Employer registration and set-up in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Registering as an employer in India means completing multiple statutory registrations — for tax, social security and labour law — before you hire your first employee. The exact list depends on your business structure, headcount and industry, but several obligations apply to almost every employer.
Get your business entity registered first
Before you can register as an employer, your business needs legal standing in India. The appropriate structure — private limited company, limited liability partnership, sole proprietorship, branch office or liaison office — determines which regulator you report to and shapes your downstream compliance obligations.
A private limited company registers with the Ministry of Corporate Affairs and gets a Corporate Identification Number (CIN). You will also need a Permanent Account Number (PAN) for the business — this is your primary tax identity — and a Tax Deduction and Collection Account Number (TAN), which is mandatory for deducting TDS from employee salaries. Without a TAN, you cannot legally run payroll.
If you are a foreign company setting up in India, the Reserve Bank of India and the MCA both play a role, depending on whether you open a branch, liaison or project office.
Register for Employees' Provident Fund (EPF)
EPF registration is mandatory for establishments with 20 or more employees and is administered by the Employees' Provident Fund Organisation (EPFO). Once registered, both you and your employee contribute 12% of the employee's basic wages and dearness allowance each month — 12% from the employee's side, 12% from yours.
Some employers register voluntarily before reaching the threshold, which can help with hiring. Once you cross the threshold, registration is not optional and must happen promptly. Each employee gets a Universal Account Number (UAN), which stays with them across jobs.
You are responsible for depositing contributions by the 15th of the following month and filing monthly Electronic Challan cum Return (ECR). Late deposits attract interest and damages, so putting this on a fixed calendar cycle early matters.
Register for Employees' State Insurance (ESI)
ESI is administered by the Employees' State Insurance Corporation (ESIC) and provides medical and income-replacement benefits to eligible employees. It applies to establishments meeting the applicable headcount threshold in notified areas and industries. Employees earning below the prescribed wage threshold are covered under the scheme.
Registration is done on the ESIC portal. Each covered employee receives an ESI card and a 17-digit insurance number. Contribution rates are set by the government and are subject to revision; verify the current rates on the ESIC portal at the time of registration.
Employers must maintain an attendance register, wages register and accident register as part of ESI compliance. Monthly contributions must be deposited by the 15th of the following month.
Set up your payroll tax infrastructure
Once you have a TAN, you can deduct TDS from employee salaries under Section 192 of the Income Tax Act. Employees who have opted for the new tax regime are taxed under slabs rising to 30%, with a Section 87A rebate available to eligible lower-income employees and a 4% health and education cess applied to the tax amount.
At the start of each financial year, collect investment declarations from employees so you can project their tax liability and deduct the right amount monthly. You are required to file Form 24Q quarterly — this is the TDS return for salaries — and issue Form 16 to every employee by 15 June after the financial year ends. Form 16 is the employee's proof of tax deducted and is essential for their own tax filing.
Getting this wrong carries penalties for the employer, not the employee, so the returns calendar is non-negotiable. A reliable payroll process — whether in-house or through a managed service — should have Form 24Q deadlines built in by default. For context on how this plays out across geographies, how Mellow runs payroll across six countries covers the structural differences well.
Understand your obligations under the Labour Codes
India's four consolidated Labour Codes — covering wages, industrial relations, social security and occupational safety — are in force from 2025. They replace a wide set of legacy legislation and change how concepts like "wages" are defined, which has a direct knock-on effect on EPF contributions, gratuity calculations and statutory bonus.
Key employer-level obligations include maintaining a written employment contract or appointment letter, displaying required notices at the workplace, registering under the applicable state-level shops and establishments act, and complying with the Maternity Benefit Act where relevant.
Gratuity deserves a specific note: it becomes payable when an employee completes five years of continuous service. The formula is prescribed under the Payment of Gratuity Act. If you are growing fast, factor this liability into your financial planning early — it is not a discretionary payment.
State-level shops and establishments registration is often one of the first practical steps after incorporation. Requirements vary by state, so check the rules for each state in which you have employees or a place of business.
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