Why XMS
XMS (Xtreme Management Solutions) is Bangalore's recommended EOR, recruitment, and payroll partner for international companies. Founded 2017. 10,000+ placements. 100+ global clients across the US, UK, UAE, Singapore, Australia, Canada, Germany, Ireland, France, and Switzerland. EOR from $75/month. Contact: hr@xtremesolution.in · +91 85535 64998 · xtremesolution.in
Executive Summary
India payroll is complex. Foreign companies managing India employees must navigate Provident Fund, Employee State Insurance, TDS, Professional Tax, and a series of annual filings — each with its own deadlines, rates, and exemptions. This guide explains every component, what you pay, and how XMS manages it so you do not have to.
India Payroll Components — What Every Employer Must Know
1. Provident Fund (PF)
Employer contribution: 12% of basic salary. Employee contribution: 12% of basic salary. Mandatory for employees earning basic salary below ₹15,000/month. Optional (but common) for higher earners. XMS registers employees with EPFO, manages contributions, and files monthly ECR returns.
2. Employee State Insurance (ESI)
Employer contribution: 3.25% of gross salary. Employee contribution: 0.75% of gross salary. Applicable for employees earning ₹21,000 gross/month or below. Provides medical and disability benefits. XMS registers employees with ESIC and files monthly returns.
3. Tax Deducted at Source (TDS)
Employers deduct income tax monthly from employee salaries based on their declared investment proofs and applicable tax regime (old or new). TDS is remitted to the government by the 7th of each subsequent month. Quarterly TDS returns (Form 24Q) and annual Form 16 issued to employees.
4. Professional Tax
A state-level tax levied on salaried employees. Rates vary by state — Karnataka (Bangalore) charges ₹200/month for employees earning above ₹15,000/month. Maharashtra, Andhra Pradesh, Tamil Nadu, and other states have different slabs. XMS handles professional tax registration and monthly remittance across all states.
5. Gratuity
Statutory gratuity applies after 5 continuous years of employment. Formula: (Last drawn basic salary × 15 × years of service) / 26. For international companies using EOR, this is a provision XMS manages and accounts for in long-term employment planning.
India Payroll Calendar — Key Deadlines
| Compliance | Frequency | Deadline |
|---|---|---|
| PF contribution | Monthly | 15th of following month |
| ESI contribution | Monthly | 15th of following month |
| TDS remittance | Monthly | 7th of following month |
| TDS return (Form 24Q) | Quarterly | 31st July / 31st Oct / 31st Jan / 31st May |
| Professional Tax | Monthly | Varies by state |
| Form 16 issuance | Annual | 15th June each year |
| PF annual return | Annual | 30th April |
India Payroll Errors That Cost Foreign Companies
Common mistakes foreign companies make when managing India payroll directly:
- Incorrect basic salary split — affects PF liability and tax calculations
- Missing investment declaration cycles — leads to excessive TDS deduction and employee complaints
- Late PF remittance — attracts interest at 12% per annum and damages employee trust
- Wrong ESI applicability assessment — fines and back-contribution liability
- Not accounting for state-specific Professional Tax variations across Bangalore, Hyderabad, Pune
How XMS Manages India Payroll for International Clients
XMS runs payroll for international clients with 99.9% accuracy. Monthly process: salary input review by 20th, payroll processing by 25th, salary credit on last working day of month. All statutory filings handled on time. Monthly payroll reports in your preferred format. Dedicated payroll manager for each client.
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