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Payroll and benefits guide

India

CapitalNew Delhi
Fiscal Year1 April - 31 March
Date Formatdd/mm/yyyy
CurrencyINR (Indian Rupee)
Payroll FrequencyMonthly
Employer Taxes13% – 16.25%
Employee Costs12% – 12.75%

Overview

Languages
Hindi, English
Income tax
0% – 30%
VAT
18%
Reduced rates: 5%. Goods and Services Tax (GST); since September 2025 the main rates are 5% and 18%, with 40% on luxury and sin goods

Contributions

Employer

3.67%
Employees' Provident Fund (EPF)Part of the 12% employer share. Mandatory on wages up to INR 15,000 per month; many employers contribute on full basic pay
8.33%
Employees' Pension Scheme (EPS)Part of the 12% employer share; calculated on wages up to INR 15,000 (maximum INR 1,250 per month)
0.5%
EPF administration charge
0.5%
Employees' Deposit Linked Insurance (EDLI)On wages up to INR 15,000
3.25%
Employees' State Insurance (ESI)Only for employees earning up to INR 21,000 per month
13% – 16.25%
Total employer costExcludes gratuity and state Labour Welfare Fund contributions

Employee

12%
Employees' Provident Fund (EPF)Matches the employer share
0.75%
Employees' State Insurance (ESI)Only for employees earning up to INR 21,000 per month
Up to INR 2,500 per year
Professional taxCharged only by some states, such as Maharashtra and Karnataka; slabs vary by state
12% – 12.75%
Total employee costExcludes income tax and professional tax

Authority Payments

Authority Payment
Income Tax Department
Paid To
Tax deducted at source (TDS) on salaries
Due Date
By the 7th of the following month (30 April for March)
Method
Online challan, with quarterly Form 24Q returns
Authority Payment
Employees' Provident Fund Organisation (EPFO)
Paid To
EPF, EPS, and EDLI contributions
Due Date
By the 15th of the following month
Method
Electronic challan-cum-return (ECR) on the EPFO portal
Authority Payment
Employees' State Insurance Corporation (ESIC)
Paid To
ESI contributions
Due Date
By the 15th of the following month
Method
ESIC online portal
Authority Payment
State tax and labor departments
Paid To
Professional tax and Labour Welfare Fund
Due Date
Monthly, half-yearly, or yearly, depending on the state
Method
State online portals

Minimum Wage & Working Hours

Minimum wage
Varies by state / Daily or monthly
Each state sets rates by skill level, industry, and zone, and many revise them twice a year. A national floor wage under the Code on Wages had not been notified as of October 2026
Standard working hours
8–9 hours per day, 48 hours per week
State shops and establishments acts set daily limits and weekly rest; office roles are often contracted at 40–45 hours
Overtime
200% of ordinary wages for workers covered by factory and state shops and establishments laws

Leave

  • Annual leaveVaries by stateFactory workers earn 1 day for every 20 days worked; state shops and establishments acts set entitlements for office staff
  • Sick leaveVaries by stateSet by state law; ESI-covered employees receive cash sickness benefit from ESIC
  • Maternity leave26 weeks paidFor the first 2 children (12 weeks after that); requires 80 days of work in the prior 12 months. Paid by the employer, or by ESIC for ESI-covered employees
  • Paternity leaveNo statutory entitlement in the private sectorMany employers offer 5–15 days by policy
  • Public holidays3 national holidays plus state festival holidaysRepublic Day, Independence Day, and Gandhi Jayanti are national; states add festival holidays, so totals vary

Termination

Probation period
Not set by law; 3–6 months is common
Notice period
Set by contract and state law; 30–90 days is common after probation
Severance pay
Gratuity of 15 days' wages per year after 5 years of service, capped at INR 20 lakh; retrenched workers also receive 15 days' average pay per year of service
13th salary
Not mandatory; a statutory bonus of 8.33%–20% applies to employees earning up to INR 21,000 per month
Notes
Under the new labor codes, fixed-term employees qualify for gratuity after 1 year

Benefits

  • Provident fundMandatory

    EPF and EPS retirement contributions through EPFO

  • GratuityMandatory

    Lump sum on exit after 5 years of service (1 year for fixed-term staff)

  • Group health insuranceCommon

    Medical cover for the employee and family, standard for salaried roles

  • Meal and flexible allowancesCommon

    Tax-efficient components in the salary structure

Visas & Work Permits

  • Employment visa (E visa)

    Duration
    Up to 1 year at first, extendable
    Requirements
    Job offer from an Indian employer and annual pay above USD 25,000, with limited exceptions

    Holders staying over 180 days register with the Foreigners Regional Registration Office (FRRO) within 14 days of arrival

FAQ

Sources

Last updated:

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