Country file

What it costs an employer to hire in India

An employer in India pays ₹1,909,980 on a gross salary of ₹1,800,000. That is 6.1% more than the salary.

At ₹3,600,000 the employer adds 5.5%, because the contribution ceilings start to bite.

Every rate below comes from a statutory source with the date it was read. The figures are for 2026.

A mid salary of ₹1,800,000

Employer-side statutory contributions on a gross salary of ₹1,800,000 a year. Each line is capped at the range shown, so the amount is the rate applied to the part of the salary that falls inside that range.
Contribution	Rate	Annual base charged	Amount	Source
EPS, employees' pension scheme, employer share	8.33%	₹180,000	₹14,994	source checked 2026-08-21
EPF, provident fund, employer share	3.67%	₹180,000	₹6,606	source checked 2026-08-21
EDLI, deposit-linked insurance, employer	0.50%	₹180,000	₹900	source checked 2026-08-21
EPF administrative charges, employer	0.50%	₹180,000	₹900	source checked 2026-08-21
ESI, employer share, only for employees on 21,000 rupees a month or less at entry	3.25%	Not applicable above ₹252,000	₹0	source checked 2026-08-21
Statutory employer contributions			₹23,400

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Everything the law obliges the employer to pay. It excludes anything discretionary, anything an EOR charges, and any insurance premium that is set per employer rather than by statute.
Gross salary	₹1,800,000
Statutory employer contributions	₹23,400
Mandatory severance accrual (4.81%)	₹86,580
Total employer cost	₹1,909,980
Added on top of the salary	6.1%

A senior salary of ₹3,600,000

Employer-side statutory contributions on a gross salary of ₹3,600,000 a year. Each line is capped at the range shown, so the amount is the rate applied to the part of the salary that falls inside that range.
Contribution	Rate	Annual base charged	Amount	Source
EPS, employees' pension scheme, employer share	8.33%	₹180,000	₹14,994	source checked 2026-08-21
EPF, provident fund, employer share	3.67%	₹180,000	₹6,606	source checked 2026-08-21
EDLI, deposit-linked insurance, employer	0.50%	₹180,000	₹900	source checked 2026-08-21
EPF administrative charges, employer	0.50%	₹180,000	₹900	source checked 2026-08-21
ESI, employer share, only for employees on 21,000 rupees a month or less at entry	3.25%	Not applicable above ₹252,000	₹0	source checked 2026-08-21
Statutory employer contributions			₹23,400

Scroll sideways on a phone.

Everything the law obliges the employer to pay. It excludes anything discretionary, anything an EOR charges, and any insurance premium that is set per employer rather than by statute.
Gross salary	₹3,600,000
Statutory employer contributions	₹23,400
Mandatory severance accrual (4.81%)	₹173,160
Total employer cost	₹3,796,560
Added on top of the salary	5.5%

The formula

total employer cost = gross salary + sum over each statutory contribution of rate x max(0, min(salary, ceiling) - band floor) (zero if the contribution applies only below a wage the salary exceeds) + gross salary x (mandatory extra months / 12) + gross salary x mandatory severance accrual rate

Each ceiling above applies only to its own line, which is why the employer percentage for India is not the same at both salaries. Employer contribution ceilings, country by country lists where every ceiling on this site sits.

Time off, extra pay and leaving

Statutory paid leave	15 days
Public holidays	3
Mandatory extra pay	0 months
Minimum employer notice	4 weeks

Earned leave accrues at roughly one day per twenty days worked under the Factories Act, about 15 a year. Only three holidays are mandated nationally; the rest are notified by each state.

No universal statutory 13th month. A statutory annual bonus of 8.33% to 20% of wages applies under the Payment of Bonus Act to employees on 21,000 rupees a month or less, computed on a 7,000 rupee base or the state minimum wage if higher.

Gratuity under the Payment of Gratuity Act 1972 is fifteen twenty-sixths of the last drawn basic plus dearness allowance per year of service, payable after five years. 4.81% is the usual monthly accrual equivalent.

What the percentage hides

The EPF wage ceiling is 15,000 rupees a month. Contributions above it are optional for the employer, which is why the marginal rate on a senior salary is effectively zero.

ESI applies only where gross wages are 21,000 rupees a month or less at the time of coverage. Once covered, contributions run on actual wages with no upper cap.

Under the Code on Social Security, in force from 29 June 2026 in some states, the wage definition for provident fund and gratuity shifts to a broader base in which at least half of total remuneration must count. Implementation varies by state.

Not confirmed on a statutory source, and therefore not in any figure above: state public holiday counts; earned-leave entitlement in states outside Factories Act coverage; whether the ESI wage ceiling has been raised above 21,000 rupees in 2026.

Using an employer of record in India

Everything above is what the state takes. An employer of record adds its own fee on top, and that fee is a flat monthly amount rather than a percentage, so it weighs far more on a junior salary than a senior one. The published prices are here, and the calculator will add one to the figures on this page.

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Written by Kaz, independent publisher. No commercial relationship with the providers named unless it is listed on the disclosure page.

Page last updated 2026-08-30. Sources: statutory bodies only, listed per figure. Rates last verified 2026-08-21. This is not legal, tax or payroll advice and we do not file anyone's payroll.

Every formula on this site is written out in full on Method. Ordering is by computed cost, never by what a provider pays us.

Corrections: contact form.