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Mercans CountryIntel ® India Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in India

The world’s largest democracy, India is diverse with distinct regions. Ranked the world’s fifth-largest economy by GDP, the Indian government has eased foreign direct investment restrictions and business reforms have led to consistent improvements in recent years.

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Doing Business in India

An attractive consumer market, India presents the largest market for manufactured goods and services. That said, there are still steps to be taken to ease new business setup, to address protectionist policies and manage business growth in a vast, fragmented market. However, India has made significant strides in terms of technology innovation in sectors such as telecommunications, IT, pharmaceuticals, textiles and engineering.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in the UK is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banks are open from Monday - Friday 9am - 4pm

Working Week

The standard working week is 40 hours per week usually worked from Monday to Friday, 8 hours per day

Labor Law

There are 44 labour related statutes enacted by the Central Government which address minimum wages, accidental and social security benefits, occupational safety and health, conditions of employment, disciplinary action, trade unions and industrial relations. Workers may be classified as unorganized (home-based, self employed or wage workers), organized workers (association of workers known as unions) or international workers.

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Main Industries

Iron & Steel, Textiles, Jute, Sugar, Cement, Paper

GDP Growth

10.20%

Dates & Numbers

dd/mm/yyyy

Official State Name

India

Population

1.38 billion

Capital

New Delhi

Major Languages

Hindi

Currency

Indian Rupee ₹

Internet Domain

.in

International Dialing Code

+91

India
New Delhi, IN
2:07 pm, December 2, 2022
25°C
smoke

Payroll

Bills that consolidate and regulate wages, industrial relations, social security and occupational safety, health and working conditions have been introduced: the Industrial Relations Code 2020, the Code on Wages 2019 and the Code on Social Security 2020. Companies that operate global payroll should take note of the labour legislation applicable to all establishments in India. These must be complied with in respect of all employees, irrespective of their nationality.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 7-10 years

Reports

15 days

Annual Leave

12 days paid sick leave

Sick Leave

26 weeks of paid maternity leave and 15 days of paid paternity leave

Maternity & Paternity Leave

On provision of 30-90 days prior notice

Employee Termination

Although not mandatory, it can be paid as a percentage of the yearly salary

13th month salary

₹176 for an eight-hour work day

Minimum Wage

Paid at the rate of twice the ordinary rate of wages of the worker

Overtime

15 days' wages for each completed year of service

Severance Pay

Tax and Social Security

An individual’s income tax is determined by their residential status. An individual is considered a resident of India if they are in India for a minimum of 182 days during the tax year. India’s social security system includes the Employees’ Provident Fund Scheme (1952), the Employees’ Pension Scheme (1995) and the Employees’ Deposit Linked Insurance Scheme (1976).

Tax

Individuals are taxed on a progressive basis, with a maximum marginal rate of tax of 42.75% under the Income Tax Act.

25.1%

Corporate Income Tax

42.7%

Personal Income Tax

18%

Sales Tax

12-18%

VAT

Social Security

The Employees’ Pension Scheme is both a defined contribution and defined benefit scheme which provides pension payments for life on retirement and on disability during employment.

24%

Social Security Rate

12%

Social Security Rate for Employers

12%

Social Security Rate for Employees

Employment Law

The labour laws are applicable to all establishments in India, that is, employers and employees within India. Collective bargaining agreements may be negotiated by trade union members and an employer and since these terms are subject to labour legislation, they require a higher duty of care on the part of the employer.

Employment agreement

The usual practice is for employees to receive an offer letter which outlines the terms of employment but an employment contract is recommended to be completed.

Working condition

A National Floor Wage was introduced to bring uniformity to the minimum wages across India. Additionally, the Labour Ministry issued Model Standing Orders in 2020 which allow for ‘Work from home’ to be formalised and encouraged

Leaves

The amount of leave available to an individual will depend on the state they reside in. There are also various types of leave including annual leave, sick leave, maternity and paternity leave, family leave

Employment termination

Labour and employment is governed at both the federal and state levels. A 30 - 90 day notice period is mandated for terminating ‘workmen’. When terminating for convenience, the employer must ensure the last person in is the first one made redundant.

1 month

Minimum notice period for terminating an employee

15 days

Total number of public holidays

40

Working hours per week

7 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Foreign employees are required to have an employment visa which is granted on meeting certain conditions. This includes the applicant being highly skilled or qualified and engaged or appointed by a company in India on a contract of employment basis.

Residency permits

Foreign nationals (including family members) who intend to stay in India for over 180 days must register with the Foreign Regional Registration Office (FRRO) within 14 days of arriving in the country.

Work Permit validity

One year

Required Documents

Completed and signed online application form – (www.indianvisaonline.gov.in/visa)

Two recent passport size photos (51mm x 51mm) which are not older than three months

The local company NOC document should be provided in its original form together with seal and signature

The NOC should state that the person is sent on behalf of the company and that the ticket, accommodation, stay and expenses are borne by the company

The original invitation letter from India should be provided showing the seal and signature

Copy of the valid Trade License of the local company. Where the document is in Arabic or any other language, a translation is required.

Compliant, reliable, error-free and touchless payroll in India

Build the best team and hire top talent compliantly in India. Get in touch with India payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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