Inbound India payroll compliance checklist

How to use this checklist

This is a working checklist for HR, payroll, and mobility teams handling a foreign national assigned to work for or through an Indian establishment. It follows the assignment timeline: before arrival, first payroll month, ongoing monthly cycle, year-end, and exit or repatriation. Each item names who typically owns it.

For the calculation mechanics behind any item, see the shadow payroll guide, the EPF International Workers guide, and the SSA/Certificate of Coverage guide.

Before arrival

• Confirm SSA/CoC status. Owner: mobility team, with home-country payroll. Check whether the assignee’s home country has a Social Security Agreement with India. Start the Certificate of Coverage application early — it should be ready before the assignment starts, not applied for afterward.
• Classify the assignment as International Worker or not. Owner: mobility team. Without a valid CoC, the assignee is a covered International Worker under EPF Para 83 from day one, with no short-stay exemption.
• Set up the shadow payroll build, if the assignee stays on the home-country payroll. Owner: payroll/finance. Confirm which three bases will be tracked in parallel: IW PF wages (full, uncapped), Labour Code “wages” (50%-deemed), and Income-tax Act 2025 taxable salary.
• Decide the tax-equalisation policy terms, if applicable. Owner: mobility/reward team. Confirm hypothetical tax rate, what it is compared against, and settlement timing, before the assignee’s first payslip.
• Register the assignment with the Indian establishment. Owner: local HR. Confirm the assignee’s status under the Code on Wages and Social Security Code definitions — this drives which entitlements apply.

First payroll month

• Start India-sourced income-tax withholding. Owner: payroll. Withhold on India-sourced salary as it falls due or is paid, under the §15 charging rule of the 2025 Act.
• Start IW PF contributions, unless a CoC is on file. Owner: payroll. Base the contribution on the full global package — home-country base, cost-of-living allowance, and offshore allowances — not just the India-delivered slice. This is the single most common first-month error.
• Confirm the deemed-wages base under the Code on Wages. Owner: payroll, with local counsel. Where excluded pay components exceed 50% of total remuneration, the excess is added back into “wages” for gratuity, leave, and other Code entitlements.
• File initial IW enrolment paperwork with EPFO, where coverage applies. Owner: local HR/payroll.

Ongoing — every month

• Reconcile the three payroll bases against each other: IW PF wages, deemed Code wages, and taxable salary. Owner: payroll.
• Deposit employee PF and ESI contributions by the statutory due date, without exception. Owner: payroll. The §29 disallowance risk under the 2025 Act is real, even though its precise cut-off is not yet settled — labour-law due date versus the relaxed ITR-filing due date. Treat the stricter date as the working assumption.
• Track hypothetical-tax withholding against a running actual-tax estimate, if the assignee is on a tax-equalisation policy. Owner: mobility/reward team.
• Monitor the gratuity accrual timeline, if the assignee is on an India-registered fixed-term contract. Owner: local HR/payroll. Gratuity now accrues from one year of service, pro-rata, on the deemed-wages base.

Year-end

• Finalise assignment allowances and cost-of-living adjustments for the year. Owner: mobility team.
• Calculate and gross up the tax-equalisation settlement, splitting sheltered (non-monetary perquisite) and unsheltered (cash) components. Owner: payroll/mobility, per the gross-up mechanics guide.
• Issue the annual TDS certificate — Form 16, now anchored to §130 of the 2025 Act — and file the quarterly return (Form 24Q, under §138). Owner: payroll.
• Check PF interest above ₹2,50,000 on the assignee’s IW PF balance for the year; it is taxable under Schedule II, Table Sl. 3–4. Owner: payroll/tax team.
• Confirm employer-side accruals — bonus, leave-encashment, gratuity-fund — were actually paid by the ITR due date, since they are deductible to the employer only on that actual-payment basis under §37. Owner: finance.

Exit and repatriation

• Check Schedule XI’s five-year continuous-service rule before assuming an early PF withdrawal is tax-free. Owner: payroll/tax team.
• Confirm withdrawal eligibility by IW category. Owner: mobility team. Non-SSA-country International Workers generally can only make a final PF withdrawal at age 58, after leaving covered employment — not simply on leaving India.
• Complete the tax-equalisation settlement for the final partial year, including any repatriation allowances. Owner: mobility/reward team.
• File final India tax returns and settle any residual withholding. Owner: tax team, with the assignee.
• Confirm CoC expiry date against actual departure date. Owner: mobility team. Coverage that runs past the CoC’s stated detachment period reverts the assignee to full Para 83 status for the overrun period.

General guidance, not legal advice — confirm role ownership and specific deadlines with India counsel or your payroll provider before relying on this checklist.