to the 31st of March. A taxpayer’s ‘Residential’ or ‘Non-residential’ status is important, since it affects their income tax rates:
The tax reporting process involves the following obligations:
All new employees are required to have a PAN card in order to pay tax which takes approximately 1 month to obtain.
The new employee should be registered with the authorities within 15 days of the second month of employment.
For an expat employee, passport & salary details will be required.
There are no legislative specifications of time scale for the final payment. However, if the employee has completed 5 years of service, gratuity payment needs to be made within 30 days of departure.
It is usually preferable to make the F&F payment (final employee payments) within 30 days of departure.
Provident Fund and ESI authorities are require to be informed of leaving employees.
Employers in India have withholding obligations towards employees’ salaries, which include tax and social security and, in some cases, benefit plans like health insurance. Certain tax-free allowances are permitted, including rent, transport, medical, meals, travel for leave, education, and any other special costs like uniforms, books or research.
Payslips must be issued to employees in India - and are done so in English. It is legally acceptable to issue online payslips in India. Given the complexities of India’s tax system, employers with global employee populations may choose to outsource the process to gain the benefit of third-party expertise. Explore your options when choosing a global payroll provider by exploring the regulatory landscape.