What are the mandatory statutory deductions in India payroll?

Employers in India must deduct and contribute to the following statutory schemes: Provident Fund (PF): 12% of basic salary from both employer and employee, deposited with the EPFO. Employee State Insurance (ESI): 3.25% employer and 0.75% employee contribution for employees earning up to ₹21,000/month. Tax Deducted at Source (TDS): Income tax withheld monthly under Section 192 of the Income Tax Act. Professional Tax (PT): State-level levy — applicable in most states, rates vary from ₹0 to ₹2,500/year. Employers must also provision for Gratuity (employees with 5+ years' service) and Statutory Bonus under the Payment of Bonus Act.

What is the difference between PF, ESI and PT in India?

Provident Fund (PF) is a central government retirement savings scheme. Both employer and employee contribute 12% of basic salary. Applicable to establishments with 20+ employees. Employee State Insurance (ESI) is a health and social security scheme for employees earning up to ₹21,000/month. Employer contributes 3.25% and employee 0.75% of gross wages. Covers medical, maternity, disability and dependent benefits. Professional Tax (PT) is a state-level levy on salaried employees. Unlike PF and ESI which are central schemes, PT rates vary by state — from ₹0 in Delhi to ₹2,500/year in Maharashtra.

What is TDS and how is it calculated in Indian payroll?

TDS (Tax Deducted at Source) is income tax withheld by an employer from employee salary under Section 192 of the Income Tax Act. The employer estimates total annual taxable income at year start or joining date, applies applicable tax slab rates (new or old regime per employee's declaration), divides annual tax liability by 12 for monthly deduction amount, deposits TDS with government by the 7th of the following month, files quarterly TDS returns (Form 24Q), and issues Form 16 (TDS certificate) to all employees by June 15 each year.

How do India's 4 Labour Codes affect payroll?

India's 4 Labour Codes consolidate 29 existing labour laws. Key payroll impacts: Code on Wages broadens the 'wages' definition — affecting PF, gratuity and bonus calculations significantly. Code on Social Security extends PF and ESI coverage to gig and platform workers. Code on Industrial Relations changes retrenchment, lay-off, and notice pay rules affecting payroll. Occupational Safety Code revises working hours and overtime with payroll calculation implications. TopSource monitors state-by-state enforcement notifications and updates payroll configurations automatically when codes are notified in your employees' states.

How does payroll outsourcing work for a foreign company with employees in India?

Foreign companies outsource India payroll to a managed provider like TopSource. Employees are onboarded onto Portico with India-specific statutory configurations. Each month TopSource calculates gross-to-net including TDS, PF, ESI, PT deductions. Clients review and approve payroll via Portico dashboard before disbursement. TopSource deposits TDS (7th), PF and ESI (15th) and files all statutory returns. Employees receive digital payslips and Form 16 is issued annually. If you have no legal entity in India, the EOR service allows you to hire and pay compliantly without establishing an Indian company.

Can a company run payroll in India without a local legal entity?

Yes. Companies without a legal entity in India can use an Employer of Record (EOR) service. TopSource acts as the legal employer running payroll, managing PF/ESI/TDS/PT compliance, and issuing employment contracts under Indian law while the client retains day-to-day operational control. EOR is ideal for companies testing the India market, hiring a small India team, or waiting for their entity to be established. Once a legal entity is in place, clients can transition to standard managed payroll seamlessly.

How much does payroll outsourcing cost in India?

India payroll outsourcing is typically priced per-employee per-month. Total cost depends on number of employees on India payroll, complexity (multi-state, expat employees, variable components), level of service (basic processing vs. full statutory management and advisory), and HRIS integration requirements. TopSource offers transparent, per-employee pricing with no hidden setup fees. Most clients see positive ROI within 3 months.

How many employees do I need to outsource India payroll?

You can outsource India payroll from as few as 1 employee. TopSource works with companies at every stage — from a single India hire to 5,000+ employee operations. Whether you're testing the India market or running a large established operation, the managed payroll service scales with you.

Can TopSource work alongside our existing India HR team?

Yes, many clients use TopSource for payroll compliance and statutory management while their India HR team handles recruitment, performance management, and employee relations. The Portico platform integrates seamlessly with your HRIS, so both teams work from a single source of truth.

How does TopSource protect our employee payroll data in India?

TopSource is ISO 27001 certified and SOC 2 Type II audited — the two highest standards for information security and data handling. All payroll data is encrypted in transit and at rest, with role-based access controls ensuring only authorised personnel can access employee information. Systems are independently audited annually.

How quickly can we get India payroll set up with TopSource?

Most clients are live on India payroll within 2–4 weeks, depending on headcount, number of states, and HRIS integration complexity. The onboarding team handles EPFO/ESIC registrations, system configuration, and data migration — clients do not need to manage any of this themselves. For EOR engagements, the first India employee can often be on payroll within days.

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