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India is the world's largest source of technology talent. Rippling EOR handles EPF, ESIC, Professional Tax, and state-level Shops and Establishments compliance so your first Indian hire is done right.
India is one of the world's most important EOR markets, with the largest English-speaking technical workforce globally and deep talent pools in software engineering, data science, AI/ML, financial services, legal, and business process management. Bengaluru, Hyderabad, Pune, Mumbai, Chennai, and Delhi-NCR are the primary tech hubs, with Bengaluru (often called India's Silicon Valley) hosting the highest concentration of engineering talent.
India's employment law framework is complex and multilayered: four central Labour Codes consolidating 29+ legacy laws are being phased in; state-specific Shops and Establishments Acts govern most employment; and central acts (EPF, ESIC, Payment of Gratuity Act, Maternity Benefit Act) apply based on headcount and industry thresholds. This complexity makes EOR particularly valuable for international companies seeking to hire Indian talent without establishing a local entity.
India is frequently the highest-volume EOR country for US tech and SaaS companies. Payroll compliance, statutory deductions (EPF, ESIC, TDS), and state-level Professional Tax are the primary complexity areas.
Establishing an Indian Private Limited company requires Ministry of Corporate Affairs registration, PAN/TAN registration, GST registration, EPF/ESIC registration, and state-specific Shops and Establishments registration — typically 4–8 weeks. A branch office or liaison office is an alternative but restrictive. EOR is the right choice for 1–10 employees, initial Indian market entry, or where the complexity of Indian compliance (Labour Codes, state variations, EPF/ESIC, Professional Tax) makes a dedicated entity impractical.
Many companies maintain EOR arrangements in India even at 15–20+ employees due to the ongoing compliance burden and the significant liability of non-compliance with EPF and ESIC (retrospective assessment, penalties, and prosecution risk). Salary structuring (basic vs. allowances vs. reimbursements) is a key optimization area that EOR providers configure in Rippling.
EPF (Employees' Provident Fund): 12% of basic salary + DA (Dearness Allowance) on statutory wage ceiling (₹15,000/month; many employers apply it on full basic). ESIC (Employees' State Insurance): 0.75% of gross wages (for employees earning up to ₹21,000/month). Professional Tax: state-specific, typically ₹200/month deducted from salary in applicable states (Maharashtra, Karnataka, West Bengal, etc.). Income tax (TDS): withheld under Section 192 of the Income Tax Act on estimated annual taxable income at applicable slab rates.
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EPF: 12% of basic salary + DA (employer contribution split: 8.33% to EPS — Employees' Pension Scheme, up to wage ceiling; 3.67% to EPF account). ESIC: 3.25% of gross wages (for employees earning up to ₹21,000/month — employees above this threshold are exempt from ESIC). Gratuity accrual: 4.81% of basic salary per year (provision for gratuity payable after 5 years — 15 days' wages per year of service). Labour Welfare Fund (LWF): state-specific, small contribution. Total employer statutory on-cost: approximately 16–20% of basic salary depending on structure. Additional employer contributions required for employees with special allowances under EPF wage definition changes.
India has two income tax regimes for individuals. New Regime (default from FY 2024-25): 0% up to ₹3L; 5% ₹3–6L; 10% ₹6–9L; 15% ₹9–12L; 20% ₹12–15L; 30% above ₹15L. Standard deduction of ₹75,000 available under new regime from FY 2024-25. Old Regime: allows deductions (80C — ₹1.5L; 80D health insurance; HRA; LTA etc.) but higher marginal rates above ₹10L. TDS (Tax Deducted at Source) under Section 192 withheld monthly based on projected annual income. Form 16 issued annually. Rippling EOR manages TDS and Form 16 issuance.
Leave entitlements vary by state Shops and Establishments Act. Typical structure: Earned/Privilege Leave (12–18 days per year, accrued); Casual Leave (8–12 days, non-accruing); Sick Leave (8–12 days). Public holidays: approximately 10–15 national and state holidays depending on location and company policy. Maternity leave: 26 weeks paid (for companies with 10+ employees — Maternity Benefit (Amendment) Act 2017; first 2 children); 12 weeks for 3rd child onwards. Paternity leave: not mandated nationally, but many companies offer 5–15 days by policy.
For non-workmen employees (managerial, professional — most EOR hires): notice period as per employment contract (typically 30–90 days). For workmen under the Industrial Disputes Act: retrenchment compensation of 15 days' wages per year of service (for companies with 100+ employees, prior government permission required for retrenchment — the 'chapter VB' requirement). For companies with under 100 employees: notice + retrenchment compensation without government approval. In practice, most professional employee exits are managed by negotiated notice periods and Full and Final Settlement (FnF) payments including leave encashment, gratuity (if 5+ years), and EPF withdrawal facilitation.
Indian citizens and OCI (Overseas Citizens of India) card holders: unrestricted right to work in India. Foreign nationals: Employment Visa (e-Visa for eligible nationalities or sticker visa) — sponsored by the Indian employer entity. Employment Visa requires a minimum salary of USD 25,000/year (exemptions for specific roles). Rippling EOR's Indian entity can sponsor Employment Visas for foreign national employees. Processing time: 2–6 weeks for most nationalities.
Statutory benefits: Provident Fund (EPF — employer 12% of basic+DA), Employee State Insurance (ESIC — employer 3.25% for eligible employees), Gratuity (payable after 5 years of continuous service — 15 days' wages per year), and paid annual leave (earned leave, sick leave, and casual leave per applicable Shops and Establishments Act). Professional Tax withheld in applicable states.
Market standard for tech and professional employees: health insurance (group mediclaim — near-universal, covering employee + family), term life insurance, meal allowances (food coupons — tax-advantaged), leave travel allowance (LTA), performance bonus, and ESOP for senior roles. Health insurance coverage for family is a key retention benefit in the competitive Indian tech market. Rippling EOR manages EPF, ESIC, and Gratuity accrual.
Rippling EOR India operates through a local Indian Private Limited entity. Key configuration: salary structure optimization (basic vs. allowances ratio — critical for EPF cost and take-home); EPF registration and monthly ECR filing; ESIC registration (if applicable based on salary); Professional Tax registration state-by-state (required if employees are in Maharashtra, Karnataka, West Bengal, etc.); and TDS regime selection per employee declaration. Typical onboarding: 2–3 weeks.
Common thePeopleStack configuration items for Indian EOR: health insurance (group mediclaim — always set up from day one); food coupon setup (Sodexo/Ticket Restaurant — tax-efficient meal benefit); and LTA configuration for senior employees. India is one of our highest-volume EOR configurations.
Indian salary structuring significantly affects take-home pay and employer costs. A typical salary structure includes: Basic salary (40–50% of CTC — drives EPF, Gratuity, and HRA calculations); House Rent Allowance (HRA — tax-exempt up to limits); Leave Travel Allowance (LTA — tax-exempt twice in 4 years); Special Allowance (fully taxable filler); and Employer EPF contribution. Optimizing the basic salary percentage is the primary lever — lower basic reduces EPF cost but also reduces gratuity and HRA benefit. Rippling EOR configures salary structures for each Indian employee engagement.
EPF (Employees' Provident Fund) is mandatory for all companies with 20+ employees (and their employees). Both employer (12% of basic+DA) and employee (12% of basic+DA) contribute monthly to the EPFO (Employees' Provident Fund Organisation). The statutory wage ceiling is ₹15,000/month — contributions are calculated on this ceiling unless the employer opts to apply EPF on the full basic salary. Rippling EOR registers with EPFO, calculates EPF contributions, and submits ECR (Electronic Challan cum Return) monthly.
India does not have a single national minimum wage. The Code on Wages 2019 introduced a national floor wage (currently ₹176/day — approximately ₹4,576/month) below which no state can set its minimum wage. State-specific minimum wages vary by industry, skill category, and location — Delhi's minimum wage for unskilled workers is approximately ₹17,234/month (2024); Karnataka's for skilled workers is higher. For professional tech roles covered by EOR, market rates significantly exceed minimum wages.
New Tax Regime (Section 115BAC): flat rates with no common exemptions — 0% up to ₹3L; 5% ₹3L–6L; 10% ₹6L–9L; 15% ₹9L–12L; 20% ₹12L–15L; 30% above ₹15L. Old Tax Regime: allows HRA, LTA, 80C, 80D, and other deductions but higher rates. From FY 2024-25, the New Tax Regime is the default regime. Employees can opt for the Old Regime by notifying their employer. Rippling EOR handles TDS withholding under both regimes based on employee declaration.
