Hiring in India — a practical guide
India is one of the world's largest talent markets — deep in engineering, finance, design and operations, at competitive cost. But employment here is statutory-heavy and state-specific. This guide covers what a global company needs to know to hire compliantly.
1. Two ways to hire: your own entity, or an EOR
To employ someone in India you either need a local legal entity (a private limited company, with PF/ESI/PT registrations, a bank account and ongoing filings) or an Employer of Record (EOR). Setting up an entity takes months and carries real running cost and compliance overhead — sensible once you have a sizeable team.
An EORlike Connect by Vinpro already holds the entity and becomes the legal employer on your behalf. You direct the work; we handle the contract, payroll, statutory contributions and compliance. It's the fastest, lowest-risk way to hire one person or a team without setting up in India.
2. The statutory must-knows
India employment carries several mandatory contributions and taxes:
- Provident Fund (PF/EPF) — retirement savings; 12% employee + 12% employer on basic wages.
- ESI — health insurance for employees earning ≤ ₹21,000/month; 0.75% employee + 3.25% employer.
- Professional Tax (PT) — a small state-level tax (often ~₹200/month); rules differ by state.
- TDS — income tax deducted at source from salary, deposited monthly, with quarterly returns (Form 24Q) and annual Form 16.
- Gratuity — payable after 5 years of service; typically accrued at ~4.81% of basic.
- Statutory bonus — for eligible employees under the Payment of Bonus Act.
3. How salary is structured
Indian salaries are broken into components — basic, HRA, special allowance and reimbursements — which affect PF, tax and take-home. Basic is usually ~40–50% of gross. A well-structured CTC keeps employees tax-efficient and statutory contributions correct. Use our Salary Calculator to see gross-to-net.
4. Employment essentials
- A compliant offer letter and employment agreement (probation, notice period, confidentiality, IP assignment).
- Notice periods are typically 30–90 days and are taken seriously in India.
- Leave — earned/casual/sick leave per state shops-and-establishments rules.
- POSH — a Prevention of Sexual Harassment policy and committee are mandatory.
5. The steps to onboard
- Agree role, salary and start date.
- Issue a compliant offer and employment contract.
- Collect KYC and statutory documents; register the employee for PF/ESI.
- Set up payroll with the right components and deductions.
- Run monthly payroll, deposit statutory dues, and file returns on time.
With an EOR, steps 2–5 are handled for you — most hires onboard in days, not months.
Want to hire in India without an entity? We can have your first hire onboarded this week.
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