Employer of Record (EOR) India for US Companies

US companies have hired Indian engineers and operators for two decades, but the structures available have not kept pace with how distributed teams actually work. Setting up a wholly-owned Indian subsidiary takes 4 to 6 months and USD 15,000 to 30,000 in legal and registration costs. Misclassifying full-time staff as 1099-style contractors creates Permanent Establishment risk under Article 5 of the India-US DTAA and reclassification penalties under Indian labour codes. Direct payroll on a US W-2 is not legally available without an Indian entity.

The Employer of Record structure solves this gap. The EOR acts as the legal employer in India under Indian labour law, while the US client retains full functional control over day-to-day work, projects, and IP. Patron Accounting brings CA-led depth to this structure - we handle the four Labour Codes, EPF / ESI / Professional Tax filings, monthly TDS under Section 192, ESOP / RSU equivalence under Section 17(2)(vi), and the India-US DTAA navigation that generic EOR platforms outsource to local partners.

Content is reviewed quarterly for accuracy.

Patron's EOR India service is built specifically for US-headquartered companies. We onboard US C-Corps, LLCs, and S-Corps - typical client headcounts in India range from 1 to 30 employees.

When EOR is the right structure

• Hiring 1 to 25 Indian full-time employees (above 25, evaluate entity setup).
• Pre-Series-B startup testing India hiring before committing to a subsidiary.
• Mid-market SaaS or AI company building distributed engineering or customer success teams.
• US-listed enterprise piloting India presence ahead of formal market entry.
• US client wants speed (5 to 10 days onboarding versus 4 to 6 months for entity setup).
• US client wants compliance liability transferred to a specialist - PE risk firewall, labour code compliance, payroll filings.

When entity setup makes more sense

• Headcount above 25 to 30 - per-employee EOR fee crosses entity-overhead break-even.
• Need to invoice Indian customers in INR - EOR cannot do client-facing invoicing.
• Raising Series A / B in India - investors require a local entity.
• Opening a physical office or warehouse - requires an entity.
• Long-term commitment of 5+ years - entity is more cost-effective at scale.

From US client (one-time)

• Certificate of incorporation of US entity
• EIN / IRS Form W-9 of US entity
• Authorised signatory designation for MSA
• Beneficial ownership disclosure (US-side compliance)
• Standard employment offer template (Patron will adapt to India)

Per Indian employee (onboarding)

• PAN card (mandatory for TDS) and Aadhaar card (for e-Sign and EPF UAN)
• Bank account proof (cancelled cheque or passbook)
• Education certificates (highest qualification)
• Previous employer relieving letter and salary slip (for tax-regime continuity)
• Form 11 declaration (prior PF membership)
• Address proof (rental agreement / utility bill) and two passport-size photographs (for ESI card)

Per ESOP / RSU event

• Grant letter from US parent and vesting schedule document
• Exercise notice / vesting confirmation from US transfer agent
• FMV evidence on exercise / vesting date (US ticker close or 409A valuation)
• Sell-to-cover broker statement (if applicable)

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free EOR India consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

"Extremely great, knowledgeable person who deserves 5 stars for smooth and quick handling."

- Nishikant Gurav, Google Review

"Took minimum time, really impressive acumen. And it's not expensive at all."

- Rajib Dutta, Google Review

Trusted by 50+ US-headquartered companies running India teams - early-stage Series A SaaS firms, mid-market AI / data infrastructure companies, and Nasdaq-listed enterprises piloting India presence. Plus 10,000+ Indian SMBs and enterprise clients including Hyundai, Asian Paints, and Bridgestone.

4-Office City Trust Signal: With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely. US clients work with us entirely remotely with India-time-zone-aware scheduling.

EOR India connects to several Patron service lines across the engagement lifecycle and the eventual EOR-to-subsidiary migration:

• Payroll Processing and Management Services - parallel domestic payroll service for the post-migration Indian entity.
• Private Limited Company Registration - entity-setup alternative and the EOR-to-entity migration path at the 25 to 30 headcount threshold.
• LLP Incorporation - alternative entity structure for certain India operating models.
• TDS Return Filing - Form 24Q quarterly filing for salary TDS under Section 192.
• Payroll Services for IT and Software Industry - most US clients hire IT / software roles.
• ITR for Companies - post-migration corporate income-tax return for the Indian Pvt Ltd.
• Tax Audit - post-migration when the entity crosses the Section 44AB turnover threshold.

India-US DTAA - Signed 12 September 1989, in force from AY 1991-92. Article 5 (Permanent Establishment) - fixed place of business; offices, branches, factories, construction sites of 120+ days; sub-paragraph 4 covers dependent agents with binding-contract authority. Article 7 (Business Profits) - business profits taxable only in the home state unless a PE exists in the other state. Article 16 (Dependent Personal Services) - salaries taxable where employment is exercised; Indian employees of Patron-as-EOR are taxed in India under Section 192. Article 25 (Relief from Double Taxation) - Foreign Tax Credit mechanism via Form 67. Reference: incometaxindia.gov.in; IRS treaty documents.

Section 17(2)(vi) Income-tax Act 1961 - Any specified security or sweat equity share allotted by employer to employee is a perquisite. Valuation under Rule 3(8) and Rule 3(9) of the Income-tax Rules - FMV on exercise/vesting date minus exercise price. Section 192 - employer TDS on salary and perquisites at slab rates. Schedule FA of the ITR - mandatory foreign-asset disclosure; Form 67 for FTC.

FCRA 2010 Section 2(1)(h) - "Foreign contribution" excludes any amount received in lieu of goods sold or services rendered. Service fee paid by US client to Patron for EOR services is a commercial transaction, NOT a foreign contribution. FEMA 1999 - governs all cross-border commercial transactions; inward remittance for services processed via AD-Cat-I bank with Form A2 and RBI purpose code (P0802 / P1006).

Four Labour Codes - Code on Wages 2019, Code on Social Security 2020, Industrial Relations Code 2020, OSH Code 2020 - consolidate 29 prior labour laws; state implementation rules notified through 2025-2026. Reference: labour.gov.in.

EPF and MP Act 1952 - Mandatory PF for employees with basic wage up to Rs 15,000 per month; voluntary above; employer + employee 12% each. ESI Act 1948 - mandatory medical insurance for gross wage up to Rs 21,000 per month; employer 3.25%, employee 0.75%. Reference: epfindia.gov.in.

Penalty provisions - Contractor misclassification: backdated EPF, ESI, gratuity, leave encashment, TDS for 3 to 7 years. PE re-characterisation: attribution of US parent global profit + interest under Sec 234A/B/C + penalty under Sec 270A (50% / 200%). Section 192 TDS default: interest 1.5% per month under Sec 201(1A); penalty up to TDS amount under Sec 271C. EPF default: damages under Sec 14B + interest under Sec 7Q. Schedule FA non-disclosure: Black Money Act 2015 - 120% of tax + prosecution.

Three risks accumulate when US companies delay a compliant India hiring structure. First, every month a US-payrolled W-2 employee works from India or a 1099 contractor works full-time for a US client is a month of accumulating Permanent Establishment exposure under Article 5 of the India-US DTAA - Indian Revenue Authorities have 6 to 7 years to look back.

Second, Indian labour authorities can reclassify long-term contractors as employees, triggering backdated EPF, ESI, gratuity, leave encashment, and TDS for the entire reclassification period. Third, ESOP / RSU income to Indian-resident employees that goes unreported in Schedule FA invites Black Money Act 2015 consequences - 120 percent tax plus prosecution.

Patron's EOR closes all three risks from Day 1 of engagement.

US companies hiring Indian talent face a regulatory landscape where direct W-2 payroll is unavailable, contractor engagement creates reclassification and Permanent Establishment risk, and entity setup takes 4 to 6 months and significant capital outlay. The Employer of Record structure is the only compliant path to hire Indian full-time employees in 5 to 10 days.

What separates Patron from generic EOR platforms is CA-led depth - Article 5 India-US DTAA navigation, Section 17(2)(vi) ESOP / RSU handling with sell-to-cover and Schedule FA support, FCRA-versus-FEMA clarity for US Finance teams, FEMA-compliant inward remittance via Form A2, four Labour Codes compliance with state-specific rules, and a clear migration path to subsidiary at the 25 to 30 headcount threshold.

With 15+ years serving Indian businesses and 50+ US-headquartered EOR engagements, Patron Accounting handles the structure that lets US companies focus on product and growth. US-time-zone-friendly scheduling. Free first consultation. Reply within 4 business hours.