Country Overview
India is a dynamic and culturally rich country that offers a fast-growing economy, world-class cities, and a vast pool of professional talent. As the world’s most populous nation, India is home to global business centres such as Mumbai (financial hub), New Delhi (capital region), Bengaluru (technology hub), Hyderabad, Chennai, and Pune.
India offers a highly skilled workforce with deep expertise across Information Technology, Financial Services, Engineering, Pharmaceuticals, and Professional Services. Hindi and English are both official languages, alongside 22 other recognised regional languages, which makes international collaboration straightforward. All foreign nationals (apart from citizens of Nepal and Bhutan, and OCI cardholders) require work authorisation to be employed in India.
*This guide is intended for general informational purposes only and should not be viewed as legal or tax advice. The information discussed may change frequently, and Access Financial cannot guarantee that all content remains current at all times.
2026 Key Legislative Updates
India’s four new Labour Codes were notified on 21 November 2025, with full operational rollout from 1 April 2026. Fixed-term employees now receive pro-rata gratuity after 1 year of service (down from 5). “Wages” must be at least 50% of total remuneration, increasing PF and gratuity bases. Central minimum wage for skilled workers is INR 24,804/month.
Contracts
Indian employment contracts define the terms of engagement — type, duration, notice, pay, and benefits. Written contracts are standard practice and are required to evidence the employment relationship under the new Labour Codes.
Contract Types
| Contract Type | Duration | Key Features |
|---|---|---|
| Permanent (Indefinite) | Indefinite | Open-ended; continues until terminated by either party with notice |
| Fixed-Term (FTC) | Specified end date | Same pay, benefits, and working conditions as permanent staff; pro-rata gratuity after 1 year |
| Independent Contractor | Project-based | Contract for services; not covered by labour laws or statutory benefits (PF, gratuity, leave) |
| EOR / Umbrella | Aligned with project | Worker employed by umbrella entity; ideal for foreign contractors needing visa sponsorship |
Employee vs. Contractor — Substance Over Form
Indian labour authorities look at the substance of the engagement. If you work full-time under the direction of a single company, you are likely to be classified as an employee even if labelled a contractor. To preserve independent status, maintain multiple clients, short engagements, and your own working methods.
What Your Contract Must Include
Standard Inclusions
- Job title, role description, and reporting line
- Start date and contract duration (if fixed-term)
- Salary breakdown (basic, HRA, allowances) and pay frequency
- Working hours and location
- Annual leave and sick leave entitlement
- Notice period (both sides)
- Provident Fund and gratuity eligibility
- Probation terms
Common Additional Clauses
- Confidentiality / NDA provisions
- Intellectual property assignment
- Restrictive covenants (non-compete, non-solicit)
- Variable pay, bonus, and ESOP terms
- HRA and Leave Travel Allowance (LTA) structure
- Group health insurance and benefits
- Code of conduct and disciplinary procedure
Access Financial drafts compliant Indian employment and contractor agreements and manages onboarding for EOR and AOR engagements.
Working Hours & Overtime
India’s labour laws set maximum daily and weekly working hours, rest breaks, and overtime entitlements. Most professional offices follow a 5-day working week, while standard statutory limits apply to all sectors.
| Parameter | Rule | Notes |
|---|---|---|
| Maximum daily hours | 9 hrs | Legal maximum for a normal work schedule |
| Maximum weekly hours | 48 hrs/week | Standard cap under labour legislation |
| Typical office hours | 40–45 hrs/week | Most professional roles operate Mon–Fri, 8–9 hrs/day |
| Weekly day off | 1 day minimum | Usually Sunday; many offices give Saturday and Sunday |
| Overtime rate | 2× normal rate | Applicable to eligible “workman” category employees |
| Rest break | 30 min per 5 hrs | Required under Factories Act / Shops & Establishments Acts |
Equal Pay & Non-Discrimination
The Code on Wages mandates equal pay for equal work regardless of gender. Constitutional provisions and various labour laws prohibit discrimination on grounds of gender, caste, religion, or place of birth.
Probation Period
Probation in India is contractual rather than statutory. Initial periods are typically 3 to 6 months, during which either party may terminate the contract with shorter notice.
| Parameter | Standard practice | Legal notes |
|---|---|---|
| Typical duration | 3–6 months | No statutory maximum; 6 months most common for white-collar roles |
| Notice during probation | 1 week (contractual) | Often shorter than post-confirmation notice |
| Extension | Allowed | Must be agreed in writing; typically up to 3 months |
| Statutory benefits | Apply during probation | Minimum wage, weekly rest, leave accrual, PF (if applicable) |
Immigration & Work Visas
All foreign nationals (apart from Nepalese and Bhutanese citizens and OCI cardholders) require a visa to enter India. Employment visas must be obtained before travel — they cannot be issued in-country, and there is no switching from tourist to work status internally.
e-FRRO Registration — Mandatory within 14 Days
Foreign nationals holding visas valid for more than 180 days must register with the Foreigners Regional Registration Office (FRRO) within 14 days of arrival via the online e-FRRO portal to obtain their Residential Permit. Late registration attracts fines and complications for visa extensions or exit.
Main Work Visa Categories
| Visa Route | Min. Salary | Sponsor? | Duration |
|---|---|---|---|
| Employment Visa (E-Visa) | INR 1.625M/yr (~USD 25,000) | Indian employer | Up to 1 year initially; extendable to 5 years |
| Business Visa (B-Visa) | No salary permitted | Indian counterpart | Up to 6 months / 1 year (10 yrs for some nationals) |
| Project Visa | Sector-specific | Indian project entity | Duration of project; power/steel sectors |
| Entry Visa (X-Visa) | N/A | Primary visa holder | For dependants of E-Visa holders |
Post-Arrival Requirements
| Step | Timeline | Notes |
|---|---|---|
| FRRO registration | Within 14 days | Mandatory for visas > 180 days; via e-FRRO online portal |
| PAN card application | Soon after arrival | Indian tax ID; required for salary, banking, leases |
| Aadhaar enrolment | After 182 days residency | Optional for foreigners; useful for KYC |
| Provident Fund enrolment | Automatic on joining | Foreign nationals treated as “International Workers” |
AF’s immigration team manages Employment Visa applications, e-FRRO registration, and PAN card processing for contractors and professionals relocating to India.
Leave Entitlements
India’s statutory leave framework is set under the Factories Act, the Shops & Establishments Acts of individual states, and the new Labour Codes. Most professional employers offer leave entitlements above the statutory minimum.
Annual Leave
| Parameter | Entitlement | Notes |
|---|---|---|
| Statutory minimum | ~15 days/yr | Earned at 1 day per 20 days worked |
| Market standard (professional) | 20–30 days/yr | Plus sick leave and casual leave allowances |
| Sick leave | ~7–12 days/yr | State-specific; typically split between sick and casual |
| Carry-forward | Allowed | Subject to company policy; usually capped |
Parental Leave
| Leave type | Duration | Pay | Eligibility |
|---|---|---|---|
| Maternity (1st & 2nd child) | 26 weeks | Fully paid | 80 days of work pre-delivery |
| Maternity (3rd+ child) | 12 weeks | Fully paid | 80 days of work pre-delivery |
| Paternity | Not statutory | Per employer policy | Commonly 5 days–2 weeks at multinationals |
| Adoption Leave | 12 weeks | Fully paid | Child under 3 months at adoption |
Public Holidays 2026
India observes 3 national holidays uniformly across the country and 17 gazetted holidays declared by the Central Government. State governments declare additional regional holidays reflecting India’s cultural diversity.
| Date | Day | Holiday | Type |
|---|---|---|---|
| 26 January | Monday | Republic Day | National |
| 4 March | Wednesday | Holi | Gazetted |
| 21 March | Saturday | Id-ul-Fitr | Gazetted |
| 26 March | Thursday | Ram Navami | Gazetted |
| 31 March | Tuesday | Mahavir Jayanti | Gazetted |
| 3 April | Friday | Good Friday | Gazetted |
| 1 May | Friday | Buddha Purnima | Gazetted |
| 27 May | Wednesday | Id-ul-Zuha (Bakrid) | Gazetted |
| 26 June | Friday | Muharram | Gazetted |
| 15 August | Saturday | Independence Day | National |
| 2 October | Friday | Gandhi Jayanti | National |
| 20 October | Tuesday | Dussehra | Gazetted |
| 8 November | Sunday | Diwali | Gazetted |
| 24 November | Tuesday | Guru Nanak Jayanti | Gazetted |
| 25 December | Friday | Christmas Day | Gazetted |
Notice Periods
Indian notice periods are primarily contractual rather than statutory and tend to be longer than international norms — especially in the IT and professional services sectors.
| Stage / Role | Typical notice (employer & employee) | Notes |
|---|---|---|
| During probation | 1 week – 1 month | Contractual; usually shorter |
| Junior / mid-level confirmed | 1 month | Standard for most sectors |
| Experienced / senior roles | 2–3 months | Very common in IT, finance, consulting |
| C-suite / executive | 3–6 months | Often with garden leave or buy-out clause |
Termination & Severance
Indian labour law provides significant protection for “workman” category employees under the Industrial Disputes Act. For managerial and supervisory roles, terms are largely governed by contract.
| Benefit | Entitlement | Cap / Notes |
|---|---|---|
| Gratuity (permanent) | 15 days’ wages × completed years | After 5 years’ continuous service |
| Gratuity (fixed-term) | Pro-rata 15 days’ wages × years | After 1 year service (new Labour Codes) |
| Statutory ceiling | INR 2,000,000 | Fully tax-free for private-sector employees |
| Retrenchment compensation | 15 days’ pay per year | For “workman” under Industrial Disputes Act |
| Payment timeline | Within 30 days | 10% annual interest on delays |
New Labour Codes — Effective from 1 April 2026
India’s four consolidated Labour Codes were notified on 21 November 2025. “Wages” must be at least 50% of total remuneration, which increases the base for gratuity and Provident Fund. Fixed-term workers now qualify for pro-rata gratuity after 1 year instead of 5. Review compensation structures now — AF can advise.
Income Tax
India’s tax year runs from 1 April to 31 March. All employees are taxed via TDS (Tax Deducted at Source) — employers deduct income tax monthly through payroll. The “new tax regime” is the default from FY 2026–27.
Income Tax Slabs FY 2026–27 (New Regime)
| Band | Annual Income (INR) | Rate FY 2026–27 |
|---|---|---|
| Nil rate | Up to 400,000 | 0% |
| Slab 1 | 400,001 – 800,000 | 5% |
| Slab 2 | 800,001 – 1,200,000 | 10% |
| Slab 3 | 1,200,001 – 1,600,000 | 15% |
| Slab 4 | 1,600,001 – 2,000,000 | 20% |
| Slab 5 | 2,000,001 – 2,400,000 | 25% |
| Slab 6 | Above 2,400,000 | 30% |
Rebate under Section 87A — Income up to INR 12 Lakh Tax-Free
Under the new regime in FY 2026–27, taxable income up to INR 1,200,000 attracts a full rebate of up to INR 60,000. With the standard deduction of INR 75,000, salaried individuals can earn up to INR 1,275,000 tax-free.
Surcharge on High Income
| Income threshold | Surcharge | Notes |
|---|---|---|
| Above INR 5,000,000 | 10% | On income tax payable |
| Above INR 10,000,000 | 15% | On income tax payable |
| Above INR 20,000,000 | 25% | Capped at 25% under new regime |
| Above INR 50,000,000 | 25% (new) / 37% (old) | Max effective rate ~39% under new regime |
GST (Goods & Services Tax)
| Rate | % | Applies to |
|---|---|---|
| Nil rate | 0% | Essential food items, basic necessities |
| Reduced | 5% | Common food items, transport, basic necessities |
| Standard | 18% | Most goods and services |
| Luxury / Sin | 40% | Premium cars, tobacco, aerated drinks |
| Registration threshold | INR 2,000,000 | Annual turnover for service providers (₹1M in special states) |
Let Access Financial handle your Indian payroll, TDS, and GST compliance — seamlessly and compliantly, with local specialists on call.
Benefits
India’s statutory benefits framework is supplemented by extensive supplemental benefits in the corporate sector. Competitive employers layer health, wellness, and tax-efficient allowances to attract and retain professional talent.
Mandatory Statutory Benefits
| Benefit | Rate / Amount | Notes |
|---|---|---|
| Provident Fund (EPF) | 24% total | 12% employer + 12% employee on basic + DA |
| Gratuity | 15 days × years of service | Cap INR 2M; from 1 year for FTC, 5 years for permanent |
| Maternity Leave | 26 weeks (fully paid) | First two children; 12 weeks for third+ |
| Annual Leave | ~15+ days/yr statutory | Per Shops & Establishments / Factories Act |
| ESI (low-wage staff) | 4% total | Healthcare cover for wages up to ₹21,000/month |
Market-Standard Supplemental Benefits
| Benefit | Prevalence | Typical provision |
|---|---|---|
| House Rent Allowance (HRA) | Standard component | 40–50% of basic; tax-exempt for rented housing |
| Group Health Insurance | Virtually universal in MNCs | Cover for employee + family; INR 300k–1M cover |
| Leave Travel Allowance (LTA) | Very common | Tax-free reimbursement of domestic travel |
| Meal Vouchers / Cafeteria | Very common | Sodexo or similar; up to ₹2,000/month tax-free |
| NPS Contributions | Increasingly common | Employer can contribute up to 14% of salary tax-free |
| Group Life / Term Cover | Common at large employers | 2–4× annual CTC typical |
| Remote / Hybrid Working | Standard in IT & services | Mostly hybrid 2–3 days office post-2021 |
Pension System
India’s retirement framework is built around the Provident Fund (EPF), Employees’ Pension Scheme (EPS), and the voluntary National Pension System (NPS). Foreign nationals are treated as International Workers with specific rules.
| Parameter | 2026 details | Notes |
|---|---|---|
| EPF — employer contribution | 12% | On basic + DA; full salary base for International Workers |
| EPF — employee contribution | 12% | Same base; accumulates with interest |
| EPF interest rate (FY 2025–26) | 8.25% | Set annually by EPFO / Government |
| EPS (Indian employees) | 8.33% of cap ₹15,000 | Max ₹1,250/month diverted from employer 12% |
| International Workers EPS | Typically not eligible | Full employer 12% goes to PF; lump-sum on exit |
| NPS — employer deduction (new regime) | Up to 14% of salary | Tax-free under Section 80CCD(2) |
| State Pension age | 58 / 60 | Depends on scheme & employer rules |
Insurances
India operates a mixed public-private healthcare system. Most foreign professionals rely on private health insurance, either provided by the employer or purchased individually.
| Insurance | Coverage | Notes |
|---|---|---|
| ESI (Public Health) | Wages up to ₹21,000/month | Not applicable to foreign professionals (higher salary) |
| Group Health Insurance | INR 300,000 – 1,000,000 | Standard employer-provided benefit |
| Professional Indemnity | INR 1M – 2M+ | Often required for IT, consulting, medical contractors |
| Motor Insurance (third party) | Statutory minimum | Motor Vehicles Act — mandatory for all vehicles |
Professional Indemnity Insurance — Contractors
Often contractually required by end-clients in India. Covers professional negligence claims. Minimum INR 1M is standard; financial services, IT consulting, and engineering roles typically require INR 2M+. AF can advise on appropriate cover for your sector.
Private Health Insurance
| Provider | Typical annual premium (individual) | Type |
|---|---|---|
| HDFC ERGO | INR 8,000 – 25,000 | Comprehensive |
| Tata AIG | INR 9,000 – 24,000 | Comprehensive |
| Star Health | INR 7,000 – 22,000 | Standard / specialised plans |
| International (Cigna, Aetna) | USD 1,500 – 4,000 | Global cover; popular with expats |
AF Solutions
Access Financial has supported corporate clients, recruitment agencies, and professional contractors operating in India for many years, with a local entity based in New Delhi.
For End-Clients
Managing a contingent workforce in India can be complex. Our solutions streamline workforce management, making it simple, compliant, and cost-effective.
For Recruiters
We offer a complete suite of services, allowing you to simply, compliantly, and efficiently place your candidates in India, with minimum fuss.
For Contractors
Focus on what you do best and let us take care of your payroll, TDS, GST, social security, and immigration needs in India.
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FAQ
Find answers to our most frequently asked questions below.
What solutions do you offer in India?
In India, Access Financial provides two compliant engagement models:
Employed/EOR (umbrella): We become the legal employer of your employees in India. Your business retains full control of the day-to-day work and deliverables, while we carry the employment, payroll, and tax liability.
Self-employment: Where an engagement genuinely meets the criteria for self-employed status, we register the contractor compliantly, manage their filing obligations throughout the contract term, and deregister them at the end of the assignment.
When should a company consider using an EOR?
An EOR is especially useful in a range of scenarios. It is the most efficient route when you want to convert existing contractors into compliant employees and reduce misclassification risk, or when you need to hire talent in a country where you do not have a local entity. It also allows you to onboard quickly without going through a lengthy and complex company registration process, while ensuring full compliance with local employment law, payroll, and tax regulations. Beyond these core use cases, an EOR is equally valuable when you are testing a new market before committing to a long-term investment, or when you simply need temporary or project-based hires abroad.
Can we hire both local nationals and foreign employees through an EOR or AOR?
Yes. Our EOR and AOR services cover both local nationals and foreign hires. For foreign nationals, additional visa or work permit requirements apply, and we can support the application process end-to-end — including sponsorship in jurisdictions where we hold the relevant licence.
Is permanent establishment (PE) risk avoided?
An EOR is a third-party business that legally employs international workers on your behalf, creating a clear layer of separation between your company and the staff based in other countries. The EOR becomes the legal employer for those workers, so although the employees continue to deliver services to your business, the legal distancing helps mitigate many common PE risks. That said, PE is determined by the facts on the ground (the nature of the activity, contract-signing authority, where revenue is generated, and so on), not solely by who issues the payslip. We therefore recommend reviewing each engagement with our specialists to confirm the appropriate structure.
Is contractor misclassification a high risk under an AOR engagement?
Misclassification typically occurs when contractors are treated as employees in practice — fixed hours, integration into the team, no right of substitution, direct supervision, and so on. Prevention requires clear engagement frameworks, standardised processes, documented evidence of independence, and recurring audits. Accountability and the right technology are key to staying compliant at scale, particularly as tax authorities increasingly use data analytics and algorithmic checks to flag suspect arrangements.
At Access Financial, we help our clients minimise this risk by designing tailored classification frameworks, onboarding checklists, contractual safeguards, and recurring compliance audits.
What is your pricing model?
Our standard management fee is 5% of the contract value, with a minimum of €550. We also offer volume discounts on bulk engagements. To discuss pricing for your specific scenario, please get in touch with our team here: https://accessfinancial.com/#get-started.
Social Insurance
India’s primary social security scheme for the private sector is the Employees’ Provident Fund (EPF) and Employee Pension Scheme (EPS), administered by the EPFO.
International Workers — No Wage Cap
Foreign nationals working in India are classified as “International Workers”. Unlike Indian employees, the INR 15,000/month wage cap does not apply — PF contributions are calculated on full monthly salary. This significantly increases both employer and employee contributions.
Employer Contributions
Employee Contributions