Running payroll in India looks straightforward until you are three months in and staring at a PF notice, a TDS mismatch, or an angry employee asking why their payslip does not match what was deposited. XMS has been managing payroll for Indian companies and international teams since 2015. We handle the complexity so you do not have to.
India has one of the most complex payroll compliance environments in the world. PF rates change. ESI applicability thresholds shift. Professional Tax slabs differ by state. TDS calculations depend on investment declarations that employees submit incorrectly or not at all. LWF rates vary. Bonus calculations have legal definitions that most companies ignore until an audit arrives.
Most growing companies try to manage this in-house with a single HR executive who is also handling recruitment, onboarding, and exit formalities. The result is late filings, incorrect calculations, and compliance gaps that only become visible when a government notice arrives. By then, the penalties and interest have already accumulated.
The companies that avoid these problems do not have better HR executives. They have better systems. Outsourcing payroll to a specialist is not a sign that your team cannot cope. It is a recognition that payroll compliance in India requires dedicated expertise and that your HR team's time is worth more than chasing challans.
PF compliance errors compound. A miscalculated basic salary, an incorrect employee category, or a late payment challan can trigger notices that take months to resolve. We prevent these at the source.
TDS errors usually trace back to incorrect investment declarations, salary structure misclassification, or mid-year salary revisions that were not accounted for. We manage the full TDS cycle proactively, not reactively.
Payroll in India involves salary computation, statutory deductions, bank upload files, challan payments, return filings, payslip generation, and query resolution. For a team of 50, this can consume an entire person's month. We handle all of it.
US and UK companies employing Indian teams often have no visibility into whether PF, ESI, PT, TDS, and LWF are being filed correctly. We give you a clean compliance record and a clear monthly summary in a format that makes sense to your finance team.
We take over the full payroll function. You share attendance data and variable inputs. We handle everything else from computation to compliance.
Salary computation for all employees including variable pay, incentives, arrears, and deductions. Accurate to the last rupee, processed before your payment date every month.
Provident Fund and ESI calculations, challan generation, monthly filings, and ECR uploads. New joinee registration, exit closures, and UAN management handled as standard.
Monthly TDS calculations based on employee investment declarations, salary structure, and applicable exemptions. Form 24Q filings each quarter and Form 16 generation at year end.
PT applicability check, monthly deductions, and state-wise filings. PT slabs and filing cycles vary by state and we manage the complexity across all your locations.
LWF deductions and remittance where applicable. Contribution rates and cycles differ by state and we track them so you never miss a filing or pay incorrect amounts.
Payslip generation for every employee each month. Bank upload files prepared in your bank's required format so salary disbursement is a single approval, not a manual process.
Exit employee computation covering notice period recovery, gratuity eligibility, leave encashment, and all deductions. Done accurately and on time so departing employees do not need to follow up.
We maintain a compliance calendar for your organisation and file on time without reminders from your side. You receive a monthly compliance summary confirming every filing completed.
For companies using our Employer of Record service, payroll is handled as part of the same engagement. One partner, one invoice, complete compliance across recruitment, employment, and payroll.
We have been managing payroll compliance in India since 2015. We have seen regulation changes, interpretation disputes, and compliance gaps that newer providers have not encountered. That experience protects you.
Late PF, ESI, or TDS filings attract interest and penalties. We have a zero late filing record across our client portfolio. Every challan is paid, every return is filed, and you receive confirmation each month.
You receive a clean monthly payroll summary, individual payslips, compliance filing confirmations, and a full audit trail. No black boxes. You always know exactly what was processed and what was filed.
International companies using our EOR service get payroll as part of the same engagement. One relationship, one point of contact, complete statutory compliance across employment and payroll.
We have managed payrolls from 5 to 800 employees. The process scales cleanly as you add headcount without any disruption to your compliance cycle or reporting.
You have a single point of contact who knows your payroll setup, your employees, and your requirements. When something changes, you call one person who actually knows your account.
We collect your existing payroll data, employee records, salary structures, and statutory registration details. Setup typically takes one to two weeks depending on headcount and complexity.
You share attendance data, new joiners, exits, salary revisions, and any variable components before the agreed cutoff date each month. That is the extent of your monthly involvement.
We compute salaries, generate payslips, prepare bank files, calculate all statutory deductions, pay challans, and file returns. All before your salary payment date.
You receive a full monthly report covering payroll processed, filings completed, compliance status, and any items requiring your attention. Everything documented and archived.
If you do not have an India entity, our Employer of Record service handles legal employment, payroll, PF, ESI, and TDS on your behalf. No entity required.
Need to hire people before you outsource payroll to us? Our recruitment team sources and screens candidates across technology, finance, operations, and all other functions.
India Payroll Compliance Guide 2026 — PF, ESI, TDS and Labour Codes explained.
India Payroll for Foreign Companies — what trips people up.
A leading Indian technology startup engaged XMS in 2019 when they had 20 employees. As the company scaled rapidly, XMS managed payroll for every stage of growth, from 20 to 100 to 400 to 800 employees, handling all PF, ESI, TDS, PT, and LWF compliance throughout. Not a single statutory penalty was incurred across the entire six-year engagement. At peak the company employed approximately 800 people with XMS managing the full payroll function and compliance calendar. The partnership is ongoing.
A US-based company engaged XMS to build and manage their India team without a local entity. XMS employed the team under our Employer of Record arrangement and ran payroll from the first hire. The client received monthly payroll summaries aligned with their US financial reporting requirements, full statutory compliance across PF, ESI, TDS, and PT, and a clean audit trail that satisfied both their India operations team and their US finance function. As the India team grew, payroll scaled without any process disruption.
Early-stage startups in India often handle payroll manually or through a basic software tool until the team reaches fifteen to twenty people. At that point the complexity — variable pay, ESOP taxation, multiple cities, contractor versus employee classification — makes manual processing risky.
XMS takes over the payroll function for startups at any stage. We set up the proper structure from day one — PF, ESI where applicable, TDS, professional tax — and manage it as the team grows. We have run payroll for companies from five people to eight hundred people and we know the inflection points where the complexity increases and what to do about them.
International companies running India payroll face unique challenges — understanding which statutory deductions apply, how to handle foreign currency salary components, how FEMA applies to cross-border payments to Indian employees, and how to manage year-end tax obligations for employees who travel.
XMS manages payroll for the India teams of US, UK, Singapore, and Australian companies. We handle the monthly cycle, all statutory filings, and liaise with the client's international finance team on cost recharges and inter-company accounting. For companies on EOR, payroll is embedded in the EOR service. For companies with their own India entity, we manage payroll as a standalone service.
Read our India payroll guide for foreign companies for a detailed overview of what you need to know.
India's payroll compliance environment is demanding. There are monthly filings, annual returns, state-specific obligations, and a regulatory framework that has been updated significantly with the introduction of the new Labour Codes. Getting it wrong has consequences — penalties, employee trust issues, and in serious cases, legal liability.
PF contributions must be deposited by the 15th of the following month. ECR (Electronic Challan cum Return) must be filed monthly. Late deposits attract interest at 12 percent per annum and companies can face prosecution for repeated defaults.
Form 24Q must be filed quarterly with salary TDS details. Form 16 must be issued to employees by 15th June each year. Errors in TDS filing create problems for employees' personal tax returns and attract notices from the Income Tax department.
ESI contributions are due by the 15th of the following month. Companies must also file a half-yearly return with ESIC. Failure to register eligible employees or make timely contributions attracts penalties.
Minimum wages vary by state, by category of work, and are revised periodically. Payroll must be structured to ensure all employees receive at least the applicable minimum wage for their state and employment category.
XMS manages all of this for clients. Read the full India Payroll Compliance Guide 2026 for detailed breakdowns of each obligation.
Tell us your headcount, your current setup, and what is causing the most problems. We will give you a clear picture of what we can do, what it will cost, and how quickly we can take over. Same day response.