Payroll And Hiring Guide in India

⭐ Section 1 — Employment vs Contractor (Critical Difference)

Employee

• TDS (withholding tax)

• PF(retirement Benifits)

• PT

• Benefits

• Leave rules

Contractor

• Higher compliance risk if long-term

• No PF/ESIC

• Not suitable for engineering/SaaS teams

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⭐ Section 2 — India Payroll Structure

India payroll ≠ Global payroll.

Payroll includes:

• Basic salary (generally 50% of total)

• Allowances (generally  25% of total)

• TDS (withholding tax)

• PF (retirement Benifits- Rs 1800 + Rs 1800)

• ESIC

• PT (professional tax – Rs 200 per month)

• Gratuity (to be paid if employees leave the company after 5 years of completed service)

• Bonus (if applicable)

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⭐ Section 3 — Required HR Documents

• Offer Letter

• Employment Agreement

• NDA

• IP Assignment

• HR Policy Book

• Attendance & Leave Policy

• Expense Policy

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⭐ Section 4 — Payroll Compliance Explained

TDS

Income tax withholding.

PF

Retirement fund.

ESIC

Medical insurance fund.

Professional Tax

State-level tax.

Gratuity

Long-term employment benefit.

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⭐ Section 5 — Monthly Payroll Workflow

1. Salary inputs

2. Attendance & leaves

3. Payroll calculation

4. Payslips

5. TDS payment

6. PF/ESIC payment

7. Payroll registers

8. Monthly compliance files

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⭐ Section 6 — Hiring Compliance Checklist

Before Hiring

• India entity

• Payroll software

• HR policies

During Hiring

• Offer

• Contract

• KYC

• Payroll onboarding

After Hiring

• PF/ESIC

• TDS

• State compliance

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