Can I hire software developers in India without setting up an Indian Pvt Ltd company?

Yes. A Global Employer of Record (EOR) acts as the legal employer in India, providing compliant employment contracts, managing EPFO provident fund contributions, Gratuity accruals, State Professional Tax, and TDS income tax withholding without incorporating an Indian Private Limited company.

What is the mandatory Employees' Provident Fund (EPFO) rate in India?

Under the EPF Act, the employer contributes 12% (divided into 3.67% EPF, 8.33% EPS pension, and 1% EDLI/admin) and the employee contributes 12% of Basic Salary + Dearness Allowance (DA).

How does the Payment of Gratuity Act work in India?

Employees who complete at least 5 years of continuous service with an employer are legally entitled to a statutory lump-sum Gratuity payout upon separation, calculated as 15 days of last-drawn basic wage for each completed year of service (tax-free up to INR 20 Lakhs).

How long is statutory maternity leave in India?

Under the Maternity Benefit (Amendment) Act 2017, female employees are entitled to 26 weeks (6 months) of fully paid maternity leave for up to the first two children, funded entirely by the employer.

What is the standard Cost to Company (CTC) salary structure in India?

In India, compensation is structured as CTC (Cost to Company), which breaks down gross salary into Basic Salary (typically 40%–50%), House Rent Allowance (HRA), Special Allowances, and mandatory employer contributions (EPF, Gratuity provisioning, Insurance).

What is State Professional Tax in India?

Professional Tax is a state-level payroll tax (levied in states like Karnataka, Maharashtra, Telangana, and Tamil Nadu), capped at a statutory maximum of INR 2,500 per year.

Employer of Record (EOR) in India | Global Payroll & Compliance

Economic Overview, Silicon Valley of Asia & GCC Superpower

India is the global headquarters for IT services, SaaS unicorns, AI research, and over 1,600 multinational Global Capability Centers (GCCs).

Key Economic Clusters

Software, Cloud & AI Engineering: Elite full-stack developers, AI/ML researchers, and DevOps engineers in Bengaluru, Hyderabad, and Pune.
FinTech & Banking Hub: Mumbai (financial capital, RBI, BSE/NSE) and global fintech innovation.
Pharmaceuticals & DeepTech: "Pharmacy of the World" (vaccines, generics) and aerospace/space-tech (ISRO ecosystem).

Employment Contracts, Shops & Establishments Act & Probation

Regulated by State Shops and Establishments Acts and the New Labour Codes.

Mandatory Written Terms: Contracts must be executed in English, detailing CTC (Cost to Company) salary structure, basic pay, allowances, and benefits.
Probation Period: Standard commercial practice is 3 to 6 months.

Working Hours, Overtime & 48-Hour Standard Week

Standard Hours: 48 hours per week (typically 9 hours/day, Monday to Friday with 1 hour lunch, or 8 hours/day over 6 days).
Overtime Surcharges: Minimum 200% (double time) of regular hourly rate for hours worked beyond daily/weekly limits.

Earned Leave (EL), Casual Leave (CL), Holidays & Maternity

Annual Leave Categories

Earned Leave (EL / Privilege Leave): 15 to 21 working days per year (accruing at 1 day per 20 days worked).
Casual & Sick Leave (CL / SL): 8 to 12 days per year for emergency personal/medical needs.
Public Holidays: ~10 to 14 public holidays (including 3 mandatory National Holidays: Republic Day 26 Jan, Independence Day 15 Aug, Gandhi Jayanti 2 Oct).

Maternity Benefit Act 2017

26 weeks (6 months) fully paid maternity leave for up to 2 surviving children (12 weeks for 3+ children), paid 100% by the employer. Dismissal during maternity leave is strictly illegal.

Provident Fund (EPFO 12%), Gratuity Act & TDS Tax

Mandatory Statutory Gratuity (Payment of Gratuity Act 1972)

Mandatory statutory lump-sum benefit payable to employees who complete 5 or more years of continuous service upon separation. Formula: **(15 × Last Drawn Basic Salary × Completed Years of Service) ÷ 26** (statutory tax-free cap up to INR 2,000,000 / ₹20 Lakhs).

Social Security (EPFO & ESIC) Breakdown

Statutory Scheme	Employer Share	Employee Share	Coverage
Employees' Provident Fund (EPF)	3.67%	12.00%	Retirement accumulation fund
Employees' Pension Scheme (EPS)	8.33%	0.00%	Monthly post-retirement pension (capped base)
EDLI Insurance & Admin Fees	1.00%	0.00%	Deposit-linked group life insurance & EPFO admin
State Insurance (ESIC)	3.25%	0.75%	Health/medical cover for gross salary <= INR 21k/mo
Total Statutory PF Remittance	13.00%	12.00%	25.0% total monthly remittance on Basic + DA

Income Tax Withholding (TDS): Managed under New Tax Regime (slabs from 0% up to 30% on earnings > INR 15 Lakhs/yr) or Old Regime with 80C deductions.

Termination, Notice Periods & Severance under Industrial Disputes Act

Notice Periods: Standard contractual notice is 30 to 90 days (1 to 3 months) or salary payment in lieu.
Retrenchment Compensation: Under the Industrial Disputes Act, retrenched non-managerial workmen receive 15 days' average pay per completed year of continuous service.

Why Use an Employer of Record (EOR) in India

Instant Access to 5M+ Tech Developers: Build dedicated engineering teams in Bengaluru or Hyderabad in days without establishing an Indian Pvt Ltd.
EPFO, Gratuity & TDS Compliance: Automated management of 12% Provident Fund, Gratuity provisioning, State Professional Tax, and Form 16 / TDS quarterly returns.
Employment Visa Sponsorship: EOR sponsors Indian Employment Visas through the FRRO (Foreigners Regional Registration Office).

Hiring in India? Key Resources

Whether you are evaluating entity setup vs. using an Employer of Record, or looking for the best international payroll solution, our guides give you transparent benchmarks:

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