India - Guide to Hiring and Payroll

India - Guide to Hiring and Payroll

Know everything about hiring and compliance in India.

India - Guide to Hiring and Payroll

Minimum Wage Requirements

In India, minimum wage regulations are intricate and determined by individual state governments. Unskilled workers face a vast array of employment opportunities, with over 2000 job types and 400 job categories, each assigned a minimum daily wage. Adhering to these minimum wage guidelines is crucial for employers to comply with the relevant authority.


Overtime pay in India is typically calculated at a higher rate, often 1.5 to 2 times the regular hourly wage, and is usually mandatory for factory workers. The standard working hours differ by state but generally amount to around 40 hours per week, from Monday to Friday. The maximum permissible working hours, as per the Shops and Establishments Act, are 48 hours per week.

Employee Benefits

Mandatory benefits for employees in India encompass contributions towards the Employee Provident Fund (EPF), Employee State Insurance (ESI), and gratuity. Additionally, employers may offer various optional benefits such as health insurance coverage, retirement plans, transportation and meal allowances, and flexible work arrangements. The cost of mandatory benefits typically ranges from 5% to 6% of the employee's gross salary.


Although there is no legal requirement for employers to provide a bonus to employees in India, many companies opt to include annual or performance-based bonuses as part of their compensation packages.

To read more about Compensation & Benefits, download the Master Guide on Hiring in India.

Employers in India usually handle payroll on a monthly basis, following a preferred schedule as outlined below:

Payroll cut-off date: 25th of each month

Payment date: Last day of every month

Individual income tax in India is calculated using a progressive tax rate system, which varies depending on an individual's income slab.

Income Tax

Income Tax Slabs as per the New Regime:

Income Tax Slabs

Income Tax Slabs

Income Range Tax Slab
Up to Rs.3,00,000 Nil
Rs.3,00,000 to Rs.6,00,000 5% on income which exceeds Rs.3,00,000
Rs.6,00,000 to Rs.9,00,000 Rs.15,000 + 10% on income more than Rs.6,00,000
Rs.9,00,000 to Rs.12,00,000 Rs.45,000 + 15% on income more than Rs.9,00,000
Rs.12,00,000 to Rs.15,00,000 Rs.90,000 + 20% on income more than Rs.12,00,000

Cost of Employment

The monthly employer cost breakdown in India typically includes:

Employer's Contributions

Employer's Contributions

Description Percentage/Amount Maximum Limit
Employer's contribution towards provident fund (EPF) 12% of basic salary Upto employees matching contribution
Administrative Fee 1% of basic salary Up to Rs. 1800
Employee deposit linked insurance (EDLI) 0.5% of basic salary Up to Rs. 75
Professional tax Rs. 200 N/A

Additional Benefits

Furthermore, employers may need to cover additional benefits. Some of them are:

  • Health Insurance
  • Gratuity
  • Maternity Benefits
  • Paid Leaves
  • Provident Fund (PF)

Read more details about the benefits and associated tax rules in our detailed Master Guide on Hiring in India.

Employment Contract

An employment contract/agreement in India should encompass various essential details, including job responsibilities, compensation, benefits, working hours, leave policies, confidentiality agreements, termination procedures, and any other specific terms relevant to the employment relationship.


During the onboarding process in India, employees are typically required to provide the following documents:

  • Valid proof of identity, such as a passport or Aadhaar card.
  • Proof of address to verify their current residential address.
  • A recent photograph for identification purposes.
  • Educational certificates to authenticate their academic qualifications.
  • PAN (Permanent Account Number) card, necessary for taxation purposes.
  • Bank account details for salary processing.

In certain cases, additional documents may be requested from the previous employer, such as:

  • Salary payslips for the last three months, offering a record of recent earnings.
  • A relieving letter, confirming the employee's departure from the previous employment.


Although having a probation period for new hires in India is not obligatory, employers may choose to implement it. The probation period's duration should be clearly specified in the employment contract, typically ranging from 3 to 6 months. During this period, employers assess the employee's suitability for the role.

Background Check

While India follows a standard procedure for background checks. Wisemonk offers a physical Background Check service through a KYC (know-Your-Customer) Partner. A person is sent to the candidate’s home address to check his physical presence and run a background check.

Read more about Employment Regulations in our detailed Hiring Guide.

The four major types of Leaves mandated by the Indian law are:

  • Privileged Leave: Earned Leave or Priveleged Leave are entitled to based on their service. Indian law mandates that an employer provide a certain number of these leaves, typically around 18 days of paid time-off annually. This type of leave is that it is encashable and can be accumulated.
  • Maternal Leave: Maternity Leave is covered under Indian law, specifically by the Maternity Benefit Act. It entitles women employees to a paid absence from work to take care of their newborns.
  • Parental Leave: Parental Leave is not covered by the Indian Law. Only Maternal Leave is applicable.
  • Sick Leave: Sick Leave or Medical Leave are provided on the grounds of sickness or in case of accidents.
  • Paternal Leave: The Indian law doesn’t allow for a Paternal leave.

To read more about more types of leaves, download the Master Guide on Hiring in India.

Termination of employment refers to the end of an employee's contract or work relationship with an employer. This can occur under various circumstances and can be initiated by either the employee or the employer.

Involuntary Termination

This occurs when the employer decides to end the employment relationship, often due to reasons such as company downsizing, poor performance, misconduct, or restructuring. 


In India, severance pay is not mandatory unless explicitly stated in the employment contract or terms of separation. The entitlement to severance pay depends on the type of termination:

  • In cases of role redundancy: Severance pay may include gratuity (for employees with a continuous service of 5 years), accrued leaves, payment in lieu of notice (if no notice is given), applicable bonuses, and any other outstanding amounts as per the employee agreement.
  • In cases of termination due to employee misconduct: There is no entitlement to notice or severance pay in such instances.

Voluntary Termination

This happens when an employee decides to leave the organization on their own accord.

Notice Period

The notice period in India can vary depending on factors like the employee's position, duration of employment, and terms outlined in the employment contract. Typically, notice periods range from 30 to 90 days.

Read more about Employment Termination in our detailed Hiring Guide.

Business Visa (B-Visa)

The Business Visa is designed for individuals intending to engage in business activities in India, such as setting up industrial/business ventures, exploring potential business or trade, sales/purchases, attending technical meetings or board discussions, and other similar activities.

Visa Type Description Target Group
B-1 Business Visitor for short-term meetings, technical discussions General business visitors for short stays
B-2 Business Visitor from Small and Medium Businesses Visitors from businesses with turnover up to Rs. 10 crore, needing frequent visits
B-3 Business Visitor from Large Businesses Visitors from businesses with turnover of Rs. 10 crore and above, requiring frequent visits
B-4 Business Visa for Investors Individuals eligible for Permanent Residency Status under investor criteria
B-5 Crew Visa Crew of non-scheduled airlines, chartered and special flights
B-6 Academicians/Experts Visa Foreign academicians/experts participating in GIAN (Global Initiative of Academic Networks)
B-7 Business Visa for Partners/Directors Foreign nationals who are partners or directors in Indian businesses
B-X For Dependents For family members of a foreign national with a Business Visa.

Validity of Business Visa:

Offers flexibility with 1 to 5-year validity, catering to both short-term and long-term business engagements.

Extendable up to 5 years if the business turnover is at least Rs.1 crore per annum within 2 years of setup.

Stay per Visit & Annual Limit:

Upto 180 days and no cumulative maximum stay duration per year

Multiple Entries: Allowed

Eligibility & Permitted Activities:

Tailored for business explorations, meetings, and negotiations, aligning with the needs of U.S. companies expanding in India.

  • Business Engagement: Applicants must be engaged in business activities related to their field and should be visiting India to pursue these activities.
  • Buying or selling industrial/commercial products.
  • Attending technical meetings, board meetings, or general meetings.
  • Recruitment of manpower.
  • Business partners or directors.
  • Consultations or participation in exhibitions, trade fairs, etc.
  • Foreign buyers transacting with Indian suppliers.
  • Short-duration visits by foreign experts/specialists for ongoing projects.
  • No Employment in India: The applicant should not be seeking or taking up employment in India.

Required Documentation:

  1. Passport: Valid for at least six months beyond the date of visa application, with at least two blank pages.
  2. Application Form
  3. Photographs
  4. Business Letter: A letter from the applicant's company detailing the purpose of the trip, business activities planned in India, and a declaration of financial responsibility.
  5. Invitation Letter: An invitation from the Indian company outlining the nature of the business visit.
  6. Financial Proof: Bank statements or financial documents showing the applicant's ability to sustain expenses in India.
  7. Tax Compliance: Proof of tax compliance may be required in some cases.

Processing Time:

The processing time can vary but is generally around 3-5 working days, depending on the consulate and specific circumstances of the application.

Entry (X) Visa for Dependents:

Depending on the type of Business Visa granted, the dependents may be granted B-1 X, B-2 X, B-3 X and B-4 X visa.

Find more details about the duration, allowed activities and restrictions of dependents in our Visa Guide

Business Visa Fees

Primary Applicant

Fee Structure: The fee for a Business Visa varies depending on the applicant's nationality and the visa duration. For U.S. citizens, the fee is generally structured as follows (as of 2023):

  • Up to 10 Years/ Single or Multiple Entry - $160

Additional Charges: This may include service fees or processing charges, which can vary depending on the country of application or the agency handling the visa application.


Dependents' Fees: Dependents (spouse and children) applying for an Entry (X) Visa usually pay a fee similar to the Business Visa fee for the primary applicant.

Fees can vary based on the duration of the visa and the nationality of the applicant.

If you are looking for this visa from other countries than the United States, contact us.

Employment Visa/Work Permit

The Employment Visa is aimed at foreign nationals who are employed by an Indian company. This includes those who are being transferred to India as part of a company's staff, individuals coming to do voluntary work with NGOs, and expatriates employed in various sectors in India.

Visa Type Description Suitable For
E-1 Short-term Employment Visa Professionals taking up remunerative employment in India for up to 6 months.
E-2 Long-term Employment Visa Individuals employed in India for durations extending beyond 6 months.
E-3 Intra-company Transferee Visa Employees of multinational companies being transferred to the India office, typically in senior or specialized roles.
E-4 Visa for Honorary Work with NGOs Professionals engaged in honorary (unpaid/voluntary) work with registered Non-Governmental Organizations in India.
E-X For Dependents For family members of a foreign national with an Employment Visa.

Validity & Extension 

  • Up to 5 years for bilateral/collaboration agreement technicians/experts.
  • Up to 3 years for highly skilled IT personnel.
  • Up to 2 years for other employment, extendable up to 5 years.

Extensions are possible within India, subject to employment continuation.

Conditions for Grant

  • Job Offer from Indian Company: Must have a confirmed job offer in India.
  • Highly skilled/qualified professionals engaged by an Indian entity.
  • Not for jobs where qualified Indians are available or for routine clerical jobs.
  • Employment in registered Indian or foreign firms executing projects in India.
  • Minimum salary above US$ 25,000 per annum (exceptions apply).
  • Compliance with Indian Laws

Stay per Visit & Annual Limit

Continuous stay for the full visa period facilitates uninterrupted work engagement.

Multiple Entries: Offers flexibility for professionals to visit their home country when needed, maintaining international work-life balance.

Eligibility & Permitted Activities

Directly correlates with the professional's role, ensuring legal compliance and focused expertise.


  • Consultants on contract with fixed remuneration.
  • Artists performing in hotels, clubs, etc.
  • Coaches for national/state level teams or clubs.
  • Foreign sportsmen contracted by Indian organizations.
  • Self-employed foreign nationals in high-skilled services.
  • Language teachers/interpreters.
  • Engineers/technicians for equipment installation.
  • Technical support/service providers.

Restrictions: Ensures that the professional is dedicated to the role they were hired for, maintaining employment integrity.

Required Documentation

  1. Passport: Valid for a duration that exceeds the term of the visa.
  2. Application Form: Fully completed and signed.
  3. Photographs
  4. Employment Contract: A copy of the employment contract with the Indian company. This contract must stipulate the duration of the contract, the nature of the job, and the remuneration, which should meet the minimum salary threshold.
  5. Qualification and Experience Certificates
  6. Employer’s Justification: A letter from the Indian employer explaining why the foreign national was chosen for the job.
  7. Tax Compliance: Evidence of compliance with Indian tax requirements.

Processing Time:

Processing times can vary but are typically around 2-4 weeks. This duration can be longer if additional documentation or verification is required.

Entry (X) Visa for Dependents:

For dependents of Employment Visa holders Depending on the type of Employment Visa granted, the dependents may be granted E-1 X, E-2 X, E-3 X, E-4 X and E-5 X visa.

  • Purpose: Specifically for family members (spouse and children) of a foreign national holding an Employment Visa in India.
  • Duration: Typically aligned with the primary Employment Visa holder’s duration.
  • Allowed Activities: Non-remunerative activities like accompanying the primary visa holder, enrolling in educational institutions for study, or participating in cultural activities.
  • Restrictions: Employment is not permitted. If dependents wish to work, they must apply for an Employment Visa separately based on their job offer in India.

Employment Visa Fees

Primary Applicant

Fee Structure: Similar to the Business Visa, the Employment Visa fee varies based on nationality and visa duration. For U.S. citizens, typical fees are as follows (as of 2023):

  • Up to 6 months: $140.
  • 6 months to 1 year: Approximately $220.
  • More than 1 year upto 5 years: Approximately $220.

Additional Charges: These may include service and processing fees, differing based on the country of application.


Dependents' Fees: Dependents on an Entry (X) Visa generally pay a fee similar to that of the primary Employment Visa applicant.
The fees are subject to change based on nationality and the specific terms of the visa.

If you are looking for visa from other countries than the United States, contact us.

Key Differences for Dependent Visa and Business/Employment Visa

Aspect Dependent Visa Business/Employment Visa
Primary Purpose Aligned with the primary visa holder’s purpose (work or business activities). Specific to the visa holder’s business activities or employment.
Duration and Validity Usually matches the duration of the primary visa holder's stay. Determined by the business project, employment contract, or other specific criteria.
Activity Restrictions Generally not allowed to engage in employment. Activities are limited to non-remunerative ones like studying or cultural engagement. Focused on the specific purpose of the visa, such as conducting business or employment in a designated role.
Application Process Relatively straightforward and dependent on the status of the primary visa holder. Involves detailed documentation related to the specific business or employment purpose.
Work Authorization Employment not automatically authorized; separate Employment Visa required for working. Directly allows for the conduct of business activities or employment as per visa specifications.

Download the comprehensive Work Permits and Visa Guide here.

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Frequently asked questions

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What are the mandatory employee benefits in India?

The mandatory benefits for employees in India include contributions towards the Employee Provident Fund (EPF), Employee State Insurance (ESI), and gratuity.

What are some additional benefits that employers may offer in India?

Additional benefits that employers may offer in India can vary but commonly include health insurance coverage, retirement plans, transportation allowances, meal allowances, and flexible work arrangements.

What are the minimum wage requirements in India?

Minimum wage requirements in India are complex and are determined by the respective state governments. There are 2000 different types of jobs for unskilled workers and more than 400 categories of employment, with a minimum daily wage for each type of job. It is essential for employers to adhere to the minimum wage guidelines set by the relevant authority.

How is overtime pay calculated in India, and what are the maximum working hours?

Overtime pay is typically calculated at a higher rate, usually 1.5 or 2 times the regular hourly wage. This is usually mandatory for factory workers. The standard working hours vary by state and are typically around 40 hours per week, Monday to Friday.

Are employers required to provide a bonus to employees in India?

There is no legal requirement for employers to provide a bonus to employees in India. However, many companies offer annual or performance-based bonuses as part of their compensation package.

How often should employers process payroll in India?

Employers in India typically process payroll on a monthly basis. Most companies prefer the following schedule: - Payroll cut-off date: 25th of every month - Payment date: Last day of every month

What is the maternity leave policy in India?

In India, female employees are entitled to maternity leave of up to 26 weeks, as per the Maternity Benefit Act. This includes 8 weeks of leave before the expected delivery date and up to 18 weeks of leave post-delivery. To be eligible, an employee must have worked for an organization for at least 80 days in the 12 months before the date of the expected delivery or adoption.

How many sick leave days are employees entitled to in India?

The number of sick leave days can vary depending on the company's policy. It is common for companies to provide a certain number of paid sick leave days per year, usually ranging from 6 to 12 days.

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