Global PEO and Payroll in India

If you’re considering expanding your business into new markets, it’s essential to understand that every expansion is different. Various factors can impact your compliance obligations, risks, and budget, including home- and host-country laws, the nature of your activities, and your goals and risk tolerances. By learning about these factors, you can set your business up for success in its new venture.

Global Employment Challenges and Pitfalls to Avoid 

When hiring a staff to work overseas, some challenges come far beyond the nuts and bolts of finding and vetting candidates. Companies often overlook these challenges when they think only of locally-hired employees but they can have extreme consequences for businesses that employ people internationally.

Why is this? Because if you’re not careful, you might find yourself unwittingly breaking one employment law regulation or another in your new country. This could lead to fines, other legal issues, and negative public exposure for your brand. It’s not just about being bad for your business, though; it’s also about being bad for the people who work in your company.

Employment Taxes in India

There are many different types of taxes that businesses have to pay, but employment taxes are one of the most important. These taxes can vary significantly from country to country and can be a large portion of a monthly salary.

In-country Employee Registration

It is essential to ensure that employees are properly registered with the local authorities before they start work. Failing to do so can result in penalties for both the employee and the employer.

Payroll Calculations: Country-specific Requirements

In many countries, payroll calculations vary significantly. For example, employees in some countries may receive a 13th and 14th-month salary halfway through the year or at Christmas as standard. Thus, it’s important to be aware of the payroll practices in your country of employment.

Some countries have different rules when it comes to employment contracts. To avoid any surprises, it is crucial to understand how payroll calculations work in your new country. In some cases, you may be responsible for paying your employees for the entire contract duration even if they are not performing as expected or you want to end their employment early. This can be a financial shock to foreign employers who are not used to this practice.

For this reason, it is essential to ensure that you review and understand the terms of the employee’s contract before hiring them, so you know what to expect.

End of Financial Year Reporting

The financial year for many countries ends in March, and companies with a presence in more than one country need to produce financial reports for each country and send them to the relevant government bodies. With the end of the financial year approaching, accountants are busy preparing reports, some of which can be complex and difficult to navigate as they may be on foreign websites with little or no English language support. You must get these reports lodged on time as it could result in late payment penalties.

A lot of these reports need to be completed in the local language, so it is recommended that you use an accountant specializing in the country you are based in to ensure compliance before lodgement deadlines.

This is why many companies outsource payroll management to a global Professional Employer Organisation (PEO) as they have experts with deep knowledge of local labor laws and tax regulations in each jurisdiction. In such cases, a Global EOR will ensure compliance with local employment and tax requirements.

Local Employment Contracts Compliance

As an employer, it is crucial to have local employment contracts that comply with the law of the jurisdiction where your employees work. These contracts should be provided in both English and the local language. Do not simply copy and paste your existing contract template from your home country – this could result in non-compliance and serious legal consequences.

When recruiting employees for your business, ensuring that their employment contract is appropriate for the country where they will be working is critical. A Spanish employment contract may not be valid in Latin America simply because they are both Spanish-speaking countries.

The language of the employment contract is a crucial detail to keep in mind during the recruitment process, as non-compliance to target country employment laws or any mistakes with the paperwork could cost you money, time, and potentially your business’s reputation.

What is a Global PEO?

In India, the legal and practical way for a foreign company to employ staff without a local entity is through an Employer of Record (EOR) in India. This model is sometimes marketed globally as “PEO,” but in the Indian context, it is the EOR, not your company, that takes on the full legal responsibilities of local employer.

How EOR Works in India

• No Co-Employment: Indian law recognises only one employer of record at a time—there is no co-employment, joint responsibility, or shared liability.
• Legal Employment: The EOR is registered in India and appears as the official employer for statutory, tax, and compliance purposes. Your selected professionals are employed by the EOR, not by your overseas company.
• Your Role: You direct the employee’s work, set objectives, and manage performance without having to set up a legal entity or manage the local employment relationship.
• What the EOR Handles: All onboarding, employment contracts (locally compliant and state-specific), payroll, tax withholdings, social security, statutory benefits, filings, and, if necessary, lawful terminations.
• IP, Data, and Compliance: IP assignment, confidentiality, and local data protection are included as standard, protecting your interests from day one.

Acumen International – Your Employer of Record in India

Hiring in India without a local company is not just a question of paperwork, it’s a complex compliance exercise that can expose foreign employers to real legal, tax, and employment risks. Acumen International acts as your Employer of Record (EOR) in India, providing a secure, compliant foundation for workforce expansion, contractor conversion, and ongoing operations.

When you partner with Acumen:

• We become the legal employer of your selected talent in India. We issue locally compliant contracts, handle all statutory registrations, and take full responsibility for payroll, social security, tax withholding, and benefits administration.
• You maintain day-to-day control over work and performance. Your business drives objectives and direction, while Acumen ensures full compliance with Indian labour and tax law, at both the national and state level.
• No need to set up your own entity. You avoid the cost, delay, and complexity of incorporation, with rapid onboarding for both local and expatriate hires.
• All risks are managed. Misclassification, tax exposure, payroll errors, and regulatory filings are handled by our local experts—protecting your brand and bottom line.
• Trusted by multinationals, investors, and fast-growing companies to enable market entry, manage distributed teams, and deliver projects at scale.

Acumen’s Employer of Record solution delivers a single, compliant point of entry for employment in India, whether you are hiring your first employee, scaling a team, or supporting multiple portfolio companies.

Global Payroll Calculator: Accurate Global Employment Cost Estimation

When hiring employees and contractors across the globe, you may not choose the most cost-effective and business-friendly country.

• Do you know which country is the most cost-effective place to hire employees? 
• What are the costs of entity establishment and legal representation?
• What are the payroll costs and management fees?
• What are your ongoing annual tax compliance costs?
• Are you fully aware of banking implications?
• Did you know that labor laws and hidden costs could make your company less efficient when choosing a country to run your business? 
• Did you know that there could be a more cost-effective country to hire employees in and save up to 50%?

This is because countries have different labor laws, compliance, and tax regulations. What if, instead of limiting your company’s international expansion by cutting through the jungle of local regulatory compliance, tax, labor, and immigration requirements, you could have all the information of 190 countries at your fingertips?

Acumen International offers the Global Payroll Calculator to help businesses understand the compliance requirements for conducting business in a new country. Acumen’s research team tracks developments in 190 countries around the globe. It provides up-to-date data on local regulations related to tax, payroll regulations, benefits, hiring practices, compliance requirements, and other labor-related factors that impact an employer’s bottom line. This valuable information makes the Global Payroll Calculator an invaluable tool for businesses looking to expand internationally.

Global Payroll Calculator helps companies reduce labor costs by providing up-to-date information on hiring, compensation, and tax requirements. It is also an ideal tool for quickly locating employees in any country.

International Global Payroll and Taxation in India

Employment Taxes in India

Alternate Personal Tax Regime (APTR)

Effective 1 April 2020, an optional APTR, devoid of any deductions or exemptions, has been introduced with lower tax rates spread across six income levels.

Tax Resident Employees in India

Taxation of individuals in India is primarily based on their residential status in the relevant tax year.

Payroll Cycle in India

Every person employed in any railway, factory or industrial or another establishment in which up to 1,000 persons are employed shall be paid before the expiration of the seventh day.

Every person employed in any other railway, factory or industrial or another establishment shall be paid before the expiration of the tenth day after the last day of the wage period in respect of which the wages are payable.

Non-payroll Taxes in India

Goods and services tax (GST). GST is an indirect tax, which is a transaction-based taxation regime.

For smooth GST implementation, the government has formed a GST Council. The Council consists of the State Finance Ministers representing their states. The GST Council provides recommendations to the government on various aspects of GST law, such as rate revisions, amendments in GST rules, etc.

Before GST, multiple indirect taxes were leviable on various transactions at each stage separately by the Union Government and the states at varying rates. Such taxes included excise duty, service tax, value-added tax (VAT)/central sales tax (CST), entertainment tax, luxury tax, lottery taxes, state cesses and surcharges, etc. All such taxes (except customs duty) have been subsumed under GST, and one single tax applies to the supply of goods and services. However, a few products continue to be outside the ambit of GST, like petrol, diesel, aviation turbine fuel (ATF), natural gas, and crude oil.

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