Wisemonk's comprehensive EOR solutions enable global companies to hire, pay, and manage employees in India without the need for a local entity. From tax optimization to equipment services, we handle all compliance and administrative tasks, allowing you to focus on your core business.
Employer of Record (EOR) services have become essential for companies expanding into the Indian market. This comprehensive guide explores:
From navigating the dual tax regime to managing statutory benefits like Provident Fund and ESI, an EOR partner can streamline your expansion into India. Whether you're hiring a single employee or building a team in India, understanding these key aspects is crucial for success in the Indian market.
An Employer of Record (EOR) in India is a third-party organization that acts as the legal employer for a company's employees in the country. The EOR takes on the responsibilities of hiring, onboarding, payroll management, and ensuring compliance with local labor laws and regulations. This allows companies to quickly and compliantly hire talent in India without establishing a legal entity.
Based on our extensive research and client feedback, here are the key benefits of using EOR services in India:
In our extensive experience working with international companies expanding to India, we've found that navigating India's labor landscape requires deep understanding of complex web of central and state-specific laws. From crafting comprehensive employment contracts to implementing probationary periods, adhering to labor laws, and managing working hours, companies must navigate a multifaceted system to ensure compliance and foster positive employer-employee relationships.
When expanding your workforce in India, the first crucial decision is choosing between contractors and full-time employees. This choice significantly impacts your approach to using an Employer of Record (EOR) in India or setting up your own entity.
Once you've decided between setting up an entity or using an EOR, the next step is to determine whether to hire full-time employees or contractors. Full-time employees, hired through an employer of record service, offer stability, long-term commitment, and are easier to manage and train. However, they require benefits, have higher overhead costs, and are harder to terminate.
Contractors, on the other hand, offer specialized skills, flexibility, and lower costs as they don't receive benefits. But they have less company loyalty, require more time to manage, and pose a greater risk of misclassification penalties.
Employees are better for core, long-term roles. Contractors excel in short-term projects needing niche expertise.
The right choice depends on the role, length of engagement, desire for control, and budget. Carefully weigh the tradeoffs for your situation.
Click here to learn more: Remote Hiring in India: Independent Contractor vs EOR Employee Explained.
When a company decides to offer employment in India, they must choose between setting up a legal entity or working with an Employer of Record (EOR) provider.
Setting up an legal entity involves establishing a legal presence, registering the business, setting up offices, and complying with local labor laws. This approach provides full control but can be time-consuming, costly, and complex, especially for businesses unfamiliar with Indian regulations.
In contrast, partnering with an Employer of Record (EOR) provider simplifies the process. The EOR acts as the legal employer, handling payroll, compliance, and statutory benefits administration. For companies with an established presence in India, considering a PEO in India service can further streamline HR operations and reduce administrative burdens.
Ultimately, the choice depends on the company's resources, timeline, and risk tolerance. Click here to learn more: Detailed Comparison of Entity Establishment vs. Employer of Record (EOR).
| Criteria | Legal Entity | Employer of Record (EOR) | ||
|---|---|---|---|---|
| Time to go live |  |
2-3 Months |  |
1-2 Days |
| Costs up to 20 employees | |
Significant upfront costs for incorporation, legal fees, office space, and ongoing maintenance expenses | |
Fixed monthly amount per employee; more cost-effective for a smaller number of employees |
| Costs above 20 employees | |
Costs of maintaining a local entity can be more cost-effective in the long run compared to EOR fees | |
EOR costs can become higher as the headcount increases, as fees are charged per employee |
| Compliances | |
The company is responsible for ensuring compliance with all Indian laws, including labor laws, tax regulations, and statutory requirements, which can be complex and time-consuming | |
The EOR handles all aspects of compliance, including payroll taxes, benefits administration, and adherence to employment laws, reducing legal risks for the company |
| Foreign compliances | |
-Investor / Board approval required for setting up the legal entity -Annual reporting of subsidiary activities and financials to the parent company -Permanent establishment (PE) risks and tax implications in India -Compliance with regulations in the company's home country |
|
The EOR assumes responsibility for local compliance, allowing the company to focus on its core business activities |
| Capabilities needed | |
Setting up and managing a legal entity requires significant time, resources, and expertise in Indian laws, tax regulations, and HR practices | |
Partnering with an EOR allows companies to leverage their local expertise, networks, and capabilities in HR, payroll, and compliance, without the need to develop these in-house. |
When choosing an Employer of Record (EOR) in India, consider your hiring needs and long-term goals. If you're looking to establish a dedicated team in India, partnering with an India-exclusive EOR like Wisemonk is often the best choice, as they offer local expertise, on-the-ground presence, cost-effective solutions, and comprehensive services tailored to the Indian market.
If you have employees in multiple countries and want to streamline payroll and employee management, consider partnering with country-specific EOR providers like Wisemonk for India. While global EOR providers offer a single platform for managing international teams, they may lack the deep local expertise and networks that specialized EOR partners bring to the table.
To make an informed decision, evaluate your company's specific requirements and compare the offerings of different EOR providers.
We have written a comprehensive article comparing the top EOR players in India, which you can find at: Best Employer of Record (EOR) companies in India [2025].
Welcoming new hires is a critical moment that shapes their first impressions and sets the tone for their employee experience. In India, a well-structured onboarding process ensures a smooth transition, compliance with local laws, and integration into the company culture.
By partnering with an EOR, you can focus on integrating the new hire into your team while the EOR manages the legal and administrative aspects of onboarding.
Click here to learn more: Detailed Onboarding Checklist for Remote Employees in India
The following table outlines a comprehensive Remote EOR Employee Onboarding Checklist for India, detailing the responsibilities of both the company and the EOR partner throughout the onboarding process:
In India's EOR hiring model, two key documents are used: the offer letter and the employment letter. The client company is responsible for sending the offer letter to candidates. This initial document outlines essential terms such as the position, compensation, and start date, serving to secure the candidate's interest.
The EOR partner, on the other hand, sends the employment letter. This document reiterates the job details provided in the offer letter and acts as a precursor to the formal employment contract. It confirms the employment relationship between the EOR and the employee.
This approach ensures clarity in the hiring process, with the client company initiating recruitment and the EOR partner formalizing the employment arrangement.
The client company is responsible for conducting interviews, selecting candidates, determining salary and benefits, preparing necessary equipment and access, and providing a comprehensive onboarding plan.
The EOR partner handles background verification, drafts compliant employment contracts, collects necessary documents (ID proofs, tax forms), sets up payroll accounts, and ensures compliance with local labor laws and regulations.
Click here to learn more: Detailed Onboarding Checklist for Remote Employees in India
In our years of experience managing payroll for international companies in India, we've found that running payroll involves several critical components to ensure accurate and timely employee compensation. Key tasks include calculating gross salaries based on employment agreements, applying statutory deductions such as income tax (TDS), Provident Fund, and managing additional deductions like professional tax. The process also requires generating detailed pay slips that outline earnings and deductions, followed by the timely disbursement of salaries to employees' bank accounts.
Our payroll experts have observed that many companies find these tasks complex and time-consuming, especially when dealing with India's ever-changing tax laws and compliance requirements.
Our data shows that companies using our EOR services save an average of 15-20 hours per month on payroll-related tasks, allowing them to focus on their core business activities. Partnering with an Employer of Record (EOR) simplifies the payroll process significantly. The EOR takes responsibility for all payroll calculations, ensuring compliance with Indian labor laws and tax regulations. They handle the complexities of statutory deductions and filings, generate comprehensive pay slips, and ensure that salaries are paid promptly.
In our extensive experience managing payroll for international companies in India, we've observed that understanding the intricacies of the Indian payroll system is crucial for businesses operating in the country. Here's a detailed breakdown of key aspects:
Our payroll experts have identified the following critical components of payroll management in India:
Click here to learn more: Statutory Compliance and Payroll for your EOR Employees in India
We've found that many companies in India partner with specialized payroll service providers to streamline these processes and ensure compliance with the complex regulatory environment.
In our extensive experience managing payroll and taxes for international companies in India, we've found that understanding the complex tax system is crucial for both employers and employees. The primary taxes that employees need to be aware of are income tax, Tax Deducted at Source (TDS), and professional tax. Here's an overview of the key taxes and considerations:
Income tax is a direct tax levied by the government on an individual's income. In India, the income tax rates for the financial year 2024-25 are based on a progressive tax system, where the tax rate increases as the taxable income increases.
India has two income tax thresholds commonly known as “Old” and “New” tax regimes.
The new tax regime has six different levels of tax rates. If you earn up to INR 300,000, you don’t have to pay any tax. For every additional INR 300,000 you earn, the tax rate goes up by 5%.
Surcharge for New Tax Regime:
In comparison, the old tax regime offers 4 levels of tax rates with a 0% tax rate for income of up to INR 250,000. It allows various deductions and exemptions. The common deductions include Section 80C (investments), HRA, LTA, and health insurance premiums. This is suitable for those with significant eligible investments and expenses.
Surcharge for Old Tax Regime:
Additionally, a 4% Health and Education Cess is applied to the tax amount after adding surcharge in both regimes.
Moreover, employees have the flexibility to choose whether they want to go with the old or the new. We strongly recommend that employers educate their employees about these options to make informed decisions.
As an employer, you are responsible for calculating the income taxes based on every employee’s preferred tax regime and remit them accordingly.
By partnering with an Employer of Record (EOR) service, companies can efficiently manage tax compliance and other employment-related responsibilities in India.
TDS is a mechanism where the tax is deducted at the source of income by the payer and deposited with the government. Employers are required to deduct TDS from their employees' salaries based on the applicable tax slab rates. The deducted amount is then remitted to the government on behalf of the employee. For example, if an employee's monthly taxable salary is ₹1,00,000, and their annual taxable income falls in the 30% tax bracket, the employer will deduct ₹30,000 (30% of ₹1,00,000) as TDS every month and remit it to the government.
Professional tax is a tax levied by state governments on salaried individuals, professionals, and businesses. The tax rates and slabs vary from state to state. In most states, employers are responsible for deducting professional tax from their employees' salaries and remitting it to the state government.
Our state-wise analysis shows that professional tax rates vary across India. For instance, in Maharashtra, the professional tax slabs for salaried individuals are:
The Indian tax system offers various deductions and exemptions that can help employees reduce their taxable income and, consequently, their tax liability. Some of the common deductions and exemptions include:
For example, if an employee invests ₹1,00,000 in PPF and pays ₹25,000 towards health insurance premiums, they can claim deductions of ₹1,25,000 under Sections 80C and 80D, respectively, thereby reducing their taxable income.
PF is a retirement savings scheme mandated by the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. It applies to establishments with 20 or more employees. Both the employer and employee contribute 12% of the employee's basic salary and dearness allowance towards the PF account. The employee's contribution is deducted from their salary, while the employer's contribution is in addition to the salary. PF contributions are eligible for tax deductions under Section 80C of the Income Tax Act. Employers must register with the EPFO and make monthly contributions.
GST is an indirect tax levied on the supply of goods and services in India. Companies providing services may be required to register for and pay GST if their annual turnover exceeds the prescribed threshold (₹20 lakhs in most states, ₹10 lakhs in special category states). GST rates vary based on the type of goods or services, with most services falling under the 18% tax bracket. Employers must ensure proper GST registration, invoicing, and filing of returns.
ESI is a self-financing social security and health insurance scheme for Indian workers. It is mandatory for establishments with 10 or more employees and applies to employees earning up to ₹21,000 per month. The employer contributes 3.25% of the employee's wages, while the employee contributes 0.75%. ESI provides various benefits such as medical care, sickness benefits, maternity benefits, and disability benefits. Employers must register with the ESIC and make timely contributions.
In conclusion, understanding the various taxes applicable to employees in India, along with the available deductions and exemptions, is crucial for effective tax planning and compliance. Employees should consult with tax professionals to determine their tax liability accurately and take advantage of the tax-saving opportunities provided by the Indian tax system.
In the post-pandemic world of remote work, skilled professionals in India have exciting opportunities to work for foreign firms. However, a significant portion of their income is lost to taxes. Did you know that salary earned for services rendered in India is taxable, regardless of residential status or where payment is received? With the new tax regime, individuals earning above ₹15 lakhs per annum fall into the 30% bracket, meaning ₹30 of every ₹100 earned goes to income tax.
Wisemonk, as your Employer of Record (EOR) in India, acts as the legal employer, optimizing employee taxes and enhancing take-home pay. Our expert team handles complex tax regulations, statutory contributions, and compliance on your behalf. We provide personalized tax planning services, leveraging deductions, exemptions, and statutory benefits under Indian laws. Partner with Wisemonk to ensure your employees receive maximum tax benefits while reducing liabilities and simplifying compliance.
We ensure your employees receive the maximum tax benefits available under Indian regulations.
Click here to learn more: Employee Tax Optimization in India.
Looking to hire employees in India but unsure about the total cost?
Our fully loaded cost calculator makes it easy for you to estimate your expenses. Simply enter the gross salary of your potential employee, and our calculator will provide you with a comprehensive breakdown of the total cost, including our Employer of Record (EOR) fees. With this tool, you can make informed hiring decisions and budget effectively for your expansion into the Indian market. Try our fully loaded cost calculator now and take the first step towards building your world-class team in India.
In India, employee leave policies are governed by various labor laws, including the Shops and Establishments Act, the Factories Act, and state-specific regulations. These laws ensure that employees receive adequate time off for rest, relaxation, and personal needs, while also considering the operational requirements of businesses. Employers are required to maintain proper records of leave taken by employees and ensure that leave balances are correctly calculated and reflected in the payroll. Non-compliance with leave regulations can result in legal penalties and damage to the employer's reputation.
Employees are entitled to a minimum of 15 days of earned leave per year, accrued at 1.25 days per month. This leave can be carried forward and is often used for planned vacations or personal time off.
Usually ranging from 7-10 days per year, casual leave is meant for unforeseen circumstances or short-term personal needs. It cannot be carried forward and is often used for emergencies or unexpected situations.
Typically, employees are entitled to 12 days of sick leave annually, used for short-term illnesses. The Indian Shops and Establishment Act mandates up to 7 days of paid sick leave. Some organizations allow accumulation of unused sick leave.
As per the Maternity Benefit (Amendment) Act, 2017, female employees are entitled to 26 weeks of paid maternity leave. This includes 8 weeks of pre-natal and 18 weeks of post-natal leave, ensuring adequate time for new mothers.
While not statutorily required in the private sector, many progressive companies like Zomato offer paternity leave as a benefit. The duration varies, with some companies offering up to 26 weeks, matching maternity leave provisions.
Offered on compassionate grounds for the death of a family member, bereavement leave is not mandated by law but is common practice. The duration varies across organizations, typically ranging from 3-5 days.
Some companies provide marriage leave for employees getting married or attending a family member's wedding. The duration and eligibility criteria for this leave type vary across organizations.
Granted at the employer's discretion, sabbatical leave allows employees to pursue higher education, take career breaks, or deal with family/health crises. There are no legal provisions for this leave, and policies vary widely among companies.
For more in-depth information, explore our comprehensive guide: "Understanding Leave Policy Laws and Holidays in India."
In our years of experience managing employee benefits for international companies in India, we've observed that a well-structured benefits package is crucial for attracting and retaining top talent but also contribute to employee well-being and job satisfaction. In India, employee benefits can be broadly categorized into statutory and supplementary benefits.
Our legal experts have identified the following mandatory benefits that employers must provide :
Based on our market research, we've found that competitive companies often offer supplementary benefits to enhance their employee value proposition. Common supplementary benefits include:
Wisemonk offers a comprehensive Flexible Benefits Plan (FBP) that allows employees to customize their salary components according to their personal needs, resulting in significant tax savings. The plan includes a range of benefits such as meal cards, fuel allowances, gift cards, and reimbursements for telecom, attire, and books. Our clients report that this plan has resulted in significant tax savings for employees, up to ₹40,000 annually, while increasing satisfaction and retention without raising CTC, making it easy for employees to avail tax savings of up to ₹40,000 annually.
For employers, the FBP helps increase employee satisfaction and retention without raising CTC. With a 100% compliant platform, Wisemonk's Flexible Benefits Plan offers a win-win solution for both employees and employers.
| Flexible Benefits Components | IT Section | Old Tax Regime | New Tax Regime | Annual Maximum Amount |
|---|---|---|---|---|
| Meal or Food Allowance | Section 10 | |
|
39,600 |
| Fuel Allowance | Section 17 | |
|
28,800 |
| Mobile and Internet | Section 17 | |
|
24,000 |
| Gift Wallet | Section 17 | |
|
5,000 |
| Attire/Apparel | Section 10 | |
|
36,000 |
| Books and Periodicals | Section 10 | |
|
36,000 |
| Total | 1,69,400 | |||
In our extensive experience managing employee terminations for international companies in India, we've found that this process requires careful navigation of various labor laws and regulations. Here's a comprehensive overview of the key aspects:
Our legal team has observed that according to the Industrial Disputes Act 1947, employers must provide a notice period ranging from 30 to 90 days for non-supervisory, non-administrative, and non-managerial roles. We strongly advise clearly defining notice periods in employment contracts to avoid potential disputes.
Severance pay, also known as retrenchment compensation, is governed by the Industrial Disputes Act 1947 and the Payment of Gratuity Act 1972. It's mandatory for employees who have completed at least one year of continuous service. The minimum severance pay is calculated as 15 days' average pay for every completed year of continuous service (or any part thereof exceeding six months).
We've found that many companies, especially MNCs, offer more generous severance packages to maintain goodwill and avoid potential disputes.
Based on our extensive experience managing employee terminations in India, we've identified five key steps for a compliant and smooth process:
Our clients have benefited from knowing that:
Remember, termination laws in India strongly favor employee protection. We always recommend seeking legal counsel to navigate the complexities of individual cases and ensure full compliance with current regulations.
Our HR experts have identified four main types of termination in India:
In our experience handling visa and work permit processes for numerous international clients, obtaining the necessary documentation for foreign employees in India can be complex. Here's a comprehensive guide to navigating this process:
Foreigner Registration:
We've found that foreigners staying in India for more than 180 days must register with the FRRO or FRO within 14 days of arrival. This can be done through the e-FRRO portal (https://indianfrro.gov.in/eservices/home.jsp). Required documents include passport, visa, proof of residence, employment contract, and photographs. A Residential Permit and Registration Certificate will be issued upon successful registration.
Useful Websites:
Our team strongly recommends checking the latest requirements on official websites and consulting with the nearest Indian Embassy, High Commission, or Consulate for up-to-date information.
Wisemonk is your all-in-one solution for expanding into India. As a leading Employer of Record (EOR) provider, we offer comprehensive services that go beyond traditional EOR offerings:
Our local expertise, transparent pricing (starting at $100 per employee per month), and advanced technology platform set us apart. We offer the industry's lowest FX markup (<0.6%) and include benefits like expense reimbursements and employee gifting at no extra cost.With Wisemonk, you can effortlessly hire, pay, and manage talent in India without establishing a local entity. We handle the complexities, allowing you to focus on your core business growth.
Ready to build your team in India? Contact Wisemonk today to streamline your expansion into India while minimizing costs and compliance risks.
Click here to speak to an expert and start building your world-class team in India!
How does an Employer of Record ensure compliance with local labor laws in India?
An Employer of Record (EOR) in India stays up to date with the complex and ever-changing local labor laws and regulations. They handle all legal aspects of employment, including contracts, payroll, taxes, and benefits, ensuring full compliance with Indian labor laws on behalf of the client company.
What are some key Indian labor laws that an EOR helps navigate?
Some important Indian labor laws an EOR assists with include the Minimum Wages Act, Payment of Wages Act, Employees' Provident Funds and Miscellaneous Provisions Act, Employees' State Insurance Act, Maternity Benefit Act, and various state-specific Shops and Establishments Acts governing work hours, leave, and employee welfare. Our legal experts continuously monitor these laws to ensure our clients maintain compliance across all aspects of employment.
How does an EOR act as the legal employer for a company's workforce in India?
An Employer of Record (EOR) in India becomes the legal employer of record for a company's employees. The EOR assumes all legal responsibilities and liabilities associated with employment, while the client company maintains day-to-day control over the employees' work and performance.
How does an EOR help companies comply with Indian employment laws when hiring international employees?
An Employer of Record (EOR) in India assists companies in hiring international employees by ensuring compliance with Indian employment laws, including obtaining necessary work visas and permits, drafting locally compliant employment contracts, and managing payroll and taxes as per Indian regulations.
Is EOR legal in India?
Yes, Employer of Record (EOR) services are legal and commonly used in India. EORs act as the legal employer of workers, handling payroll, HR administration, benefits, and compliance matters on behalf of client companies.
Can an EOR help manage employment contracts for a company's remote workers in India?
Based on our work with remote teams, EORs can indeed draft and manage employment contracts for a company's remote workers in compliance with Indian labor laws. The EOR ensures that the contracts include all necessary clauses and provisions, protecting both the company and the employees.
What are the challenges of hiring in India?
Our research shows challenges involve intense competition for top talent, skill gaps, cultural differences, and navigating complex labor laws. Many of our clients leverage EOR services to overcome these challenges and build successful teams in India.
How does an EOR support companies in providing employee benefits to their Indian workers?
An Employer of Record (EOR) in India helps companies provide statutory and supplementary employee benefits to their Indian workers. The EOR ensures compliance with mandatory benefits such as Provident Fund and Employee State Insurance and can also assist in offering additional benefits like health insurance and leave policies.
Does EOR have a platform and what features does it include?
Yes, many Employer of Record (EOR) providers offer a platform to streamline HR processes. These platforms typically include features such as employee onboarding, contract management, payroll processing, benefits administration, leave management and compliance management. Wisemonk, a leading EOR provider in India, offers a feature-rich platform to help companies manage their remote teams efficiently while ensuring compliance with local laws and regulations.
How much does an EOR cost in India?
The cost of EOR services in India varies depending on factors such as the number of employees, their salary levels, the complexity of services required, and the location within India. When choosing an EOR in India, it's important to compare pricing models and consider both the base fees and any potential hidden costs. At Wisemonk, we pride ourselves on offering transparent, flat-rate pricing while maintaining a high level of quality and strict compliance standards.
Which is the best employer of record service in India?
When choosing the best Employer of Record (EOR) service in India, it's important to consider factors such as compliance expertise, cost-effectiveness, range of services, and customer support. While there are several reputable EOR providers in India, we believe Wisemonk stands out for its comprehensive offerings, transparent pricing, and deep understanding of the Indian market.
We encourage you to compare different providers based on your specific needs and refer to our detailed comparison of Best Employer of Record (EOR) providers in India [2025].
What is the difference between EOR and PEO?
An Employer of Record (EOR) acts as the legal employer, handling all employment tasks and compliance. It's ideal for companies hiring internationally without a local entity. A Professional Employer Organization (PEO) acts as a co-employer and shares employer responsibilities with the client company, requiring an existing local entity. EORs provide a more comprehensive solution for global hiring, while PEOs offer HR support to businesses with an established presence.
If you want to understand the difference between EOR and PEO, refer to our article: "PEO vs. EOR: What is the Correct Strategy for Your Organization?"
Is there a minimum or maximum number of employees I can onboard using Wisemonk?
At Wisemonk, we're proud to offer flexible solutions for businesses of all sizes. Whether you need to onboard a single employee in India or set up teams across multiple countries, our services are scalable to meet your specific requirements.
