Company Registration
May 13, 2023
Native Language
Hindi
Employee Protection
Medium
Payroll Frequency
Monthly
Capital city
New Delhi
Average Salary
29,400 INR / month
Internet
Slow
Currency
Indian Rupee (INR)
Immigration
Medium
English Speaking
<50%
Population
1.352 Billion
Employment Cost
Low
Cost of Living
Low
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in India. Registering a legal entity in India as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in India in full accordance with local labor laws in under a week.
Employer of Record in India
Employer of Record (EOR) services are for companies who do not have a legal entity in India, but who want to hire in India. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in India.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in India in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in India while NNRoad manages payroll & HR liabilities.
- Acting as the employer of record for your employees
- Recruiting service (if needed), including candidate search, screening candidates, interview, offer, negotiation and reference check, assistance with on boarding documents
- Hiring of and termination of employees/local labor contracts (contract administration – checking right to work legally in India, offer letter, appointment letter, relieving letter and experience/conduct certificate where necessary)
- On-boarding and off-boarding employees following local law practice
- Complete payroll solution and statutory benefit administration
- Employee management – employee record retaining, time keeping, bonus and allowance management, expense and claims, and leave employee database management accordingly to the local law
- Mandatory social security (provident fund and pension fund) compliance according to the local laws
- Statutory Benefits policy maintenance and updating on regular basis
- Maternity benefits management for expectant women employees
- Foreigner VISA application, if needed
- Income tax declaration administration (employee personal income tax reporting), if needed
PEO in India
Professional Employment Organization (PEO) services are for companies who have a legal entity in India, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in India.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in India while NNRoad manages payroll & HR compliance.
- Establishing tax-efficient salary structure and adjusting pay cycle per request
- Registration of the necessary company and personnel information for payroll calculation in the payroll software and system:
- Raw data collection and cleaning including processing raw payroll data with respect to leaves, increments, bonus pay, variable pay per-diems, & salary advance, if any, given or recovered
- Determination of statutory deductions (TAS under income tax act, ESI, EPF, PT, VPF and Labour Welfare Fund contributions) based on employee pay for withholding taxes, state and other central taxes & contributions to social security schemes
- Local social security (Employee Provident Fund, Employee State Insurance, Professional Tax, and Gratuity) bureau registration, if applicable
- Set up payroll policy, maintenance, and update
- Maintain employee records accordingly to the requirements by local government
- Providing access to the payroll system
- Set up bank instruction for payment
- Monthly and quarterly payroll processing
- Year-end adjustments and annual declaration
Advantages of NNRoad's India Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in India.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in India.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in India
Taxes & Payroll in India
India imposes income tax on both residents and non-residents. The rate of tax for residents is progressive, while the rate for non-residents is a flat 30%. The country also taxes overseas income earned by its residents.
Residents are taxed on their global income, regardless of where it is earned. Non-residents are only taxed on income that is sourced in The country. Overseas income earned by residents is subject to income tax only if it is brought into the country (‘repatriated’).
There are several deductions and exemptions available under income tax law. These can be used to reduce the amount of tax payable.
The main deduction available is for investment in specified assets, such as equity shares, mutual funds and unit-linked insurance plans (ULIPs). Other deductions include those for life insurance premiums, children’s education expenses and charitable donations.
India also has a number of tax treaties with other countries. These treaties specify the income that is taxable and the rate at which it is taxed.
The income tax system is administered by the Central Board of Direct Taxes (CBDT). The CBDT is responsible for issuing tax laws, rules and regulations. It also assesses and collects taxes.
Employee Income Taxes:
Individual income tax rates are based on progressive tax brackets. Incomes at or bellow 250,000 INR per year are not taxed.
Tax Brackets
0%: 0-250,000 INR
5%: 250,001 – 500,00 INR
20%: 500,001 – 1,000,000 INR
30%: >1,000,000 INR
Sample Calculation
Yearly income = 1,000,000 INR
20% * 500,000 = 100,000
5% * 250,000= 12,500
0% * 250,000 = 0
100,000+12,500+0 = 112,500
Yearly income tax = 112,500 INR
Employer Costs in India
Employer contributions are compulsory for all companies with more than 20 employees. The rates vary depending on the industry, but the maximum contribution is capped at 12% of the employee’s wage. Employer costs also vary depending on the industry, but they are typically lower than in other countries. For example, employer costs for IT and BPO industries are only about 4% of wages. This is because India has a large pool of skilled workers who are willing to work for relatively low wages.
Employer contributions and costs can have a significant impact on the cost of doing business. For companies that are already operating on tight margins, these additional costs can be difficult to absorb. As a result, many companies are looking for ways to reduce their employer costs. One way to do this is to use contract workers or outsourcing companies that can provide employees at a lower cost.
Employer Contributions:
Employers must pay income taxes based on the salary of their employees:
12% – pension (capped at 15,000 INR per month)
4.75% – Health insurance
Employee Contributions:
12% – pension
1.75% – Health insurance
Working Hours in India
The average work hours are between 45-50 hours per week. The maximum number of overtime hours one can work is limited to three hours a day and twenty-four hours a week. For work exceeding this limit, employees must receive prior permission from their employer and additional payment for overtime wages according to India’s laws on labor. Employees typically receive 2 times their regular hourly wage rate for overtime pay.
India also has various regulations concerning working conditions that employers must adhere to, such as providing suitable rest breaks during work periods. In order to ensure compliance with these rules, regular inspections by labor department authorities may be conducted. Additionally, all workers are required to have at least one day off each week – usually Sunday – to rest and recuperate. It is important for employers to be aware of the work hours and overtime regulations so that they can ensure their employees are being fairly compensated according to these labor laws.
Working Hours per Week
The working hours per week range between 40-45 hours for full-time employees. Note that maximum legal working hours can vary by industry. Contact us for more detailed information.
Overtime Laws & Regulations
Typically, overtime compensation is calculated as 2 times the normal work rate. Some employees such as managers and IT staff sometimes do not qualify for overtime pay. This discrepancy brings about much legal ambiguity and overtime compensation will vary from case to case and employee.
Benefits & Insurance in India
India offers numerous work benefits and insurance options for employees. The country social security system includes the Employees’ State Insurance Corporation (ESIC) which provides various health, maternity, sickness and disability benefits to workers. The country also has a provident fund where part of an employee’s salary is held in trust to ensure they are provided with funds after retirement or when laid off from their job.
India also offers life insurance plans that provide financial protection against death due to any cause, as well as insurance plans covering unpaid medical expenses. The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a government-backed life insurance scheme available to those aged between 18 and 50 years old with annual premiums starting from Rs 330
Pension Fund
Employees benefit from a pension fund where both the employer and employee deposit 12% of the employee’s monthly wage.
Healthcare Insurance
Medical insurance is covered by the employer through a healthcare contribution.
Termination Laws in India
India has stringent termination laws governing the employer-employee relationship. Employers must adhere to a notice period when terminating an employee, which can range anywhere from 15 days to 3 months, depending on the number of years of service. Employers are also required to provide employees with appropriate compensation upon termination, based on their length of service and salary level.
India’s labor laws prohibit any form of discrimination or retaliation against employees who are terminated for reasons unrelated to performance or misconduct. Employers must observe these regulations strictly and ensure that all termination policies comply with the country’s labor laws. If there is a breach of termination laws, employers may face severe legal consequences. Therefore it is important for employers to seek professional advice before taking any action that may be deemed unlawful.
Employers should also consider alternative dispute resolution options, such as mediation or arbitration, to resolve any potential termination-related issues. Laws provide protection and remedies for both employers and employees in the case of a wrongful termination. As such, it is important to ensure that all termination procedures are strictly followed in order to avoid legal disputes.
In conclusion, India has strict termination laws which must be adhered to at all times by employers who wish to remain compliant with the labor regulations. It is essential for employers in the country to seek professional advice on all aspects of termination before taking any action. Alternative dispute resolution methods should also be taken into consideration when dealing with potentially sensitive matters related to termination.
Severance
Severance is only provided in cases of redundancy, when an employee’s job becomes redundant either through technology or cost reductions.
Public Holidays in India
India celebrates a number of festivals and public holidays throughout the year. These holidays are based on religions, national days, regional celebrations and certain seasons. The country is home to a wide range of religions including Hinduism, Sikhism, Jainism, Buddhism, Islam and Christianity – each religion observes its own set of holidays and festivals. India also has three national holidays – Republic Day (26 January), Independence Day (15 August) and Gandhi Jayanti (2 October).
Additionally there are several regional holidays which vary from state to state across the country. Some popular regional festivals include Baisakhi in Punjab, Pongal in Tamil Nadu and Bihu in Assam. The four major seasons – summer, monsoon season, winter and spring – are each celebrated with holidays.
Public Holidays
India is home to hundreds of regional holidays that vary from region to region. The most important and widespread holiday in India is Diwali on October 24. There are 3 federal public holidays:
- Mahatma Ghandi’s Birthday
- Independence Day
- Republic Day
Paid Leave in India
Employees are entitled to between 15 and 20 paid annual leave days per year.
Employment Contract in India
In India, an employment contract is a binding agreement between an employer and employee. It outlines the terms of employment, such as wages or salary, hours of work, job responsibilities and duties, benefits and leave entitlement. An employment contract must be made in writing in order for both parties to clearly understand the terms of employment. The country’s labor laws also require certain information to be included in all contracts of employment. This includes income details and working hours; it must also contain a clear description of any vacation/leave entitlements that are provided by the employer.
Employers must ensure that their employees receive written notification if any changes are made to the terms of their contract during the course of their employment. Furthermore, the labor laws also state that an employee may not be asked to work more than 48 hours a week or 8 hours a day without the proper authorization. India’s labor laws provide protection for both employers and employees by setting out clear rules and guidelines regarding employment contracts. It is important that employers understand the labor laws in order to ensure compliance with them. Additionally, understanding India’s labor laws can help employers create employment contracts that are compliant and beneficial for both parties.
Probation Period
Probation periods in India can range between 3 and 6 months. During this time the employer reserves the right to terminate an employee without providing any notice.
Types of Leaves in India
Sick Leave
Full-time employees are entitled to 10 days of paid sick or personal leave per year.
Maternity Leave
Full-time employees are entitled to 12 t0 26 weeks of paid maternity leave and an extra 6 weeks of paid leave in the case of a miscarriage.
Paternity Leave:
It is common for new fathers to receive 15 days of paternity leave.
Immigration Laws in India
Foreign workers may be granted a work visa for jobs where qualified Indians are unavailable. Employment visas. Citizens of Pakistan are forbidden from receiving work visas.
Work visas must be obtained from the Indian Embassy or Consulate prior to entry into India. Applicants are required to provide supporting documents such as a valid passport, proof of occupation and salary details, residence permit if applicable, health certificate, and proof of educational qualifications. Work visa applicants may also need to submit additional documentation depending on their job type and field.
Before applying for a work visa in India, foreigners should obtain an Employment Visa Clearance Certificate (EVCC) from the Ministry of External Affairs. This document confirms that they have completed all necessary requirements such as police verification. Work permits can take up to six weeks to be process so it is best to apply as soon as possible.
Once the work permit has been approved, foreigners should then obtain an Indian visa from their local consulate or embassy. Work visas are typically valid for a period of five years and can be extended up to seven years depending on the type of job and industry sector. Work visa applicants also need to show proof of financial stability in order to qualify for this type of visa.
Resources
