Payroll and Benefits Guide - India

India
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Currency

Indian Rupee
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Capital

New Delhi
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Employer Taxes

16.75%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Apr – 31 Mar

Fun Facts

Over 70% of the world’s spices are produced in India, making it both the largest producer and consumer of spices worldwide.

Agra, India is home to the Taj Mahal, one of the seven wonders of the world and a UNESCO World Heritage site.

Considered one of the world’s best, their space program is the first in the world to enter Mars orbit after making just one attempt.

It is the birthplace of the decimal system and the idea of zero.

The practice of yoga has its roots in India and has been around for more than 5,000 years.

Until 1896, it was the only source of diamonds.

India

Contributions

Employee Payroll Tax

Contribution TypeRate
Employee’s Provident Fund12.33%
Health and Education4.00%
Employee’s State Insurance1.75%

Employer Payroll Tax

Contribution TypeRate
Employee’s Provident Fund12.00%
Employee’s State Insurance4.75%

Payroll

Payroll Cycle

In India, wages are often paid on or after the 28th of each month with a monthly cycle.

13th Salary

In India, low-wage workers are required to receive the 13th salary, which is paid as a percentage of the yearly salary and within eight months of the end of the fiscal year.

Work Hours and Week

In India, a regular workweek consists of 40 hours, or eight hours every day, although it can potentially be 48 hours, including breaks.

The legally permitted workday length for employees is eight to nine hours. The majority of firms in India adhere to the usual practice of 8 hours of labor per day.

Overtime

Employment contracts dictate the payment of overtime, which is often computed at 200% of the usual pay rate.
India

Leave

Paid Time Off

Every year, every employee is given up to 20 days of paid leave. which increases based on age to a maximum of 30 days for those over 45 years old.

However, it is normal to incorporate additional leave days and restrictions on how many can be carried over to the following year in the contract.

To maintain efficiency, all requests for paid time off must be submitted at least 15 days before they are needed and authorized by the manager, works committee, and employer.

Public Holidays

There are only 3 public holidays in India.

Sick Days

For employees who have worked for at least three months consecutively, an official medical certificate must be provided within 48 hours of the first day of illness in order to be eligible for the full 15 days of paid sick leave each year.

The sick pay is calculated at a rate of 70% of the daily wage. For employees of private sector employers, this paid leave is provided and it cannot be reimbursed from the government. Factory workers use their annual paid leave for sick and unscheduled leave instead of a separate category of sick time.

There are no rules regarding paid sick leave for workers who must take prolonged sick leaves or for workers who sustain an injury while on the job.

The decision to grant an employee unpaid time off is entirely up to the employer.

Maternity Leave

For their first two children, eligible expecting mothers are entitled to 100% of their regular income rate for 26 weeks; this benefit is reduced to 12 weeks for any further children. In the six weeks immediately following the day of delivery or a miscarriage, a woman is not permitted to work.

The employee must have worked for the employer for at least 80 days in the 12 months prior to the anticipated due date in order to be eligible.

A woman who lawfully adopts a child under three months of age or a commissioning mother (a biological mother who uses her egg to develop an embryo that is implanted in another woman) is eligible to maternity benefits for a period of 12 weeks starting on the day the baby is given to them.

Every business with 50 or more employees must have a daycare facility within the allowed vicinity, either separately or in conjunction with other common amenities.

The mother must be permitted by the employer to visit the daycare four times each day, including her allotted rest period.

Paternity Leave

There are no formal paternity leave legislation for the private sector, despite the fact that government employees are entitled to 15 days of paternity leave.

Parental Leave

There are no rules about parental leave.

Other Leave(s)

Other leave entitlements and policies are typically defined by each state.

Termination

Termination Process

In India, the process of terminating an employee is typical and notice periods are necessary unless an employer can show that there is good reason to terminate an employee immediately owing to misconduct, disobedience, a lack of skill, disregard of duties, or absence without authorization.

Notice Period

The standard notice period is 30 days.

Severance Pay

Employers are required to provide compensation in the event of a termination resulting from layoff. A workman must receive pay upon cessation of employment in an amount equal to 15 days’ average pay for each completed year of continuous service, or portion thereof, exceeding six months.

Additionally, the employer is obligated to provide certain termination benefits to dismissed workers, including leave encasement, gratuities (for workers and non-workers with five years or more of uninterrupted service), payments in lieu of notice (if none is given), statutory bonuses, and any other amounts owed under the employment contract.

Employees who are fired for misconduct are not eligible for either notice pay or benefits.

Probation Period

Probation Period

Depending on the employee’s seniority and role, Indian probation periods typically range from three to six months.

Immigration

In India, there are primarily two kinds of visas: business visas and employment visas which are acquired in the the applicants home county.

For foreigners traveling to India for employment, an employment visa is needed. The maximum duration of this type of visa is five years, but if the employment contract is longer than that, an extension must be requested prior to the expiration of the visa.

Additionally, this visa provides the opportunity for longer-term residence and employment in India.

VAT

The commonly used VAT rates in India are 12.00% and 18.00%, with additional primary rates of 0.25%, 1.00%, 3.00%, 5.00%, and 28.00%