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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Payroll services in India

India has a diverse economy with key industries in technology, manufacturing, and agriculture. With specific labor laws and tax regulations, employers in India must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in India

Employers in India must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

  • Minimum wage: India’s minimum wage varies by state and industry, with the lowest set at INR 178 per day.
  • Payroll frequency: Salaries are generally paid monthly.
  • Standard working hours: The normal workweek in India is 48 hours, typically spread over five or six days.
  • Overtime: Employees are entitled to additional pay for overtime work, calculated based on labor regulations.

Taxation and social security contributions

  • Personal income tax: India has a progressive income tax system with rates ranging from 0% to 30% depending on income levels.
  • Employer contributions:
    • Provident Fund (EPF): 12% of the gross salary.
    • Employee State Insurance (ESI): 3.25% of the gross salary (applicable to employees earning below INR 21,000 per month).
  • Employee contributions:
    • Provident Fund (EPF): 12% of the gross salary.
    • Employee State Insurance (ESI): 0.75% of the gross salary.
  • Corporate tax: The corporate income tax rate in India ranges from 22% to 30% depending on turnover.
  • Tax reporting: Employers must file payroll taxes and contributions with the Indian tax authorities regularly.

Payroll compliance in India

  • Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
  • Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
  • Employers must stay updated on changes to India’s labor laws and tax regulations to avoid penalties.

Run payroll in India with Remote

Managing payroll in India requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.