India is a huge opportunity for global companies looking to expand, with over 1.2 billion people, a highly skilled labor force, and a rapidly expanding middle class. India is a complex market with multiple legal and administrative systems, a government structure with central and state budgets, and rich regional diversity.
One of the major challenges to expanding and managing payroll in India is the frequent change to both central and state regulations and business procedures. Each region has its own unique challenges and languages, so payroll can be complex to navigate.
Payroll requirements in India include registration with the Provident Fund for companies with 20 or more employees, and the Shop and Establishment Act. Additionally, payroll teams must manage payment calculations for Employee State Insurance (ESI), Professional Tax, and the Labor Welfare Fund.
There are several funding options available for employee payroll. For companies with a local bank account, employees can be paid directly in the local currency. For companies with no in-country bank account, clients can fund payroll in USD and Blue Marble can settle in the local currency.
Employment Considerations in India:
- The fiscal year runs from April 1 through March 31 each year
- There is no standard minimum wage in India, but the federal government recommends a minimum wage of Rs. 176 per day
- Work hours are limited to 48-50 hours per week
- Termination of employees requires 30 days notice
- Work visas are needed for foreigners, typically valid for the duration of the work contract, 1 year or a maximum of 5 years
- Individual income tax rates are based on income level and age
Tax and Surcharges:
- The corporate tax rate in India is 30%, but foreign businesses are taxed at 40%
- Health and Education charge is collected at 4% of the income tax
- Surcharges on 10-15% of income tax payments are applied if income is over Rs. 5 million
Sick Leave Policies:
- The standard policy in India provides 12 paid sick days per year
- Due to the COVID-19 crisis, the Karnataka government has issued a notification mandating 28 days of paid leave for coronavirus-infected employees
Blue Marble provides a cloud-based payroll platform with customized monthly reporting so you can view payroll in real-time. Our money movement services ensure your employees are paid on time and in the local currency. We have a hybrid service model with a US-based team as well as direct access to our in-country experts so you can get answers to your payroll and compliance questions when they come up. Let us help simplify your payroll in India – click here to get started