Running payroll for employees in India involves multiple statutory obligations — Provident Fund, Employee State Insurance, Professional Tax, TDS on salary, and compliance with the applicable state's Shops and Establishments Act — all of which differ materially from UK payroll practice. CyberSpark manages this entirely for UK companies whose engineering teams are employed through our EOR service in India.
At a Glance
Payroll Compliance at a Glance
Monthly INR Disbursement
Disbursed on time directly into employee Indian bank accounts with zero UK banking friction.
Full Statutory Management
PF, ESI, Professional Tax (PT), and TDS calculated, withheld, and remitted strictly on schedule.
Digital Indian Payslips
Generated in full statutory Indian format, accessible digitally to developers each pay cycle.
Year-End Form 16
Indian equivalent of UK P60 tax certificate generated and distributed to all staff by 15 June.
Single Monthly GBP Invoice
Your UK finance team pays once in GBP; CyberSpark absorbs currency conversion risks.
Full Audit Trail
Granular payroll reports, statutory challans, and compliance certificates available on request.
UK companies familiar with PAYE often underestimate the complexity of Indian payroll. While the UK framework primarily revolves around National Insurance Contributions and Pension Auto-Enrolment, Indian employment mandates multiple overlapping statutory enactments across central and state jurisdictions:
| Statutory Requirement | Governing Authority / Enactment | Rate | Compliance Notes |
|---|---|---|---|
| Provident Fund (PF) | Code on Social Security, 2020 (EPFO) | 12% employer on wages | Remitted monthly via EPFO portal; matched by 12% employee contribution. |
| Employee State Insurance (ESI) | Code on Social Security, 2020 (ESIC) | 3.25% employer contribution | Mandatory for employees earning ≤ ₹21,000/month gross. |
| Professional Tax (PT) | State Acts (e.g. Karnataka, Maharashtra PT Acts) | Set by each state, capped at ₹2,500 a year | State-level statutory deduction; remitted to the state tax authority. |
| TDS on Salary | Income-tax Act, 2025 (section 192 of the 1961 Act until March 2026) | Per income tax slab | Employer deducts and remits monthly; annual Form 16 issued to employees. |
| Gratuity | Code on Social Security, 2020 | 15 days' wages per year of service (about 4.81% of wages as a provision) | Terminal benefit payable after 5 years of continuous service, or 1 year for fixed-term employees. |
Federal Complexity
India is a federal country with state-specific employment rules. Karnataka, Maharashtra, Delhi, Tamil Nadu, and West Bengal each have distinct Shops and Establishments Acts, Professional Tax schedules, and local filings. CyberSpark registers in the state where each engineer works and follows that state's rules. Since 21 November 2025, India's four labour codes also apply nationally: they redefined "wages" (allowances above 50% of pay count towards PF and gratuity), so older salary structures should be reviewed.
Zero Banking Hassle
Directly running payroll requires establishing an Indian banking entity, capital remissions, and navigating local tax filings. Under CyberSpark's EOR, you eliminate this entire overhead: CyberSpark disburses in INR from our Indian entity, while you receive a single, transparent GBP invoice in the UK.
For all engineers employed through CyberSpark's EOR India service, our UK and Indian operational teams manage the entire lifecycle of payroll calculation, tax withholding, and government reporting:
Monthly Processing
Statutory Remittances
Annual Compliance
Audit Readiness
PAYROLL LIFECYCLE
How CyberSpark executes monthly calculations, government submissions, and annual tax governance for UK tech firms:
Candidate CTC structuring, basic vs allowance allocation, statutory PF/ESI eligibility confirmation, and compliant Indian employment contracts.
Expected window: Onboarding
Compensation Mechanics
Indian compensation is typically structured with distinct statutory components — not just a single gross salary figure as is common in UK employment. Understanding the structure is vital for accurate engineering budget planning:
| Salary Component | Typical % of CTC | Statutory & Tax Implications |
|---|---|---|
| Basic Salary | 40–50% of CTC | Provident Fund (PF) is calculated strictly on basic salary. Structuring basic properly optimizes statutory costs while ensuring compliance. |
| House Rent Allowance (HRA) | 40–50% of basic | Partially tax-exempt if the employee submits rent receipts; directly reduces employee TDS burden. |
| Special Allowance | Remainder | Fully taxable component; used flexibly to balance the overall compensation package. |
| Variable / Performance Pay | 10–20% of CTC | Paid upon milestone or quarterly achievement; taxable in the specific month disbursed. |
| Statutory Bonus | Mandatory (5.83% of basic) | Payable annually in accordance with the Payment of Bonus Act. |
Understanding "Cost to Company" (CTC)
CTC (Cost to Company) is the total employer cost — comprising gross salary plus employer-side statutory contributions (PF and ESI). UK companies accustomed to offering a gross salary should note that when an Indian candidate quotes their CTC expectation, that figure already includes employer statutory obligations. CyberSpark converts candidate CTC expectations into transparent, UK-comparable loaded monthly cost proposals in GBP.
Eliminate exchange rate volatility and multi-state compliance complexity through CyberSpark's managed UK-to-India operational infrastructure:
Zero FX Volatility
UK companies paying CyberSpark in GBP face zero INR currency risk. CyberSpark absorbs intra-month foreign exchange exposure during the conversion from your GBP settlement to local INR payroll disbursements.
Predictable billing: your monthly GBP invoice is calculated at a defined reference rate published in the engagement agreement. You are completely protected from currency swings, wire friction, and international bank processing fees.
Pan-India Reach
High-performing software talent is distributed across major tech clusters: Bengaluru (Karnataka), Mumbai (Maharashtra), Hyderabad (Telangana), Chennai (Tamil Nadu), and Pune (Maharashtra).
Seamless statutory coverage: CyberSpark registers for Professional Tax and Shops and Establishments in the state where each engineer works. You do not need to research local PT slabs or state rules; we track them for you.
BOOK A SCOPING SESSION
Consult directly with our UK technical and operational leadership. Review your India hiring roadmap, receive loaded CTC calculations, and ensure full statutory compliance from day one.
FREQUENTLY ASKED QUESTIONS
Clear, transparent answers on Indian statutory costs, tax withholding, and audit procedures for UK companies.
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