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India
  • Currency: Indian rupee (INR)
  • Payroll Frequency: Monthly
  • Employer Taxes: 16.75%

Overview

Located in South Asia, the Republic of India is the seventh-largest country in the world. Being the second most populous country also makes it the largest democracy in the world.

 
 

Hiring

India is a highly sought-after global job market with diverse jobs due to a booming economy and high economic growth. 

Recruitment:

Recruitment in India is done through job portals which allow postings for more relevant profiles and candidature, head hunting is also used for recruitment. Combined, these two methods make for a more achievable and hassle-free end-to-end recruitment.

Interview:

Recruitment processes, identifying vacancies, job advertisements, screening, shortlisting, etc. are an important part of the hiring process. But interviews make the ultimate decision as they play a very important part in gauging personality.

Application:

CVs of candidates play an important role in making a favourable impression. The presentation and organization of the CV speak a lot about an individual and the person’s mindset and attitude. Thus allowing for early screening for worthy candidates.

Employment

The standard parameters of employment in India:

 

Working Hours (Depend on the client’s company) – 8 hours a day, Monday to Friday, 40 hours a week

 

Probation Period (Depends on the client’s company) – Three months, Notice period is of 2 weeks within probation and 1 month after probation

 

Payroll cycles– Pay – cycle is 1 time (1st to 30th) 

 

Official Deduction from Salary– Unpaid leave, Taxes, PF Deduction (Retirement Benefit)

 

Typical work hours in India are 9 am-5 pm (7 pm-4 pm, 10 am-7 pm, 11 am-8 pm, 1.30 pm – 10.30 pm alternatively)

 

Public Holidays 

The government declared 12 varying public holidays with respect to the various states except for the 3 national holidays Republic Day, Independence Day and Gandhi Jayanti.

 

Casual Leave/Sick Leave

Twelve (12) days per year prorated based on the joining date. Cannot be carried forward and automatically lapse at the end of the calendar year.

 

Maternity & Paternity Leave

A female employee is entitled to Twenty-six (26) weeks of maternity leave. A male employee is entitled to paternity leave of fifteen (15) days after his wife’s giving birth.

 

Earned Leave

Can range between 15-20 leaves in a year and are carried forward at the end of the calendar year. But, the total period of such leaves at any one time shall not exceed three times the period of privilege leaves entitled after every twelve months.

Business setup

1. Checking the Company Name Availability
Before you can register a company, it’s essential to ensure that your desired name is available. Fortunately, the MCA 21 website provides an online service which enables applicants to check if their proposed company names are still up for grabs. When this process is completed successfully, the chosen business title will be visible on the same website.

 

2. Acquiring a Director Identification Number (DIN)
For anyone in the process of becoming or already serving as a director for an incorporated company, obtaining a Director Identification Number (DIN) is essential. The DIN-1 application form can be completed online to procure your provisional DIN quickly and easily.
Afterwards, the printed and signed form must be sent to the ministry with the necessary evidence of identity and address. Once verified, your request will receive permanent approval granting you a DIN.

 

3. Acquiring a Digital Signature Certificate
Obtaining a digital signature certificate requires formal confirmation from an authorized agency, registered with the ministry. With your application form and relevant identity/address evidence in hand, company directors can apply for this electronic key which validates their identity. This Digital Signature Certificate is invaluable when it comes to displaying trustworthiness and reliability within business circles.

 

4. Obtaining an Incorporation Certificate
Obtaining an incorporation certificate from the Ministry of Corporate Affairs will authenticate your business’s constitution. All that is required are three digital forms, which can easily be filed on their official website: e-form 32, e-form 1 and e-form 18. With this simple step taken care of, your company will be established.
In addition to Form 1, the Registrar of Companies must be provided with one copy each of The Memorandum and Articles of Association (MoA and AoA), a consent letter from directors, as well as an authenticated stamped document that confirms the power granted through an attorney.
When you complete your company’s incorporation forms, the certificate of incorporation will be immediately sent to the email address supplied with the information.

 

5. Creating a Company Seal for official documentation
An official seal is essential when it comes to sharing certificates and other legal documents. The total cost of obtaining a company seal will vary based on the number of words that need engraving, how many seals are issued, and how soon you need them delivered. It’s important to note that private companies are not obligated to maintain their own seals.

 

6. Stamping of all Company Documents
To ensure proper incorporation of your business, the Registrar of Companies requires that you submit a copy of your Memorandum and Articles of Association (unsigned) and proof of payment for stamp duty. This payment must be made online prior to submitting any documentation.

Upon completion of this application, the Superintendent will return the copies – one with a stamp, signature and official embossing. Company promoters must then sign both MoA and AoA forms in their own handwriting, making sure to include every required information.

 

7. Acquiring a Permanent Account Number (PAN)
For the acquisition of a PAN, filing Form 49A is necessary. Subsequently, an exclusive PAN card will be officially dispatched to your registered address via post. Although you may apply for a PAN online as well, it is essential that all required documents are sent physically in order to complete the verification process successfully.

8. Acquiring a Tax Account Number (TAN)
In accordance with the Government of India, a Tax Deduction Account Number (TAN) is an obligatory number issued by the Income-tax department to entities that must deduct or collect tax at source.
To acquire your TAN, you must complete and submit form 49B to a TIN Facilitation Center. Following verification of the application, it will be forwarded to the Income Tax Department who’ll then issue the TAN. You can apply for this number either manually or digitally through NSDL’s website.

 

9. Obtaining a certificate from the State/Municipal Inspector under the Shops and Establishment Act
It is essential to provide the State Shop and Establishment Inspector with a statement that contains your employer’s/manager’s name, official business name, postal address, and category in order for trade license registration. Additionally, you must pay relevant fees within 30 days of launching your enterprise. Fulfilling these steps will ensure the speedy completion of the procedure.

 

10. Applying for GST Registration
Companies that seek to provide goods and services across states must register for GST if their annual turnover is more than INR 40 lakhs/20 Lakhs. Before starting any other new business processes, registering for GST should be prioritized.

 

11. Obtaining a Profession Tax Certificate from the State Profession Tax Office
Every private employer is obligated to pay taxes and must acquire a registration certificate from the appropriate authority. Any business that needs to apply for Profession Tax Certificate should submit Form 1 to their local State Profession Tax Office.

 

12. Completing a National Employees’ Provident Fund Registration
Employers are obligated to provide their employee details to the EPFO in order for them to receive an Establishment Code Number (ECN). There is no need for employees themselves to submit any applications. This step only applies if a company falls within the scope of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. Thus, it’s vitally important that employers take charge of this process correctly and promptly.

 

Payroll

The payroll process in India involves dues of the employees called ‘net pay’ after adjustments are made for taxes and other deductions.

 

Net pay = Gross Income- Gross Deduction 

 

(Gross Income or salary = All types of regular income + allowances + any one-time payment or benefit and Gross Deduction = All types of regular deductions + statutory deductions + any one-time deductions.)

 

Important Elements of Salary Structure in India

The monthly salary and wage disbursement have many vital components structured together that make a salary package. These elements are essential for both employers and employees to calculate taxes, PF, ESI, benefits, LTA, etc.

 

Payroll Cycle – The payroll cycle in India is generally monthly, with wages paid on or after the 28th of each month.

 

13th Salary- The 13th salary in India is usually mandatory, paid as a percentage of the annual salary and within eight months of the end of the financial year.

 

Overtime– All work in excess of the standard 48 hours a week is to be paid as overtime and is regulated by employment contracts, generally calculated at 200% of the regular pay rate.

 

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