Employer of Record in India: FAQs

Setting up an owned India entity carries roughly ₹32.5 lakh (₹3,249,316) in one-off incorporation, legal, tax, and payroll setup costs, plus roughly ₹35 lakh/year in ongoing in-house payroll, audit, and labor-law counsel costs - versus an EOR annual management fee of roughly ₹6.16 lakh (₹616,012) per employee with zero setup cost, per Deel's own published 2026 cost comparison. The entity route only becomes cheaper once you're running enough headcount in India to absorb the fixed setup and ongoing compliance overhead.

An India EOR registers and remits Employee Provident Fund (EPF, 12% of basic wages from both employer and employee for establishments with 20+ employees), Employee State Insurance (ESI, 3.25% employer / 0.75% employee, for employees earning up to INR 21,000/month gross), monthly TDS under the Income-tax Act, gratuity accrual (15 days' wages per completed year of service, tax-exempt up to INR 20 lakh lifetime), and the statutory annual bonus (8.33%-20% of salary under the Payment of Bonus Act).

An EOR can typically issue a compliant offer and get an employee onboarded within 1-2 business days, since the EOR already owns a registered Indian legal entity. Incorporating your own India entity and registering for GST, TAN, EPFO, and ESIC typically takes around 2 months before you can legally issue your first paycheck.

Indian courts have a track record of reclassifying contractors as full-time employees where the underlying relationship shows employer-style control (fixed hours, exclusivity, tools provided, ongoing supervision), which triggers back-pay, statutory benefit shortfalls, and penalties. Using an EOR secures verified employee status under Indian law from day one, which removes this exposure.