Payroll Outsourcing Services India

Payroll Outsourcing Services in India – Fully Managed

Run accurate, compliant India payroll. TDS, Provident Fund, ESI, Professional Tax, gratuity and Labour Code reporting — handled end-to-end by named local specialists.

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Payroll Outsourcing Company in India

Every Payslip Filed. Every Return On Time.

India payroll demands precision across three authorities. From TDS income tax and Provident Fund to ESI, Professional Tax, gratuity and the new Labour Codes, compliance is detailed and unforgiving. We handle every filing to the EPFO, ESIC and Income Tax Department so your people are paid right, on time, every time.

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India payroll at a glance

12 %
Employee & employer Provident Fund (each)
4 %
Total ESI rate (3.25% employer + 0.75% employee)
5 yrs
5yrs (permanent) / 1yr (fixed-term, pro-rata)
26 wks
Paid maternity leave (Maternity Benefit Act)

Income tax slabs & TDS

Employers withhold income tax from salaries at source as TDS (Tax Deducted at Source) under Section 192 and deposit it with the Income Tax Department each month. The new tax regime is the default from FY 2025-26; employees may opt for the old regime if their deductions make it more beneficial.

Under the new regime a standard deduction of ₹75,000 applies, and the Section 87A rebate makes income up to ₹12.75 lakh effectively tax-free. The slabs below are for the new regime (FY 2026-27).

No tax on annual income up to ₹4 lakh under the new regime. With the standard deduction and the Section 87A rebate, salaried income up to ₹12 lakh can be effectively tax-free.

5% on the slice of income in this band. The 87A rebate offsets tax for total income within ₹12 lakh, so this typically bites only above that threshold.

10% on income in this band. Applies to the portion of taxable income between ₹8 lakh and ₹12 lakh.

15% on income in this band. Above the rebate ceiling, tax becomes payable on a slab-by-slab basis.

20% on the income within this band under the new regime.

25% on income in this band. A health & education cess of 4% is added on top of the total tax for all bands.

Top rate of 30% on income above ₹24 lakh. Surcharge applies at higher income levels, plus the 4% cess. (Old regime: 0% to ₹2.5L, 5% to ₹5L, 20% to ₹10L, 30% above, with a ₹50,000 standard deduction.)
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*Indicative figures only and not definitive legal advice. Local regulations change frequently. Consult an expert
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Provident Fund (EPF) & Employee State Insurance (ESI)

Two central social-security schemes sit at the core of Indian payroll. EPF is a retirement fund administered by the EPFO; ESI is a medical and cash-benefit scheme run by the ESIC for lower-wage employees.

EPF — 12% employee

Employees contribute 12% of Basic + DA to their Provident Fund, tracked under a portable 12-digit UAN (Universal Account Number) that follows them across employers.

EPF — 12% employer (3.67% + 8.33%)

The employer also contributes 12%, split as 3.67% to EPF and 8.33% to the EPS pension scheme. The EPS portion is capped at 8.33% of ₹15,000 = ₹1,250/month.

EPF wage ceiling — ₹15,000

PF is statutorily mandatory on wages up to ₹15,000/month; above that it is optional by agreement. Plus 0.50% EDLI insurance and 0.50% admin charges on the employer side.

ESI — 0.75% employee

Employees earning up to ₹21,000/month gross contribute 0.75% to ESI, funding medical care, sickness, maternity and disability benefits.

ESI — 3.25% employer

Employers contribute 3.25% of gross wages for every employee within the ₹21,000 ceiling (₹25,000 for employees with disabilities). Total ESI is 4%.

UAN & ESIC registration

Establishments must register with the EPFO and ESIC and generate a UAN and ESIC number for each eligible employee — a core onboarding step for compliant Indian payroll.

Statutory contribution rates

3.67 %
Employer share to EPF
8.33 %
Employer share to EPS pension
0.50 %
EDLI insurance (employer)
0.75 %
ESI employee share
3.25 %
ESI employer share
2,500 /yr
Professional Tax (max, state-levied)

Professional Tax, minimum wage & statutory bonus

Beyond central schemes, Indian payroll carries state-level and Act-based obligations. Several of these vary by state, so the exact figures depend on where your employees are based.

Professional Tax — state-levied

A state tax on income, capped at ₹2,500 per year. Rates and slabs differ by state (e.g. Maharashtra, Karnataka), and several states — Delhi, Haryana, UP — do not levy it at all.

Minimum wage — by state & skill

India has no single national minimum wage. Each state sets rates by zone, scheduled employment and skill level (unskilled to highly-skilled), above a central national floor wage.

Statutory bonus — 8.33% to 20%

Under the Payment of Bonus Act, employees earning up to ₹21,000/month are entitled to an annual bonus of 8.33%–20% of salary, calculated on a ceiling of ₹7,000 or the minimum wage, whichever is higher.

Payroll compliance cycle & deadlines

Indian payroll runs on a tight monthly and quarterly filing calendar across three authorities — the Income Tax Department (TDS), the EPFO (Provident Fund) and the ESIC (state insurance). Missing a deadline triggers interest and penalties, so the cycle below is the backbone of a compliant India payroll.

Income tax deducted from salaries (TDS, Section 192) for a month must be deposited with the government by the 7th of the following month. For March deductions the deadline is 30 April.

The EPF Electronic Challan-cum-Return (ECR) and the ESI contribution for a month are both due by the 15th of the following month, covering employer and employee shares.

The salary TDS return is filed each quarter: Q1 by 31 July, Q2 by 31 October, Q3 by 31 January, and Q4 by 31 May. Late filing attracts a fee of ₹200/day under Section 234E.

Employers must issue Form 16 — the annual statement of salary paid and tax deducted — to every employee by 15 June following the end of the financial year (which runs 1 April to 31 March).

Where Professional Tax applies, employers deduct and remit it on the schedule set by each state (monthly or annually), filing the relevant state PT return.

India’s tax year (financial year) runs April to March, with the assessment year following it. Payroll calendars, Form 16 and annual filings all key off this cycle.

Gratuity, leave & the new Labour Codes

Beyond monthly salary and statutory contributions, Indian employers must budget for end-of-service and leave entitlements — and prepare for the biggest shake-up in decades: the four new Labour Codes, in force since 21 November 2025.

Under the Payment of Gratuity Act, employees with 5 years of continuous service receive gratuity of (last drawn salary × 15 × years of service) ÷ 26. It is tax-exempt up to ₹20 lakh.

The Maternity Benefit Act provides 26 weeks of paid maternity leave for the first two children (12 weeks for the third onwards), for establishments with 10 or more employees.

Earned/privileged, casual and sick leave are governed by each state’s Shops & Establishments Act, so accrual rates and carry-forward rules vary by where the employee is based.

India has consolidated 29 central labour laws into four Codes (Wages; Industrial Relations; Social Security; OSH), effective 21 November 2025, with detailed rules being finalised through 2026. We unpack what this means in India’s new labour law reforms 2026.

Under the Code on Wages, basic pay must be at least 50% of total compensation — raising PF, gratuity and bonus liabilities and reshaping take-home pay. Read our guide to the new wage code’s impact on payroll processing in India.

On exit, employers must settle final wages, leave encashment and gratuity. The new Labour Codes tighten this to a 48-hour wage-settlement expectation, making accurate, fast offboarding payroll essential.

Ready to simplify your India payroll?

Talk to a TopSource expert about running accurate, compliant payroll in India — TDS, EPF, ESI, Professional Tax, gratuity and the new Labour Codes handled end to end.

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More than a payroll platform

The German labor market is governed by comprehensive payroll laws that emphasize employee rights and benefits. TopSource offers expert guidance and solutions for businesses managing their workforce in India. We assist with payroll processing, legal compliance, and human resource management, ensuring that businesses can focus on their core operations while maintaining a compliant and efficient workforce in India.

HR Advisory

Simplified Payroll

Seamlessly run payroll in India and 130 other countries with guaranteed compliance to ever-changing local tax, labor, and reporting laws.

Dedicated Support

You’ll have a named account manager and access to local specialists for India, so every question, update or challenge gets a fast, informed response.

Employer of record and payroll services from TopSource Worldwide

Access to Expertise

Employment law query? Best practice for benefits? Our expertise and support goes beyond Payroll to ensure you have the tools you need to grow your organization.

Employer of Record (EOR)

Sync with your HR Systems

Effortlessly sync payroll with time tracking, leave, onboarding, and benefits systems via our dedicated API. Easily setup by our hands-on onboarding team.

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Accelerating your growth in India and beyond

TopSource goes far beyond payroll, acting as your end-to-end partner in global workforce management. From Employer of Record (EOR) services and seamless entity setup to localized accountancy and fractional HR support, we cover every aspect of international employment.

Talent gap analysis for businesses

With our Global EOR services, you can hire talent in any country without establishing a legal entity. We handle employment contracts, payroll, benefits, and compliance on your behalf, enabling fast, risk-free global expansion.

On demand access to our fractional and regional HR professionals who understand local laws, cultures, and best practices. Bespoke talent intelligence including salary, business and talent market benchmarking.

Our global entity management team helps you establish and maintain your corporate entities worldwide. We ensure full compliance with local laws and regulations, streamline administrative processes, and minimize risk — so you can focus on growing your business.

We offer comprehensive accounting solutions tailored to meet your international needs. From bookkeeping and financial reporting to tax filings and audits, our services help you maintain transparency, accuracy, and compliance in every jurisdiction.

Meet our experts for India

Whether you’re entering the market or scaling operations, our specialists provide the insight and guidance you need to succeed in one of the world’s most dynamic and regulated employment landscapes. With TopSource, you’re backed by real experts, every step of the way.

India payroll: frequently asked questions

The questions our customers ask most often when setting up or switching their India payroll. For anything specific to your business, our India payroll specialists are a phone call away.

We manage monthly TDS calculation and remittance, quarterly TDS returns (Form 24Q), and the annual TDS certificate (Form 16) issued to each employee. We also handle monthly Provident Fund and ESI remittance and returns via the EPFO and ESIC portals, plus state-specific Professional Tax filings, which differ by the state each employee is based in.

Monthly payroll is standard across India, typically processed and paid by the last working day of the month or the first few days of the following month. Payslips itemize gross salary, allowances, PF, ESI, Professional Tax, and TDS deductions, along with net pay, and we generate these in a format that reconciles cleanly with EPFO, ESIC, and Income Tax Department filings.

Yes, our Global Payroll service processes payroll for employees of your existing India entity, registered for GST, TAN, EPFO, and ESIC as applicable. If you don’t yet have an India entity, our Employer of Record service is the right starting point instead, since it lets us act as the legal employer; many clients start with EOR and transition to Global Payroll once their own India entity is established.

Salaries in India are paid in Indian Rupees through domestic bank transfers, and we work with your India entity’s local banking arrangements to process net pay, statutory remittances, and vendor payments (such as PF and ESI contributions) on schedule, while keeping your global treasury and reporting in whatever base currency you use for consolidation.

Yes. We report India payroll data in a standardized format alongside your other countries, so headcount cost, statutory contribution spend, and compliance status are visible in one place rather than scattered across separate local providers. This consolidated visibility, rather than just a country-by-country dashboard, is the core of how we structure multi-country payroll reporting.