Relocation from USA to India: A Guide for US Employers

An employee tells you they are moving to India, and the move date is already on the calendar. Relocation from USA to India looks like a logistics question, but it is really a structure question: who employs this person once they land, and what do you owe on each side of the border?

This guide is for US founders, people leaders and finance teams in that position. It covers the employee scenarios that matter, your four structural options, what ends in the US and starts in India, and what it costs, with deeper guides on payroll and retention where each one earns its place.

Which employee scenario applies to your relocation?

Before you compare structures, pin down who is actually moving. The same move date creates very different obligations depending on the person's status.

• Indian national on a US work visa: This is the most common case. Once they leave the US and their US employment ends, they are generally treated as a nonresident alien for US tax, and pay for work performed outside the US is generally not US wages subject to withholding. The year they leave is usually a dual-status year, so a US CPA should confirm the details.
• US citizen: They remain a US taxpayer on worldwide income wherever they live. Unless they hold Overseas Citizen of India (OCI) status, working in India generally means an employment visa, and our India work visa and permit guide covers the process. OCI holders usually do not need an employment visa for private-sector work, but confirm with the consulate or MHA: the consulate's OCI page gives OCI holders parity with NRIs in economic matters (except agricultural and plantation property), says they cannot normally hold government employment, and requires prior permission for missionary, mountaineering and journalism activities and permits for protected or restricted areas.
• Green card holder: The US filing duties match a citizen's, and there is an extra immigration question about how long they can stay abroad without putting their permanent residence at risk. We cover it in its own section below.
• Remote-first or acqui-hired employee: Someone who simply prefers to live in India, or who joined through an acquisition, follows the same structural rules once they work from India for the long term.

India's residency tests turn on days. A person is resident with 182 days in a tax year, or with 60 days plus 365 days across the preceding four years, according to the Income Tax Department's FAQ. The clock starts on arrival, not when the paperwork is done.

As an India-native EOR supporting 300+ global companies, we treat the employee's status as the first question in any relocation, since it decides which rules apply.

For the retention side of the conversation, read our guide on how to retain a US employee relocating to India.

Why are US employees moving to India now?

Reasons vary. Family and caregiving are common, and some employees simply prefer to live in India and keep working remotely for a US team.

For employees on H-1B status, a job ending starts a clock. USCIS says a worker whose employment ends may have up to 60 consecutive days, or until the authorized validity ends if sooner, to find new employment, change status or depart. DHS published a proposed rule on 11 September 2026 to remove that grace period for H-1B and several other categories (Federal Register), but it stays in force until a final rule is issued, so check the current position before planning around it. Separately, a $100,000 payment applies to certain new H-1B petitions, which affects how costly it is to bring someone back later, but a federal court vacated the agency guidance on 8 June 2026 and the position is still moving.

Whatever the trigger, the window is short. A fixed move date, an ending visa or a notice period usually leaves weeks, not months, to settle the structure. If relocations are becoming a pattern at your company, our guide to global mobility strategy explains how to set a policy once instead of deciding case by case.

What are your options for relocation from USA to India?

There are four ways to handle the employment relationship once someone lives in India, and three of them come with a catch.

Four relocation paths compared

Keeping them on US payroll works, if at all, only as a short bridge. US payroll systems typically cannot withhold Indian income tax or make provident fund contributions, and a US employee doing core work from India can create permanent establishment (PE) risk for the company. India taxes the profits attributable to a PE, with foreign companies taxed at a 35% base rate, a 2% surcharge on income of ₹1 crore to ₹10 crore or 5% above ₹10 crore, and 4% cess, according to the Income Tax Department, which works out to an effective rate of roughly 36.4% to 38.22%. Our guide to permanent establishment risk in India lists the triggers.

The contractor route looks clean on paper and often is not. Authorities weigh control, exclusivity and who supplies the equipment, not the label, so reclassification can bring back-payment of benefits and penalties. See contractor misclassification risk in India and contractor vs EOR employee in India for the tests and the cost.

An Indian subsidiary gives you full control and takes months to stand up, followed by annual filings and audits. Our EOR vs entity comparison shows why an entity usually pays off only once you have a few dozen long-term employees.

An Employer of Record becomes the legal employer on its own Indian entity while you keep directing the work. For the full mechanics, see how an Employer of Record works, and for the map across other countries, our pillar guide to relocation to India.

Which relocation path fits which employee?

The right path depends less on the move itself than on what else is true about the employee and your India plans. The table maps common situations to the structure that usually fits.

Path by employee situation

If a relocation is the first step into India, our guide to using an EOR before setting up an India entity shows how US startups sequence the decision.

What ends on the US side when someone relocates?

Choosing the EOR route means the employee resigns from your US entity and signs an Indian contract, so several US items close at once.

• Payroll and W-2: Final wages, state withholding and the year's W-2 follow your normal separation process. Pay for work performed in India after the move should not keep running through US payroll.
• State tax residency: Ending payroll does not by itself end state residency, and states apply different tests. Ask your CPA to confirm the employee's position, especially in states that look at domicile.
• Group health coverage: Eligibility under your employer plan ends with employment. Ask your plan administrator whether COBRA is offered and whether it would cover care in India. On the India side, cover is arranged through the EOR, as our guide to health insurance through an EOR explains.
• 401(k): The employee can usually leave the balance in the plan, roll it over or withdraw it. A rollover is not taxable, while an early distribution before age 59½ generally adds a 10% additional tax unless an exception applies, according to the IRS.
• Equity: Whether vesting continues depends on how your plan defines continuous service and on any board approval needed. Our guide to ESOPs via EOR employment explains how parent-company equity works for India employees. Having supported 2,000+ employees on Indian payroll, we handle the Indian tax on parent-company stock options, which Wisemonk's pricing FAQ confirms are possible.
• IP and confidentiality: Your US agreements do not carry over automatically. The Indian contract needs its own assignment and confidentiality terms, with a back-to-back assignment from the EOR to your US entity.

If your plan grants restricted stock units, see whether an India EOR employee can receive RSUs from a US C-corp before the resignation date is fixed.

What starts in India on the first day?

On arrival, India's rules apply to the person and to the pay, whatever your US documents say.

• Tax residency: The 182-day and 60-plus-365-day tests decide when the employee becomes resident. A person returning after years abroad often qualifies as resident but not ordinarily resident (RNOR), which applies where they were non-resident in nine of the ten preceding years or spent 729 days or fewer in India in the preceding seven. RNOR status can narrow what India taxes in the early years, mainly income earned abroad, but whether it applies to your employee needs a chartered accountant's view.
• Provident Fund: Employer and employee each contribute 12% of basic wages up to a monthly ceiling of ₹25,000, raised from ₹15,000 on 17 September 2026 under notification S.O. 5109(E), per the PIB press release and the Gazette notification. Our glossary explains the Provident Fund in plain terms.
• Gratuity: It becomes payable after five years of continuous service, or after one year on a fixed-term contract, and is provisioned monthly at about 4.81% of basic pay according to Wisemonk's EOR guide. Statutory gratuity runs from service with the Indian employer, so recognising earlier US tenure is a term to agree in the contract.
• Contract and notice: The Indian-law contract replaces the US offer letter, with notice periods set by contract and state law. See notice periods for EOR employees in India for what is enforceable.
• Pay structure: Under the Code on Wages, allowances excluded from wages cannot exceed 50% of total pay, and any excess is treated as wages for provident fund and gratuity. The US salary has to be rebuilt into Indian components, not converted line by line.

Managing more than $20 million in annual payroll for global teams in India, we treat the first pay cycle as the test of a relocation, because every item above has to be right at once. The mechanics, forms and monthly filings are in our payroll and tax setup guide for US employees relocating to India.

Which US tax and filing duties continue after the move?

Not every relocating employee keeps US filing duties, which is why the status question comes first. For the ones who do, the duties summarised here continue whichever structure you choose.

• Form 1040: US citizens and green card holders file on worldwide income every year. An Indian national who has become a nonresident alien generally does not, beyond the year of departure, unless they keep US-source income.
• Foreign earned income exclusion or foreign tax credit: US persons can exclude up to $132,900 of foreign earned income for 2026 if they meet the IRS residence or physical presence tests, per the IRS, or claim a credit for Indian tax paid. Which route is better depends on the numbers.
• FBAR and Form 8938: FBAR applies when foreign accounts exceed $10,000 in aggregate at any time in the year. Form 8938 for single filers living abroad starts at $200,000 at year-end or $300,000 at any time, and $400,000 and $600,000 for joint filers, per the IRS comparison. They are separate filings.
• Social security: IRS Publication 54 says US social security and Medicare taxes generally do not apply to services performed outside the US, with exceptions that include an American employer. With a genuine Indian employer, FICA generally falls away while provident fund applies. SSA's operations manual (POMS GN 01701.005, dated 17 September 2026) lists 31 countries with agreements, and India is not among them, so there is no treaty relief if both systems claim the same wages.

Pro Tip: Book the US CPA and Indian chartered accountant conversations before the resignation date, not after the first payroll. The departure year and the first Indian tax year are cheaper to plan than to repair.

For the employee's own Indian filings once salary starts, note that the salary TDS certificate is Form 16 (issued as Form 130 for salary paid from 1 April 2026 under the Income-tax Rules, 2026), and our guide to Form 16, TDS and ITR filing when your employer is foreign walks through what to expect.

What should green card holders know before relocating?

A green card holder can live and work in India through an employer of record, but the immigration side needs its own plan. USCIS says lengthy or frequent absences can support a conclusion that someone has abandoned permanent resident status.

For an absence of a year or more, USCIS advises applying for a re-entry permit. The permit generally lasts up to two years, and the application is filed from inside the US before departure, according to USCIS. It does not guarantee re-entry.

The US tax position stays as described above, because green card holders remain US filers on worldwide income. Employers cannot give immigration advice, so the employee should speak to an immigration attorney before the move date is fixed.

How much does relocating through an EOR cost?

Wisemonk's EOR fee is a flat monthly amount set by the employee's annual salary, so the band your relocated employee falls into matters more than the headline "from" price.

EOR fee by salary band

A senior US engineer will often sit in the top band, although restructuring pay to Indian norms can change the salary figure and therefore the band. Illustrative example, not a quote: a relocated employee paid $90,000 would sit in the $399 band, which is $4,788 a year in fees before statutory contributions and insurance.

• Setup and exit: $0 for setup, onboarding and offboarding.
• Currency: A 1% FX markup, with no markup on salaries.
• Deposit: Two months' salary plus fee, so payroll is always funded.
• Add-ons: Laptops and insurance are billed at cost.
• Statutory costs: Employer provident fund, gratuity and leave provisions sit on top of salary and are the same whichever provider you choose.

On the worked example in Wisemonk's EOR guide (an estimate for a ₹6,00,000 salary as of September 2026), the fee is $1,188 of a $8,209 yearly cost, so statutory and benefit lines matter as much as the fee. To compare providers on price, see our breakdown of Employer of Record cost in India.

How long does the move take?

For an Indian national, a compliant India payroll typically starts within one to two weeks. A foreign national who needs an employment visa usually takes six to ten weeks, according to Wisemonk's EOR guide, so start earlier for a US citizen without OCI.

1. Confirm status and move date: Get the US CPA and, where relevant, immigration advice on the employee's position.
2. Choose the structure: Sign the service agreement with the EOR.
3. Agree the Indian package: Rebuild the US salary into Indian components so take-home is protected.
4. Issue the contract: The employee signs the Indian contract, and the US resignation is timed to the last US payday.
5. Register the employee: PAN, provident fund and other statutory registrations are completed before the first pay run.
6. Run the first payroll: The EOR pays in rupees, deducts tax at source and files the returns.

A compliant offer can be issued within 24 to 48 hours of the details being shared, so the long pole is usually the employee's documents and the move date, not the paperwork.

When is relocation not the right fit?

Some moves do not need a new employer at all. For stays under roughly six months, moving employment to an Indian structure is usually disproportionate, and the better questions are your remote-work policy, payroll tax and PE exposure for that period.

A new structure also cannot fix everything. If the relocated employee will sign contracts, negotiate deals or close customers on your behalf from India, PE risk can remain even under an EOR. Our guide on how to avoid permanent establishment risk in any country explains where the line sits.

Practical Tip: Write down what the relocated employee may and may not do in India, such as signing, negotiating or closing, before the move. A one-page role boundary is easier to enforce than a PE dispute is to defend.

Where can you find more India hiring answers?

If you want specific answers on compliance, payroll and hiring structures, these Wisemonk FAQ hubs go deeper:

• India compliance and legal FAQs
• Hiring in India without a local entity FAQs
• Payroll, benefits and employee management FAQs
• Contractor engagement and employment risk FAQs
• Choosing the right hiring approach for India FAQs
• Scaling teams in India FAQs

How can Wisemonk keep your relocating US employee?

Wisemonk is an India-native Employer of Record that helps global companies hire, pay and manage employees without setting up a local entity in India. For a relocating US employee, we take over the Indian employment, payroll and statutory compliance so the person keeps their role and your team keeps its context.

Here is what we handle when a US employee moves home:

• Employer of Record services: We become the legal employer through our own Indian entity, with no partner network, starting at $99 per employee per month for salaries up to $12,800 ($199 and $399 above that). Setup, onboarding and offboarding cost $0, and a named India-based HR manager looks after your team.
• Salary and CTC structuring: The US salary is rebuilt into Indian components with take-home protected, and our calculator shows how a CTC turns into net pay under both tax regimes.
• Compliant employment contracts: Contracts follow Indian law and assign IP to you in every contract, with confidentiality terms built in.
• Health insurance and equipment: Insurance for every employee plus laptops delivered, set up and collected, with laptops and insurance billed at cost.
• Equity and entity transition: Stock options from your parent company are supported with the Indian tax handled by us, and we set up your own Indian entity and move the team with tenure intact when you are ready.

Today, we support 2,000+ employees across global teams, manage more than $20 million in annual payroll, and maintain a 4.8 rating on G2.

Hear from our clients

"We came across Wisemonk and met with the CEO and staff to explain our situation, and were very impressed with their customer-focused approach to their business. Wisemonk onboarded all of my employees in one or two days. They paid my employees' salaries on the day after my payment cleared. Needless to say, my employees and I were very satisfied with their service then and remain so over a year later. We are an American company, so I was very happy to see that they have a US bank account where I can make ACH payments to minimize bank charges. All salary payments are timely. They worked directly with my employees to enroll them in the health care program and explain any coverage-related issues. The best part is that we get to work with a dedicated person assigned to our company. I would highly recommend Wisemonk and think of them as our Indian HR department."
- Frank Menes, Founder & CEO, Senem RFP

From San Francisco to Hyderabad: one engineer, nine days

A 30-person B2B SaaS company in San Francisco had a senior backend engineer with three years on the team who needed to move to Hyderabad for family reasons. He was an Indian national on US payroll, the company had no Indian entity, and the move date was roughly six weeks away.

The path choice was effectively made by the facts: US payroll could not continue once he lived in India. Wisemonk became his Employer of Record, so his US payroll ended and an Indian employment contract began, with provident fund, professional tax, income-tax deductions, gratuity and statutory health benefits set up from the first pay cycle. His compensation was restructured to Indian norms while protecting his take-home pay, and his tenure carried over, with one Wisemonk contact managing the contract, payroll and compliance.

The outcome: one senior engineer retained, 100% of pay, benefits and tenure preserved with no gap, and 9 days from offer to first compliant India payroll.

Read the full story in the case study.