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India at a Glance

Whether you're hiring your first employee or expanding an existing team, understanding the local employment landscape is essential. From visa requirements and statutory benefits to payroll taxes and regulatory oversight, this section provides a practical overview of what employers need to know to stay compliant and operate effectively in 

India
Work Permits & Visas
  • • Foreign nationals require an Employment Visa for work—valid for 1 year, extendable in-country up to 5 years.
  • • Minimum salary requirement applies for most expatriates (typically USD 25,000 annual).
  • • Visas must be obtained before arrival; conversion from tourist/business visas is not allowed.
  • • Registration with the Foreigners Regional Registration Office (FRRO) required within 14 days of arrival.
  • • Employers must provide letters of appointment, justification for hiring foreign nationals, and comply with sector-specific restrictions.
  • Payroll
  • • Payroll is typically processed monthly.
  • • Income Components: Basic salary, HRA, allowances, bonuses, leave encashment, and taxable benefits.
  • • Deductions: Income tax (TDS), Employee Provident Fund (EPF), Employee State Insurance (ESI), Professional Tax (where applicable).
  • • Employer Contributions: EPF, ESI (if applicable), gratuity accruals, and social security obligations for certain sectors.
  • • Employers must file monthly TDS returns and provide annual Form 16 to employees.
  • Employment Contracts
  • • Written employment contracts are standard and highly recommended.
  • • Probation: Typically 3–6 months; can extend depending on company policy.
  • • Working Hours: Generally 8–9 hours/day and 48 hours/week; overtime paid at 2x wages.
  • • Notice Period: Usually 30–90 days depending on seniority and employment terms.
  • • Termination: Must comply with Industrial Disputes Act and state-level labour rules; retrenchment and layoffs require statutory procedures.
  • • Minimum Wage: Varies by state and job category.
  • • Collective bargaining agreements may apply in unionised sectors.
  • Employee Benefits
  • • Annual Leave: Usually 12–18 days depending on state legislation.
  • • Sick Leave: 6–12 days on average, varying by state.
  • • Maternity Leave: 26 weeks paid (with conditions); employers must provide crèche facilities for firms with 50+ employees.
  • • Paternity Leave: No central mandate; some organisations provide 5–15 days.
  • • Social Security: EPF (retirement savings), ESI (health insurance for lower-income categories), bonus payments under the Payment of Bonus Act, and gratuity after 5 years of service.
  • • Employers often provide additional benefits such as allowances, private medical insurance, and meal vouchers.
  • Tax Overview
  • • Tax Residency:
    • Resident if in India ≥182 days in the tax year or meeting other residency criteria.
    • Residents taxed on global income; non-residents taxed only on India-sourced income.
  • • Tax Year: April 1 – March 31.
  • • System: Progressive personal income tax with optional “old” and “new” regimes.
  • • Withholding: Employers must deduct TDS monthly and remit to tax authorities.
  • • Double Taxation Treaties: India maintains extensive treaties with many countries.
  • Personal Income Tax
    Over (INR) Not Over (INR) Tax on Column 1 (INR) Tax on Excess (%)
    0 400,000 0 0%
    400,000 800,000 0 5%
    800,000 1,200,000 20,000 10%
    1,200,000 1,600,000 60,000 15%
    1,600,000 2,000,000 120,000 20%
    2,000,000 2,400,000 200,000 25%
    2,400,000 300,000 30%

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