Payroll Outsourcing in India for Foreign Companies
Payroll outsourcing in India lets a foreign company pay its India-based employees correctly and on time without an internal payroll team that understands Indian tax and labour law. For companies using an Employer of Record, payroll is included as part of that service. For companies with their own Indian entity, payroll can also be outsourced separately while the entity itself remains yours.
What Indian Payroll Actually Involves
Indian payroll is more layered than payroll in many Western markets, since it combines salary calculation with several parallel statutory obligations that each carry their own filing deadlines and penalties for errors.
- Provident Fund (PF) — a retirement savings contribution shared between employer and employee, mandatory once an organisation crosses a minimum employee threshold
- Employee State Insurance (ESI) — a health and disability insurance contribution applicable to employees below a specified salary threshold
- Professional Tax — a state-level tax that varies by state and, in some cases, does not apply at all
- Tax Deducted at Source (TDS) — income tax withheld from salary each month and deposited with the government, reconciled annually through Form 16
- Gratuity — a lump sum payable to employees who complete a minimum period of continuous service
- Statutory bonus and leave entitlements — minimum bonus and leave requirements that vary by state and industry
Why Foreign Companies Outsource This Instead of Managing It Directly
Each of the contributions above has its own filing calendar, its own registration requirements, and its own penalty structure for late or incorrect filing. A company with no payroll team on the ground in India has no practical way to track these correctly, and errors here are not just administrative. Incorrect PF or ESI contributions, missed TDS deposits, or wrong statutory bonus calculations can trigger penalties, interest, and in some cases labour department scrutiny that extends well beyond the specific error. Outsourcing this to a provider that already manages it for other clients removes that operational risk entirely.
How Our Payroll Process Works
- Salary structuring at the time of hiring, balancing statutory requirements with take-home pay
- Monthly salary calculation, including deductions and employer contributions
- PF, ESI, and professional tax deposits filed within statutory deadlines
- TDS calculation, monthly deposit, and annual Form 16 issuance
- Payslip generation and distribution to each employee
- Full and final settlement calculation at the time of exit, including gratuity where applicable
Payroll Under EOR vs Payroll for Your Own Entity
If you are hiring through our Employer of Record service, payroll is already included as part of that arrangement, since we are the legal employer running it. If you already operate your own Indian entity and want the payroll function outsourced while the entity remains fully yours, we support that as a standalone service, with statutory filings still handled under your entity’s registrations rather than ours.
Frequently Asked Questions
Is payroll included when we use an Employer of Record?
Yes. Payroll, statutory contributions, and tax filings are all part of our EOR service, since we are the legal employer.
Can you handle payroll if we already have our own Indian entity?
Yes. We support standalone payroll outsourcing for companies with their own registered entity, filed under that entity’s registrations.
What happens if a statutory filing deadline is missed?
Missed filings can trigger financial penalties and interest, and in some cases increased scrutiny in future audits. This is one of the main reasons companies outsource payroll rather than manage the calendar internally.
How is currency handled for foreign companies paying in USD, GBP, or EUR?
You pay us in your own currency, and we handle conversion and disbursement to employees in Indian rupees along with all statutory deposits.
Consultation
If your company needs payroll support for employees in India, whether through an EOR or your own entity, our team can walk through what applies to your specific situation.