Glossary
Shadow payroll
A parallel, non-paying payroll record run in the host country (India) to track tax and social-security obligations for an assignee actually paid from the home country.
Shadow payroll doesn’t disburse salary. It exists purely to calculate and remit India withholding tax and, where applicable, PF contributions, on income the assignee receives through the home-country payroll.
It is the standard mechanism for inbound assignments where the employer wants one home-country pay run but still must meet India’s tax and PF obligations for India workdays.
Why it matters now: getting shadow payroll wrong — missing the deemed-wages PF base, or misapplying Para 83 — is a common failure. It shows up repeatedly in inbound-assignment audits.