India

Registrations and Establishing an Entity

• Obtain Director Identification Number (DIN)
• Obtain digital signature
• Reserve company name with Registrar of Companies (ROC)
• File incorporation documents online
• Obtain PAN and TAN from tax authorities
• Register under Shops & Establishments Act
• Register for GST, PF (EPFO), and ESI
• LWF and Professional Tax registration (location dependent)

Banking Employee payments can be made from abroad, but statutory payments (e.g., PF, ESI, tax) must be made from an in-country bank. Transfers take 2–3 days. Banking hours are Mon–Fri 09:00–16:00, and Sat (1st & 3rd) 09:00–13:00.

Working Week

Typically Monday–Saturday, 09:30–18:00. Actual hours may vary by industry.

Holiday Accrual Minimum entitlement varies by state; usually 12–18 days/year. Leave encashment for unused leave is paid at standard rates.

Maternity Leave Up to 26 weeks for first two children; 12 weeks for third child. 6 weeks for miscarriage. Crèche facility required for 50+ employees.

Paternity Leave Not statutory; usually 7–10 days per company policy.

Sick Leave Leave entitlements vary by location; typically 5–12 days/year.

National Service Not applicable in India.

Tax Year

April 1 – March 31

Income Tax (New Regime – from 1 April 2025)

• Up to INR 3,00,000: Nil
• INR 3,00,001 – 6,00,000: 5%
• INR 6,00,001 – 9,00,000: 10%
• INR 9,00,001 – 12,00,000: 15%
• INR 12,00,001 – 15,00,000: 20%
• Above INR 15,00,000: 30%
• Rebate u/s 87A: up to INR 60,000 for income up to INR 7,00,000

Social Security Contributions

• Provident Fund: 12% employee, 12% employer (8.33% to pension fund, 3.67% to PF)
• ESI: Employee 0.75%, Employer 3.25%
• Professional Tax and Labour Welfare Fund: location dependent
• EPFO reporting deadline: 15th monthly
• Interest for delay: 12% per annum; damages up to 25% depending on duration

Payroll

• Salary due by 7th of the following month
• 8-year payroll record retention
• Online English payslips are permitted

Reports

• Monthly: TDS (by 7th), PF/ESI (by 15th)
• Quarterly TDS Returns: Form 27A (Jul, Oct, Jan, May)
• Annual TDS Summary: Form 16 (due 15 June)

New Employees

• PAN required for tax compliance (takes ~1 month to obtain)
• Registration with PF/ESI within 15 days of second month
• Passport and salary details required for expatriates

Leavers

• Final payment (F&F) due within 30 days
• Gratuity payable after 5 years of service
• Inform PF/ESI authorities of departure

Expenses

• Business expenses must be reimbursed outside of salary
• Valid invoices and receipts required for tax-free treatment

Employee Benefits

• Statutory: PF, ESI, gratuity, bonus, maternity
• Optional: medical insurance, allowances, crèche facility

Expenses

• Business expenses must be reimbursed outside of salary
• Valid invoices and receipts required for tax-free treatment

Employment Visa (EV)

• Required for employment or voluntary work with NGOs
• Valid from date of issue; renewable for up to 5 years

Required Documents:

• Passport valid for 180+ days, visa fee
• Photos, signed application and undertaking
• Employment contract specifying income tax clause
• Employer’s registration documents and applicant's educational records

• Indian numbering system uses Lakh (1,00,000) and Crore (1,00,00,000)
• Leave, tax slabs, and welfare contributions vary by state
• PAN, TAN, GST, ESI, PF registration is mandatory for compliance

Further Information For more information, or assistance with India tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.