Payroll Guide: India

Published on 29 Mar 2023

Entrust your India payroll with Asia Pacific's Award-Winning Payroll and HRMS provider

OS HRS takes care of your multi-country payroll with local regulatory expertise. From India, across Asia Pacific and beyond, we are the payroll partner of global leaders. Not sure where to start when it comes to multi-country payroll? Here’s our quick payroll guide for your India business operations.

Overview of payroll in India



Payroll cycle 

Monthly, + 13th month salary

Employer Contributions

EPF -12% ESI - 3.25% 

Minimum wage  

No statutory minimum wage except for certain regulated sectors

Working hours  

48 hours per week, 9 hours a day 

What are the steps to set up payroll in India?

Payroll in India involves a number of compliance requirements, including the calculation and withholding of taxes, social security contributions, and other deductions. Here are the steps to set up payroll in India:

  1. Obtain a PAN Card: The first step in setting up payroll in India is to obtain a Permanent Account Number (PAN) card. This is a 10-digit alphanumeric code issued by the Indian Income Tax Department, and it is required for all tax-related transactions.

  2. Register for Tax Deduction Account Number (TAN): To deduct taxes from employee salaries, you need to register for a Tax Deduction Account Number (TAN). This is a 10-digit alphanumeric code that is used to identify your company when you deduct and deposit taxes with the Income Tax Department.

  3. Decide on Payroll Frequency: The next step is to decide on the frequency of payroll processing, which can be monthly, bi-monthly, or weekly, depending on your company's policies.

  4. Collect Employee Information: To set up payroll, you need to collect employee information, such as name, address, PAN card details, bank account details, and salary structure.

  5. Calculate Salary and Deductions: Once you have collected employee information, you need to calculate salaries and deductions based on the salary structure. Deductions can include income tax, provident fund (PF), and employee state insurance (ESI).

  6. Obtain ESI and PF Registration: If your company has more than 20 employees, you need to obtain ESI and PF registration. This is a mandatory requirement, and you need to contribute a certain percentage of employee salaries to these funds.

  7. Generate Payslips and Bank Transfer: After calculating salaries and deductions, you need to generate payslips for employees and transfer their salaries to their bank accounts.

  8. File Monthly Returns: Finally, you need to file monthly returns with the Income Tax Department and ESI and PF authorities. These returns report the tax and other deductions made from employee salaries.

It is important to note that setting up payroll in India can be complex, and it is recommended to seek professional advice or engage a payroll outsourcing company like OS HRS to ensure compliance with local regulations.

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What do you need to know about India Payroll?

Employer Contributions in India

What do you as an employer need to make in employer contributions?


Employee’s Provident Fund (EPF)

Employee’s Pension Scheme (EPS)

Note: Compulsory for employers with more than 20 employees, maximum monthly salary of 15,000.00 INR


Employee’s State Insurance (ESI)

Note: Compulsory for employers with more than 10 employees


Total Employer Contributions

Employee Contributions in India

What do your employees need to set aside in contributions?


Employee’s Provident Fund (EPF)

Employee’s Pension Scheme (EPS)

Note: Compulsory for employers with more than 20 employees, maximum monthly salary of 15,000.00 INR


Employee’s State Insurance (ESI)


Health and Education Cess


Total Employee Contributions

Employee Income Taxes in India

What are the income tax rates in India for the Assessment Year 2024-25?

Old Regime


Up to 2,50,000.00 INR


Rs. 2,50,000 to Rs. 5,00,000


Rs. 5,00,000 to Rs. 10,00,000


Above 10,00,000 INR

New Regime


0.00 INR – 3,00,000.00 INR


3,00,001.00 INR – 6,00,000.00 INR


6,00,001.00 INR – 9,00,000.00 INR


9,00,001.00 INR – 12,00,000 INR


12,00,001 INR – 15,00,000 INR


Over 15,00,000 INR

Why trust OS HRS with your multi-country payroll?

Integrate your multi-country payroll processes

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Dedicated multi-country payroll compliance

Reach out to OS HRS for a discovery call today!

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Last updated April 2023

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