An India PEO, as the term is used by global providers, is usually not US-style co-employment at all: it is an employer of record. The provider's Indian entity employs your hire, runs payroll and carries the statutory registrations, because India's employment framework attaches obligations to the legal employer rather than recognising a shared-employer contract. What separates a real provider from a payroll wrapper is the statutory stack: provident fund, state insurance, gratuity and the filing calendar that goes with them.
What a PEO or EOR does in India
The provider's entity issues the employment contract, pays salary in rupees, withholds income tax, and operates the two big social schemes where they apply: the Employees' Provident Fund, administered by the EPFO, and the Employees' State Insurance scheme, administered by the ESIC. Provident fund obligations apply to establishments with 20 or more employees, which means an established EOR entity is in scope even when you are hiring one person through it. The buyer keeps day-to-day direction of the work; the provider carries the registrations, the monthly electronic filings and the statutory accruals that Indian employment generates from the first payslip.
The provident fund stack, with the real numbers
Under the EPF scheme the employee contributes 12% of basic salary plus dearness allowance and the employer matches with its own 12%, split as 8.33% to the Employees' Pension Scheme, capped at a pensionable wage of Rs 15,000 per month, and 3.67% to the provident fund account. On top of the match the employer pays 0.5% to the Employees' Deposit Linked Insurance scheme and 0.5% in administrative charges. Contributions are reported through a monthly Electronic Challan cum Return, due with payment by the 15th of the following month. A quote that shows only gross salary plus a fee, with no employer PF line, is either assuming an exemption or hiding a cost.
State insurance and the other accruals
The Employees' State Insurance scheme covers lower-wage employees: it applies in notified areas to establishments above a headcount threshold, with a wage ceiling of Rs 21,000 per month, or Rs 25,000 for employees with disabilities. Where it applies, the employer contributes 3.25% of wages and the employee 0.75%. Above the ceiling, ESI simply does not apply to that employee, which is why many professional hires carry PF but not ESI. Beyond these, Indian service accrues statutory gratuity with tenure and paid leave under state shops-and-establishments rules; the amounts vary by state and statute, so ask the provider to show each accrual as a line rather than an assurance.
What to check in an India provider
Ask for the provider's PF establishment code and confirmation that your hire's Universal Account Number will be generated and KYC-verified, since PF money that is deducted but not credited is a classic failure mode. Ask which items the invoice itemises: employer PF at 12% plus EDLI and admin charges, ESI where the wage is in scope, gratuity accrual, and professional tax where the state levies it. Ask how the provider handles the monthly ECR deadline and what evidence of filing you receive. Statute and the employment contract control; this page describes the mechanism and is not legal or tax advice.
Questions people ask about india peo
Is an India PEO the same as co-employment in the US?
No. The term is borrowed: in India the provider's entity is the sole legal employer, which makes the product an employer of record. US-style co-employment, where two employers share one worker by contract, is not how Indian registrations work.
What does the employer pay into EPF in India?
A 12% match on basic salary plus dearness allowance, split 8.33% to the pension scheme, capped at a Rs 15,000 monthly pensionable wage, and 3.67% to the provident fund, plus 0.5% for deposit-linked insurance and 0.5% in administrative charges.
Does ESI apply to every employee?
No. ESI covers employees up to a wage ceiling of Rs 21,000 per month, Rs 25,000 for persons with disabilities, in covered establishments in notified areas. Employees above the ceiling are outside the scheme, though PF usually still applies.
When are PF contributions due?
The monthly Electronic Challan cum Return is filed with payment by the 15th of the following month. Ask your provider for the filing evidence, not just an invoice line.