A foreign company can hire in India without an Indian subsidiary, but still needs a lawful employer and local compliance. A permitted, registered Indian branch is a direct route. An Indian EOR may work if it is the genuine employer and meets labour rules. The Ministry commencement notice confirms that the four Labour Codes took effect on November 21, 2025; state and appropriate-government rules still shape some duties.
Identify the legal employer and worksite, then confirm approvals, work authorization, appointment terms, payroll and funding. The example uses an approved branch, but approval alone does not clear every hiring requirement.
Can you hire an employee in India without incorporating?
Yes, conditionally. A foreign company may use an approved branch without forming an Indian-incorporated subsidiary. The Reserve Bank of India's foreign investment Master Direction allows branches for specified activities, including information technology and software development, subject to eligibility, activity and approval conditions. The foreign company remains legal employer through its branch.
A branch is registered Indian presence, not a no-presence shortcut. The company must address FEMA/RBI and bank requirements, Registrar of Companies filings where required, tax accounts PAN/TAN, payroll withholding, social security, labour and state registrations. RBI approval is from the FEMA perspective; other clearances remain necessary. A liaison office is narrower and is not a general payroll business. A tax account or payment sent from overseas alone does not establish a permitted employer route: confirm the company's Indian presence and employer obligations before hiring.
An EOR can be another route if the Indian provider actually employs the worker. Its entity must be the substantive employer, with the worker and client arrangement assessed under the applicable staffing rules.
Choose a permitted employment route
Under the Companies Act, a foreign company with an Indian place of business, directly or through an agent, may have section 380 filing duties. Confirm the actual branch and activity.
For an EOR, the OSH Code includes human-resource supply in contract labour. Section 2(1)(m) excludes only qualifying regular, non-part-time contractor employees where every condition is met, including permanent accepted terms, periodic increments, social security and welfare benefits for activities of the contractor's establishment. This does not exempt every EOR worker.
For actual contract labour, section 45 applies its Part at 50 or more contract workers currently or on any day in the preceding 12 months for the establishment or manpower-supply contractor, subject to exclusions; section 47 then requires a licence. Section 57 restricts contract labour in core activity, except where the establishment normally contracts that work, does not need full-time workers for most of the period, or faces a sudden time-limited increase. Check the actual worker and arrangement. A licence does not override the core-work rule.
Confirm the person, job and work location are eligible
Before making an offer, record:
- Work permission: Confirm citizenship and status. For a foreign national, check whether a visa or exemption applies and whether the conditions allow the proposed employment. India's immigration framework permits status and activity restrictions. Confirm any required sponsor and job approval before work; residence alone is insufficient.
- Employer and site: Name the foreign company acting through its branch, or the Indian employer, consistently on employment documents and payroll. Record actual state, address, remote-work location, manager and duties.
- Employment model: Establish who hires, pays, provides benefits and handles deductions. For an intermediary, test every section 2(1)(m) element; otherwise assess contract-labour scope, licensing and core-work rules. Software development may be core to a software business, so a job title does not settle the question.
- Approvals and registrations: Check branch activity/approval, ROC filing where required, PAN and TAN if deducting tax, and active employer and state registrations. A TAN supports tax deduction; it does not prove labour or foreign-investment permission. Check any sector or professional authorization separately.
Pause before offer or work if work authorization, employer status, site coverage or a required approval is unresolved. A move to another state may change the setup.
Prepare the offer and country employment terms
At an establishment covered by the OSH Code, the employer must issue every employee an appointment letter on appointment in the information and form prescribed by the appropriate government. Identify that government for the actual establishment; a Central Rules form does not automatically govern a Karnataka private employer. For readiness, issue and sign the required letter before work begins.
For the Bengaluru example, assume the branch employs at least 20 workers and is registered under the OSH Code. Karnataka Act 38 of 2026 exempts an establishment with at least 10 workers already registered under the OSH Code from the Shops Act. This condition does not waive OSH registration or other obligations. Verify the headcount and registration for the actual site.
For an OSH Code worker at a covered establishment, the Code sets an eight-hour daily limit, weekly rest and overtime at twice normal wages with consent; paid annual leave has its own qualifying-service and midyear-entry rules. State schedule, rest, overtime, leave and holidays in the appointment. Assess statutory benefits such as gratuity and maternity under the Social Security Code, separately from optional or promised benefits. Scope depends on the worker and establishment.
Complete the hire from agreement to first payroll
In this hypothetical, Example Foreign Software Inc. employs Ananya Rao directly through its approved and ROC-registered Bengaluru branch. Assume approval permits the ordinary, unregulated software activity, registrations cover the site, the branch has 20+ workers, Rao is an Indian citizen authorized to work, her duties make her an OSH Code worker, and the appropriate-government appointment form is used. It does not rely on an EOR or contractor exclusion.
- Approve role and site: HR records job, site, salary and manager; branch confirms approval and registration fit.
- Verify route: Company confirms RBI/bank conditions, required ROC filings, tax accounts and active employer/payroll registrations.
- Clear employee inputs: Rao provides identity, PAN, bank and EPFO history; employer confirms eligibility and duties.
- Issue terms: Branch prepares the applicable appointment letter; both parties sign copies before work.
- Configure payroll: Employer checks tax, UAN/membership and Karnataka professional tax. Treasury clears cash into the branch payroll account by the assumed internal cutoff.
- Start only when ready: If permissions, registrations, signed terms, employee inputs and funding are complete, Ananya starts Monday, November 2, 2026. Otherwise the parties defer the start before work.
- Pay and remit: The foreign company pays the agreed November salary November 30 and meets wage, TDS, EPF and professional-tax dates. A missed internal transfer does not change the employer's duty to pay for work already done.
The example assumes these are working dates under the employer's lawful holiday schedule and that payment rails are available. Confirm the actual work and bank calendar, including Rajyotsava on November 1, before fixing the start. If any legal gate or payroll input fails by October 30, defer the November 2 start. Once work begins, the foreign company remains responsible for timely wages even if its internal transfer is delayed.
Budget and prepare the first payment
Assume ₹180,000 gross for November. If Rao is an existing EPF member, the applicable wage base reaches the notified ₹25,000 ceiling and there is no higher-wage election, the usual 12% employee and employer shares are ₹3,000 each. The ceiling is set by the 2026 notification, and the EPF Scheme, 2026 governs membership, contributions and remittance. Confirm wage components, membership, pension allocation, EDLI and administration in payroll.
Assume no Karnataka professional-tax exemption: the state rate amendment gives ₹200 for November at this salary. Do not compute TDS from monthly gross alone; the employer needs annual projections and employee tax declarations. For this example, assume payroll has assessed Rao's ESI wages and eligibility and confirmed she is outside coverage; gross salary alone is not the test.
Illustrative net: ₹180,000 gross - ₹3,000 employee EPF - ₹200 professional tax - actual individual TDS = ₹176,800 minus actual TDS. No other employee deduction is assumed. Employer funding includes its ₹3,000 EPF share and applicable EDLI/administration. Budget benefits and eligible gratuity or maternity liabilities separately; a reserve is not an employee deduction or automatic monthly remittance. Optional benefits, equipment and outsourced payroll are separate; an EOR has its own service fee. No full total is calculated.
Salary is contractually paid November 30. The Code on Wages ordinarily requires monthly wages before expiry of the seventh day of the next month, subject to another applicable time limit; in this example the outer date is December 7. Rule 218 of the 2026 Income-tax Rules gives seven days after month end for the November TDS remittance. The 2026 EPF Scheme requires monthly contribution within 15 days after month close. Karnataka's professional-tax portal sets the succeeding-month 20th; because December 20 is Sunday, plan for Friday December 18 without assuming an extension.
For detailed cost layers, see the India hiring-cost guide. For this hire, separate salary, employer contributions, benefits, fees, one-time items, invoice currency and funding cutoff.
What your company still manages after the hire
The legal employer owns the appointment letter, wages, withholding, benefits and filings. For direct branch employment, company HR and managers supply accurate role, site, hours, leave and expense inputs. Under EOR employment, the client supplies these and coordinates changes with the Indian employer. A new state worksite can change requirements. Keep separate review for regulated activity, data access, safety and tax presence; neither a branch approval nor an EOR arrangement resolves every operational obligation or permanent-establishment question.
Questions about hiring without an entity in India
Does an Indian branch count as incorporating locally?
No. It is registered Indian presence of the foreign company, not an Indian subsidiary. It remains subject to permission and local registrations.
Can I hire through an EOR?
Potentially, if the Indian provider is the real employer and the arrangement meets worker, contract-labour, licensing and core-activity rules. The EOR label alone is not enough.
Can I pay an Indian employee from overseas without a branch?
Do not start based on a PAN/TAN, payroll account or overseas payment alone. Establish a permitted Indian presence and identify the legal employer and its labour, tax and social-security duties. A branch route is restricted and approval-based; an agency route makes the agency the employer.
Can a foreign national use the same process?
Not automatically. Confirm status and any visa, exemption or employer/job conditions under the immigration framework. An EOR or branch does not itself grant immigration permission.
What can delay the start or first salary?
Missing approval or registration, uncertain site coverage, unresolved employment classification, an unsigned appointment letter, incomplete payroll data or uncleared funding can move the start date. Once work begins, internal funding delays or EOR-client reimbursement disputes do not excuse late wages.
Our India EOR service uses an Indian legal entity and supports INR payroll with TDS, EPF/ESI, professional-tax and gratuity calculations. If you have a selected employee anywhere in India, ask us to assess the role, worker and worksite and provide a case-specific quote. Service fit and terms depend on that review.
