Written and fact-checked by the EORquotes research team · Data verified July 2026
Hiring an employee in India costs significantly more than their gross salary. This calculator itemizes every mandatory employer contribution so you can budget an offer accurately — before you talk to an EOR provider.
How much does it cost to hire an employee in India? Employing someone in India costs roughly 7.06% above their gross salary in mandatory employer contributions. A 80,000 INR per month hire costs about 85,648 INR per month all-in — 1,027,776 INR per year across 12 salary payments.
Cost of hiring in India: key facts (2026)
- Employer contributions add about 7.06% on top of gross salary at a typical wage — a 80,000 INR/month hire costs roughly 85,648 INR per month all-in.
- Salary is paid 12 times a year.
- There is no single statutory minimum wage in India; pay floors come from collective agreements or regional wage boards.
- Several contributions are capped or salary-dependent, so the effective rate falls as salary rises — the calculator handles this.
- Statutory paid leave is 15 days plus 12 public holidays, on a 48-hour week.
Hiring in India in 2026: what to know
India is the world’s largest remote-hiring talent pool, and for most foreign employers the appeal is straightforward: deep engineering, finance and support talent, widespread business English, and salary levels a fraction of Western equivalents. Competition for strong candidates is fierce, though — counter-offers are routine and notice periods of 60 to 90 days are the norm in the IT sector, so hiring timelines run longer than in Europe.
The compliance picture is where India differs most from Western markets. Labour law is split between central and state legislation, so obligations on leave, working hours and registrations vary by the state your employee sits in. The four consolidated Labour Codes passed in 2020 have been progressively implemented, changing how ‘wages’ is defined for contribution purposes — an area where getting the basic-pay split wrong is a common and expensive error.
The Labour Codes’ definition of ‘wages’ requires basic pay to be at least 50% of total compensation, which raises provident-fund and gratuity liabilities for salary structures that previously leaned heavily on allowances — the single biggest cost consideration when structuring an Indian offer in 2026. Separately, the Supreme Court has directed the government to decide on raising the EPF wage ceiling from 15,000 INR (candidate figures of 21,000 and 25,000 INR are under discussion), which would increase employer provident-fund costs if enacted.
Calculate the true cost of an employee in India
How this calculator works: contributions are computed on the annual gross salary
(12 payments per year), contributions with a statutory ceiling stop at that ceiling, rate ranges use the midpoint, and every rate is cited
in the sources at the bottom of this page.
What a hire in India actually costs: worked examples
Example: a typical professional hire (80,000 INR/month)
Employing a typical professional hire (80,000 INR/month) in India costs 1,027,776 INR per year — an effective 85,648 INR per calendar month, about 7% more than the monthly gross written in the contract.
| Annual gross (12 payments) | 960,000 INR |
| Provident fund (EPF + EPS) (12.0%), capped at 15,000 INR/month | 21,600 INR |
| Employees’ State Insurance (ESI) — not applicable at this salary | 0 INR |
| Gratuity provision (4.81%) | 46,176 INR |
| Total annual employer cost | 1,027,776 INR |
| Effective monthly cost | 85,648 INR |
Example: a senior hire (120,000 INR/month)
Employing a senior hire (120,000 INR/month) in India costs 1,530,864 INR per year — an effective 127,572 INR per calendar month, about 6% more than the monthly gross written in the contract.
| Annual gross (12 payments) | 1,440,000 INR |
| Provident fund (EPF + EPS) (12.0%), capped at 15,000 INR/month | 21,600 INR |
| Employees’ State Insurance (ESI) — not applicable at this salary | 0 INR |
| Gratuity provision (4.81%) | 69,264 INR |
| Total annual employer cost | 1,530,864 INR |
| Effective monthly cost | 127,572 INR |
Where the money goes
At a typical 80,000 INR/month salary, this is how the annual cost of employing someone in India divides between take-home pay and the mandatory contributions on top:
- Annual gross (12 payments) — 960,000 INR (93.4%)
- Provident fund (EPF + EPS) (12.0%), capped at 15,000 INR/month — 21,600 INR (2.1%)
- Gratuity provision (4.81%) — 46,176 INR (4.5%)
Skip the paperwork. An EOR employs your India hire through its own local entity — payroll, contributions, insurance and compliance handled for a flat monthly fee. Most teams are up and running in days:
What’s behind each employer cost in India
Provident fund (EPF + EPS)
The employer contributes 12% of basic wages, split 3.67% to the provident fund and 8.33% to the EPS pension scheme. Crucially, the statutory obligation is capped at a wage base of 15,000 INR per month — so the employer’s mandatory contribution tops out around 1,800 INR per month regardless of how high the salary goes. Many employers voluntarily contribute on full basic pay as a benefit; that is a choice, not a legal requirement.
Employees’ State Insurance (ESI)
ESI provides medical and sickness cover, funded by 3.25% from the employer and 0.75% from the employee. It applies only to employees earning up to 21,000 INR gross per month (25,000 INR for employees with disabilities). Above that threshold the employee falls outside the scheme entirely, so most professional hires generate no ESI cost.
Gratuity provision
Gratuity is a statutory end-of-service payment of 15 days’ wages per completed year, payable after five years of service. It is not a monthly contribution, but employers provision for it at roughly 4.81% of basic pay so the eventual payout is funded — the standard approach in Indian payroll budgeting.
What the employee pays in India
Employer contributions are only one side of the ledger. Employees in India pay their own 12% social-security contribution out of gross salary, plus progressive income tax withheld at source — the exact rate depends on income level and personal situation. That is why gross salary, net take-home and total employer cost are three different numbers. This page focuses on the employer side: what a hire actually costs your budget.
Salary structure in India
Salary is paid 12 times a year. Indian offers are quoted as CTC (cost to company), which bundles basic pay, allowances and employer contributions into one headline figure — so a CTC number is not comparable to a European gross salary. In practice: a 2,000 INR monthly salary in India means 24,000 INR in annual gross pay (12 × 2,000), and every employer contribution above is calculated on that annual figure — which is why the calculator works on an annual basis before showing you the effective monthly cost.
EOR vs opening your own entity in India
Establishing an Indian subsidiary means incorporation with the MCA, PAN and TAN registration, GST where applicable, plus state-level registrations under shops-and-establishments law wherever employees are located — realistically months of setup and meaningful ongoing compliance overhead. An EOR removes all of it: the provider’s Indian entity employs your hire, handles EPF/ESI registration and filings, and structures the offer to satisfy the 50% basic-pay rule. Given how state-specific Indian compliance is, an EOR is the pragmatic route until headcount justifies a permanent local presence. Providers such as Deel and Remote are the usual starting points — or compare quotes from several at once.
Key employment facts for India
Beyond the payroll numbers, these statutory rules shape what a India hire costs and how the relationship works day to day:
| Working hours | 48 hours/week |
| Paid annual leave | 15 days |
| Public holidays | 12 |
| Maximum probation | 6 months |
| Notice period | 30–90 days, commonly 60–90 days for professional roles (state shops-and-establishments acts and contract terms) |
| Severance | Retrenchment compensation of 15 days’ average pay per completed year for covered workmen, plus statutory gratuity after five years of service |
Hire in India without an entity
We match you with vetted EOR providers for India — free, in one request:
Or go direct to a provider covering India:
Frequently asked questions
How much does it cost to employ someone in India?
On top of gross salary, employers in India pay roughly 7.06% in mandatory contributions at a typical salary. Several of those contributions stop at a statutory wage ceiling, so the effective percentage falls as salary rises — which is why a flat percentage of gross overstates the cost of senior hires here. Use the calculator above for an itemized total at your exact salary level.
What payroll taxes do employers pay in India?
Provident fund (EPF + EPS) (12.0%), capped at 15,000 INR/month. Employees’ State Insurance (ESI) (3.25%), applies only up to 21,000 INR/month. Gratuity provision (4.81%). The biggest single item is Provident fund (EPF + EPS) at 12.0% — see the plain-language breakdown of each contribution earlier on this page for what it funds and who pays what.
How many salary payments per year are required in India?
12. Salary is paid 12 times a year. Indian offers are quoted as CTC (cost to company), which bundles basic pay, allowances and employer contributions into one headline figure — so a CTC number is not comparable to a European gross salary. When budgeting, multiply the monthly salary by 12, not 12: a 2,000 INR contract is 24,000 INR a year in gross pay before any employer contributions.
What is the minimum wage in India?
There is no statutory national minimum wage in India. Pay floors are set through collective agreements negotiated per industry, so the applicable minimum depends on the agreement covering your hire’s role — one more reason to work with a provider that knows the local agreements well.
Can I hire in India without opening a local company?
Yes — that is exactly what an Employer of Record does. The EOR already operates a legal entity in India: it employs your hire on your behalf, runs compliant payroll including the full ~7.06% of employer contributions, and sends you one monthly invoice. You direct the day-to-day work; the EOR carries the legal employment relationship.
How fast can I hire in India through an EOR?
Typically days rather than months. The slow parts of employing in India — entity setup, social-security and tax registrations, mandatory insurances — already exist on the EOR’s side. In practice your timeline is usually the candidate’s own notice period with their current employer (notice periods in India run 30–90 days, commonly 60–90 days for professional roles (state shops-and-establishments acts and contract terms)).
What does an EOR service cost in India?
Providers charge a flat monthly fee per employee on top of the statutory employment costs shown in the calculator above — the statutory costs are the same whoever you pick, but the fee is not. The same India hire can be priced very differently across providers, which is why comparing several quotes at once pays for itself.
What is the notice period and probation limit in India?
Probation runs up to 6 months, and statutory notice is 30–90 days, commonly 60–90 days for professional roles (state shops-and-establishments acts and contract terms). Getting these right in the contract from day one matters — an EOR applies the correct local terms automatically, which is where compliance risk usually hides.
How is severance calculated in India?
Retrenchment compensation of 15 days’ average pay per completed year for covered workmen, plus statutory gratuity after five years of service. Because severance exposure grows with tenure, it is worth understanding before you make an offer — the calculator above covers ongoing cost, while severance is a separate end-of-employment liability.
How many paid leave days are mandatory in India?
Employees are entitled to 15 days of paid annual leave plus 12 public holidays, on a 48-hour working week. Paid leave is part of the true cost of a hire even though it does not show as a payroll contribution.
Is India a cost-effective place to hire compared with neighbours?
It depends on the role, but the honest comparison is total employer cost, not gross salary — the effective on-cost here is about 7.06%. Use the calculator for your exact salary, then compare against nearby markets from the country index linked below before you commit to a location.
Compare India with other markets
Employer costs swing widely between countries — the same salary can cost far more or less depending on where you hire. See the full employee-cost calculator index for every country, or jump to a neighbour:
Compare EOR providers for India
Knowing the cost is half the decision — the other half is which provider handles your India hires best. These head-to-heads weigh entity model, strengths and pricing approach specifically for India:
- Deel vs Multiplier for hiring in India
- compare Multiplier and Playroll in India
- Deel or Remote for a India hire?
- India: Remote vs Oyster compared
Sources
Every number on this page traces to an official or authoritative source, checked on the date shown. Spot something outdated? Tell us and we will verify and correct it.
- EPF employer contribution 12% (3.67% EPF + 8.33% EPS), statutory wage ceiling 15,000 INR/month: EPFO (Employees' Provident Fund Organisation) (accessed 2026-07)
- ESI employer contribution 3.25%, employee 0.75%, wage ceiling 21,000 INR/month: ESIC (Employees' State Insurance Corporation) (accessed 2026-07)
- Gratuity: 15 days' wages per completed year after five years (commonly provisioned at 4.81%): Ministry of Labour & Employment (Payment of Gratuity Act, 1972) (accessed 2026-07)
- Labour Codes: wages definition requiring basic pay of at least 50% of total remuneration: Ministry of Labour & Employment (accessed 2026-07)
- Typical professional monthly salary reference (~80,000 INR) used for worked examples: Editorial estimate for a mid-level professional hire; verify per role (accessed 2026-07)