India

This guide has important information for businesses looking to hire employees or contractors in India. It's the world's most populous country and seventh largest by land. With real GDP growth of 7.6% in FY 2025-26 and projections of 6.2-6.5% for 2026 (IMF/World Bank), India remains one of the fastest-growing major economies. Today, India is a powerhouse in information technology and business process outsourcing. Every major outsourcing company in the world has a presence in India, running BPO operations and call centers at scale. The country accounts for more than 50% of all outsourcing business in the world.

Category	Details
Minimum Wage	Rs. 178/day (national floor); varies by state and skill level
Overtime Wage	2x Regular Wages (Basic + DA only)
Meal Breaks	30-60 Minutes
Rest Breaks	No federal mandate
Working hours	9 hours/day, 48 hours/week (OSH Code 2020)
Salary Payment Cycle	Monthly
Payroll Taxes	EPF (12% employer + 12% employee), ESI (3.25% employer + 0.75% employee)
Paid Vacation	15 days
Overtime Hours	Beyond 9 hours/day or 48 hours/week
Night Shift Hours	Usually paid at 110% of regular pay between 7PM and 6AM
Holidays	17 gazetted holidays/year (central government)
No Work Days	Sunday, voting days for federal and state elections

Hiring in India

A business needs a local entity in India to hire locally. You will need to register a subsidiary in India, get a local office address, tax registration, employer registration, and bank account. The business and tax registrations can take several weeks to complete.

You will also need to comply with benefits, payroll, tax, and HR laws. These laws vary between different states. If you want to take advantage of the vast labor pool by hiring in multiple cities, you will need to hire an experienced team to stay compliant everywhere. India differentiates between employees and contractors. There are different rules for both, and incorrect classification can lead to fines. With HiveDesk, you can simplify managing your remote team in India by tracking work hours, monitoring activity, and maintaining compliance documentation from day one.

Minimum Wage in India

India has a complex minimum wage structure. The national floor level minimum wage is Rs. 178/day, set by the central government under the Code on Wages 2019. State governments also set minimum wages that cannot go below this floor. Key state rates for 2025-26 include Delhi at Rs. 22,411/month (skilled) and Maharashtra at approximately Rs. 10,000/month (unskilled). The Variable Dearness Allowance (VDA) is revised semi-annually in April and October based on CPI.

For manufacturing and farm sectors, India has 2,000 different types of jobs with several hundred categories of employment. Each employment category and job type has a minimum daily wage. This makes it hard to hire industrial workers in India. HiveDesk customers usually hire white collar employees in India who are not subject to the minimum wage rules. Market salaries for IT/services professionals typically run 2-5x above these minimums. But you need to pay competitive salary to attract good talent.

Working Hours in India

Employees in the IT industry generally work for 40 hours in a week, with Saturday and Sunday as holidays. But the law allows only one weekly off so the work hours can go up to 48 in a week.

If you plan to hire a white collar employee in India, you should plan on a 40-hour work week to attract good employees. Under the OSH Code 2020 (effective November 21, 2025), overtime is paid at 2x the ordinary rate of wages. The ordinary rate includes only Basic Salary and DA; HRA, conveyance, and medical reimbursements are excluded. Work beyond 9 hours/day or 48 hours/week qualifies as overtime. Most IT workers do not get overtime pay in India.

Payroll and Taxes in India

Employers typically follow a monthly payment schedule, with salaries aid on the first of every month. Salary prorated for employees joining in the middle of a month. Salary is calculated on monthly basis, not hourly, as is the case in the US and many European countries.

• Salary in India has several allowances apart from the basic pay. Most employers break up the total compensation into basic pay, dearness allowance, house rent allowance, medical allowance, and travel allowance. Some of these are tax deductible for employees if they produce a receipt for related expenses. Salary is paid into employee's bank account on the first of every month, net of deductions. Employers must deduce income tax at source, contribution to provident fund (social security) and government's employee health insurance (if applicable).

Individual Income Tax

Only the central government can impose income tax in India. Indian income system follows a slab structure. It means individuals pay income tax based on their income level. This is also called the progressive tax system in which individuals with higher income also pay higher taxes. These tax slabs are revised in every annual budget. Employers need to stay on top of these changes to be compliant with tax laws. The following table shows the New Tax Regime slabs for FY 2025-26 (AY 2026-27), which is the default regime:

Taxable Income Slab	Tax Rate
Up to Rs. 4 lakh	NIL
Rs. 4 - 8 lakh	5%
Rs. 8 - 12 lakh	10%
Rs. 12 - 16 lakh	15%
Rs. 16 - 20 lakh	20%
Rs. 20 - 24 lakh	25%
Above Rs. 24 lakh	30%

A Section 87A rebate of up to Rs. 60,000 means individuals with taxable income up to Rs. 12 lakh pay zero tax. With the standard deduction of Rs. 75,000 for salaried employees, income up to Rs. 12.75 lakh is effectively tax-free.

EPF and ESI Contributions

Employees pay 12% of basic salary towards the Employees' Provident Fund (EPF), which is India's social security scheme. The EPF wage ceiling is Rs. 15,000/month.

Employees also pay 0.75% of salary towards the Employee State Insurance Corporation (ESI) if the gross monthly salary is less than Rs. 21,000 (Rs. 25,000 for disabled employees).

Employer Costs in India

Employers bear the following statutory costs in India:

Scheme	Employer Contribution	Details
EPF	12% of basic salary	Split: 8.33% to Employee Pension Scheme (EPS) + 3.67% to EPF
ESI	3.25% of gross salary	Applicable if employee gross salary is below Rs. 21,000/month

Total employer statutory cost is approximately 15.25% of basic salary (EPF 12% + ESI 3.25%). Employers also pay an administration fee to the Provident Fund authority for managing the contributions.

Statutory Leave Policies in India

Employers must comply with labor laws that stipulate the number of personal days off (or personal leave). In addition, every business must observe gazetted national holidays.

Employees are entitled to a minimum of 15 paid holiday days each year. But this number varies between companies and sectors. Government agencies and public sector businesses offer 30 paid holidays. Most private businesses offer between 15-30 holidays. Paid leaves can be rolled over to the next financial year.

The central government has declared 17 gazetted (compulsory) holidays for 2026. Republic Day, Independence Day, and Gandhi Jayanti are compulsory national holidays. Some states also have their own public holidays businesses must observe. Employees may also avail up to 2 restricted holidays from a separate list based on personal or religious preference.

National Holidays 2026

Date	Holiday
Jan 26	Republic Day
Mar 4	Holi
Mar 21	Id-ul-Fitr
Mar 26	Ram Navami
Mar 31	Mahavir Jayanti
Apr 3	Good Friday
May 1	Buddha Purnima
May 27	Id-ul-Zuha (Bakrid)
Jun 26	Muharram
Aug 15	Independence Day
Aug 26	Milad-un-Nabi
Oct 2	Mahatma Gandhi's Birthday
Oct 20	Dussehra
Nov 8	Diwali
Nov 14	Guru Nanak's Birthday
Dec 25	Christmas Day

Employees usually get 15 paid sick leaves in case of any illness. Maternity leave in India is one of the most generous in the world. Women get six months of paid maternity leave leading up to childbirth.

Paternity leave Men get 15 days of paid paternity leave for every childbirth.

Casual Leave This is leave that is to be used in case of an emergency or unforeseen circumstance. Most businesses give 1-2 casual leave every month. These cannot be rolled over to the next year.

Employee Benefits

Most employers offer medical and life insurance to their employees. Although India has a free public health care system, most people go to private care providers. A good medical insurance is an excellent way to attract employees who have family.

Employee Termination

Both the employer and employee can terminate an employment agreement at will by giving the necessary notice period. No cause is needed for terminating the employment if the notice period specified in the employment agreement is given.

Usually, the notice period is one month but it can vary widely by industry and role. Typical notice period in the IT industry in India is three months. Severance pay may be applicable based on the employment agreement. Employers need to pay termination benefits that include payment for leaves accrued, gratuity payment if the employee worked for more than 5 years with the employer, payment in lieu of notice period if notice is not given, and any other payment as per the employment contract.

New Labor Codes

All four new labor codes came into force on November 21, 2025, replacing 29 legacy labor laws:

1. Code on Wages, 2019 -- universal minimum wage rights, timely payment
2. Industrial Relations Code, 2020 -- trade unions, disputes, standing orders
3. Code on Social Security, 2020 -- EPF, ESI, gratuity, maternity, gig/platform workers
4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020 -- workplace safety, overtime, working hours

Final central rules are expected to be notified by April 1, 2026, enabling full operational implementation. This is the most significant Indian labor law reform in decades.