Hiring international talent into India
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring a foreign national to work in India is legal and increasingly common, but it requires navigating employment visas, income tax obligations, and social security rules before the person sets foot in your office. Get the sequence right and the process is straightforward; get it wrong and you face penalties, visa rejections, or disputes at exit.
Confirm the right visa category
Most foreign nationals employed by an Indian company will need an Employment Visa (E-Visa). This is distinct from a Business Visa, which does not permit the holder to draw a salary from an Indian entity.
Key conditions for an Employment Visa:
- The role must be a skilled or senior position. India's policy is that foreigners should not be hired for jobs where qualified Indian candidates are readily available.
- The employer in India must be the sponsoring entity. You, as the Indian company, apply to the Bureau of Immigration and the Ministry of Home Affairs on behalf of the employee.
- The candidate's gross salary must meet the minimum threshold prescribed by the government (check the current Ministry of Home Affairs circular, as this figure is revised periodically).
- Certain nationalities have additional requirements or bilateral treaty considerations — verify with the Foreigners Regional Registration Office (FRRO) relevant to your city.
Once the visa is granted, the employee must register with the FRRO within 14 days of arrival if the visa duration exceeds 180 days. As the employer, you are responsible for ensuring this happens.
Structure the employment contract correctly
Your employment contract should be governed by Indian law and reference the applicable Labour Code provisions. India's four consolidated Labour Codes — covering wages, industrial relations, social security, and occupational safety — are in force from 2025 and apply to foreign employees working in India just as they do to Indian nationals.
Practical points:
- State the compensation in Indian Rupees. If the package has components paid overseas (common in secondment arrangements), document both clearly and note which entity bears each cost.
- Define the notice period, termination conditions, and dispute resolution mechanism under Indian jurisdiction.
- If the person is a secondee from a foreign parent company, you need a secondment agreement between the two entities in addition to the local employment contract.
Handle income tax and payroll correctly
A foreign national employed in India is taxable in India on income earned here. Their tax residency status — resident, non-resident, or resident but not ordinarily resident — determines the scope of taxation and is based on the number of days spent in India. As the employer, you are responsible for deducting tax at source (TDS) from each salary payment.
Your payroll obligations:
- Deduct TDS every month based on the employee's estimated annual income and the applicable new-regime slabs, which rise to 30% for higher income. The 4% health and education cess applies on top of the income tax computed.
- The section 87A rebate applies only where the employee's income falls within the specified threshold — most senior foreign hires will not qualify.
- File Form 24Q quarterly with the Income Tax Department, as you do for all employees.
- Issue Form 16 at the end of the financial year.
- If the employee's home country has a Double Taxation Avoidance Agreement (DTAA) with India, they may be eligible for relief from being taxed twice on the same income. They must claim this themselves, but you should be aware of it when structuring their package and discussing their net take-home.
Assess Provident Fund and ESI applicability
EPF and ESI are the two main statutory social security contributions, and the rules for foreign nationals have some nuance.
EPF: The Employees' Provident Fund applies to establishments above the prescribed size threshold. Foreign nationals from countries that have a Social Security Agreement (SSA) with India — such as Germany, Japan, South Korea, France, and several others — can obtain a Certificate of Coverage from their home country's social security authority. This exempts them from contributing to EPF in India, provided they continue contributing to their home country's scheme. Without an SSA, the standard 12% employee and 12% employer contribution rates apply.
ESI: The Employees' State Insurance scheme applies to employees whose wages fall below the prescribed wage ceiling. Most senior foreign hires will exceed this threshold and will therefore not be covered. For those who are covered, contributions are mandatory.
Check the EPFO's current list of SSA partner countries before making a decision, as new agreements are added periodically.
Manage ongoing compliance and exit
Employment of a foreign national requires active maintenance throughout the engagement, not just at onboarding.
- Keep a copy of the visa, passport, and FRRO registration on file and track expiry dates. Visa renewals must be initiated before expiry.
- If the employee's role, salary, or employer entity changes materially, the Employment Visa conditions may require fresh registration or endorsement.
- When the engagement ends, ensure full and final settlement is processed correctly under Indian law. Gratuity is payable after five years of continuous service, so long-term foreign employees may be entitled to it on departure.
- Inform the FRRO of the employee's departure if required under your registration conditions.
Foreign hires are often on fixed-term or project-based contracts. Build a compliance calendar from day one so that renewals, filings, and exit steps do not catch you by surprise.
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