India is the world’s fourth-largest economy and the world’s largest democracy. Due to a rapidly growing economy, skilled workforce, large market size, and government policies encouraging business growth, India is an attractive option for established companies and startups to expand into. India has tremendous opportunities in IT services, pharmaceuticals, renewable energy, and manufacturing sectors.
Unlock growth opportunities in India with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating India’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in India, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with India’s employment and tax laws, helping you scale confidently and compliantly.
The most popular choice of entity setup, a private limited company offers limited liability to its stockholders. It is well-suited for businesses that require professional management and external funding. Managed by a board of directors with at least 2 to a maximum of 15 directors, a private limited company requires a paid-up capital of INR 1 lakh and allows 100% foreign ownership in most sectors.
Run and managed by one person who is solely responsible for all the debts and liabilities. This is a popular choice for small business owners.
This is a combination of corporation and partnership and offers its partners limited liability protection while retaining the flexibility of a partnership. This hybrid structure is ideal for professional services and smaller businesses and requires at least 2 partners with at least one partner who is an Indian resident.
This type of entity setup consists of two or more people who agree to share the profit and/or loss of the business and are known collectively as a “firm” and individually as “partners”.
At least one director who is an Indian resident. Directors require Digital Signature certificate (DSC) and Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA).
There is no separate legal director requirement, as the proprietor is the sole owner and is personally liable. The owner must be an Indian resident.
In an LLP, at least one designated partner must be an Indian resident, and all partners required Designated Partner Identification Number (DPIN).
While there’s no mandatory “director,” at least one of the partners must be an Indian resident. Partnerships are governed under the Indian Partnership Act, 1932, and registration is optional but recommended.
In India, bank account setup follows a structured process that typically occurs after entity incorporation:
Bank Account Setup in India: What’s Possible and When
Before Incorporation:
After Incorporation:
Note:
Unlike some countries, Indian banks do not allow pre-incorporation bank account setup. All entities must complete incorporation before applying. In-person verification by directors or authorized signatories is usually required by banks to meet compliance and KYC norms.
Required documents include certificate of incorporation, memorandum and articles of association, board resolution for opening bank account, directors’ PAN and address proof, corporate PAN and TAN, proof of registered office address.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. The process typically takes a few days to a week, depending on the bank.
Employment in India is primarily governed by the following laws:
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are:
Permanent Employment
The most common form of employment a permanent employment is also known as full-time employment, where employees work for a standard number of hours for a fixed remuneration. It also includes benefits like paid leaves, health insurance, and retirement contributions.
Part-Time Employment
In this type of employment, employees work fewer hours than the standard working hours and receive pro-rated wages, benefits, and leave entitlements. Employees have flexible working schedules.
Fixed-Term Employment
In this type of employment, the contract duration mentions the specific end date, and it also specifies the project completion time. The agreement can be renewed multiple times as per requirement.
In India, a probationary period typically lasts up to six months and can be extended up to three months.
The regular working hours in India are nine hours a day, of which one hour is mandated for meal/rest break and 48 hours a week.
Overtime
Any hours worked beyond the standard working hours are considered overtime.
The notice period in India usually ranges from one to three months.
Severance pay, also known as retrenchment compensation, is a mandatory payment to employees who are retrenched or laid off.
Foreign nationals can live and work in India by securing a work and residence visa. With a valid job offer and employer sponsorship, individuals with the right skills or qualifications may be eligible for temporary or long-term work authorization.
Work Visa & Permit Options in India
1. Employment Visa
For foreign nationals employed by Indian companies or their subsidiaries.
2. Business Visa
For foreign nationals establishing business operations or attending business meetings.
3. Project Visa
For professionals working on specific projects in India.
4. Intern Visa
For foreign students and professionals seeking internship opportunities.
Key Notes:
Employees receive 15 days of paid leave each year if he or she has worked for 240 days or more in a factory during a calendar year. And if the employee is an adult, then one day for every twenty days of work performed during the previous calendar year.
The exact number of days also varies by years of service, industry, and state.
Female employees are entitled to 26 weeks of maternity leave.
While there is no statutory paternity leave for private-sector workers, many companies provide paternity leave in their policies.
Sick leave usually ranges from 10 to 12 days, and it also varies by employment type and state.
India observes three national holidays:
However, employers are required to provide five to nine holidays depending on the state and territory.
The most common length of the pay period is monthly.
Payslips are mandatory, with a breakdown of earnings and deductions.
The 1965 Payment of Bonus Act mandates an annual bonus based on employee performance.
Employees in India must pay Social Security taxes, which contribute to Social Security benefits.
The mandatory and statutory benefits in India are:
Accounting standards must adhere to Indian Accounting Standards (Ind AS), which are largely aligned with International Financial Reporting Standards (IFRS).
Companies in India must file annual financial statements with the Registrar of Companies (ROC).
Statutory audit is required if a company exceeds two of the following three thresholds for two Statutory audit is mandatory for all Private Limited Companies, regardless of size. Additionally, companies must undergo audit if they exceed:
Audits must be conducted by qualified Chartered Accountants registered with the Institute of Chartered Accountants of India (ICAI).
The standard corporate tax rate is 22% for domestic companies.
A concessional rate of 15% applies to new domestic manufacturing companies incorporated after October 1, 2019, meeting specified conditions.
India levies Goods and Services Tax (GST) at standard rates of 5%, 12%, 18%, and 28%, depending on the category of goods/services. Certain essential goods may be exempt or zero-rated.
The tax return must be filed electronically by October 31 following the tax year.
Penalties for late filing may result in imprisonment or payment of the fine amount.
India follows OECD Transfer Pricing Guidelines under Section 92 of the Income Tax Act.
India has implemented CbC reporting requirements:
Transfer pricing documentation is mandatory for:
Master File
Local File
Deadline: By the due date of filing income tax returns.
The Digital Personal Data Protection Act (DPDP) 2023 governs the processing of digital personal data within India, ensuring individual rights and lawful data handling.
India’s AML framework is governed by the Prevention of Money Laundering Act (PMLA), 2002, and rules thereunder:
Obligated entities: Banks, financial institutions, intermediaries, mutual funds, insurance companies, and designated non-financial businesses and professions.
Key requirements:
Penalties: Rigorous imprisonment up to 7 years and fines up to INR 5 lakh.
Reasons you should setup legal entity in India:
Cerity Global ensures your business expansion in India is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your India business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in India.
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
To discuss your needs and how we can help you achieve a compliant and efficient expansion.