For companies hiring in India
What Does an Employee in India Really Cost?
Enter a salary and see every statutory cost on top of it — Provident Fund, ESI, gratuity and bonus — under the new Labour Codes and the higher PF ceiling from September 2026. You also see what the employee actually takes home.
- ✓ Updated for the ₹25,000 PF ceiling (17 Sep 2026)
- ✓ Labour Code 50% wage rule built in
- ✓ Results in ₹ and US$
India Employee Cost Calculator
Total cost to the employer and the employee's take-home — updates as you type.
Your total cost / year
₹12,67,846
≈ US$13,207 · ₹1,05,654/mo
Employee take-home / month
₹96,792
≈ US$1,008
Statutory costs add 5.7% on top of salary.
Employer cost breakdown (per year)
| Gross salary | ₹12,00,000 US$12,500 |
| Provident Fund — employer 12%On wages up to ₹25,000/month | ₹36,000 |
| EDLI insurance (0.5%) | ₹1,500 |
| PF admin charges (0.5%) | ₹1,500 |
| Gratuity provision (4.81%)Paid on exit after eligibility; budget it monthly | ₹28,846 |
| Total cost to employer | ₹12,67,846 US$13,207 |
Employee deductions (per year)
| Provident Fund — employee 12%Goes to the employee's PF account | −₹36,000 |
| Professional taxDepends on the state | −₹2,500 |
| Income tax (TDS), new regimeFY 2026-27, ₹75,000 standard deduction | ₹0 |
| Net take-home pay | ₹11,61,500 US$12,099 |
Estimate based on Indian rules as of October 2026 (EPF ceiling ₹25,000 from 17 Sep 2026; ESI limit ₹21,000). US$ at about ₹96. Not a final opinion for your case.
Who This Is For
- Foreign companies hiring developers, support or sales staff in India
- Startups budgeting for their first Indian team
- Indian subsidiaries planning salary structures
- HR teams comparing offers in rupees and dollars
The Rules in Plain Words
As they stand in October 2026.
Labour Codes and the 50% rule
The four Labour Codes came into force on 21 November 2025. Basic pay plus DA must be at least half of total pay — if allowances are bigger, the excess is still treated as wages for PF and gratuity.
Provident Fund — new ₹25,000 ceiling
From 17 September 2026 the EPF wage ceiling rose from ₹15,000 to ₹25,000 a month. Employer and employee each contribute 12% of wages; the employer also pays about 1% for EDLI insurance and admin charges. Contributing on pay above the ceiling is optional.
ESI for lower salaries
Employees earning up to ₹21,000 a month are covered by ESI health insurance: employer 3.25%, employee 0.75% of gross pay. Most professional salaries are above this limit.
Gratuity and bonus
Gratuity is 15 days' wages for every year of service — about 4.81% of wages a year, best set aside monthly. Fixed-term staff now qualify after one year. Statutory bonus applies only to employees earning up to ₹21,000 a month.
Income tax on salary
Employers deduct income tax (TDS) every month. Under the default new regime for FY 2026-27, there is no tax up to ₹12.75 lakh of salary after the ₹75,000 standard deduction and rebate.
You need an Indian entity
To run payroll and register for PF and ESI, a foreign company needs an Indian entity — usually a private limited subsidiary — or an Employer of Record. Hiring 'contractors' who work like employees carries reclassification risk.
Frequently Asked Questions
How much does it cost to hire an employee in India on top of salary?
Typically about 5% to 10% on top of gross salary for professional roles, depending on how PF is structured: employer PF (12% of wages up to the ceiling), EDLI and admin charges, and a gratuity provision of 4.81% of wages. Lower salaries add ESI and statutory bonus. Health insurance is optional but common.
What changed in India's PF rules in 2026?
The EPF wage ceiling was raised from ₹15,000 to ₹25,000 per month with effect from 17 September 2026. For employees earning more, the mandatory employer PF contribution rises from ₹1,800 to ₹3,000 a month if you contribute only up to the ceiling.
Can a foreign company pay Indian employees directly?
Not properly without an Indian entity or an Employer of Record, because PF, ESI, professional tax and TDS registrations need an Indian establishment. Most companies set up a private limited subsidiary once they have a few people in India.
Is the employee's take-home figure exact?
It is a close estimate under the new tax regime for FY 2026-27 with the standard deduction. It ignores old-regime deductions, other income and surcharge above ₹50 lakh.
Can you run payroll for our Indian team?
Yes. We handle monthly payroll, PF and ESI returns, professional tax, TDS deposits and quarterly TDS returns, and Form 16 at year end. Use the button in the calculator for a fixed monthly quote.
Related tools: India company setup estimator · India income tax calculator · India GST checker for online businesses
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