A PEO in India is, in almost every commercial offer, an employer of record by another name: a local entity employs your hire, runs Indian payroll and statutory contributions, and you direct the work. The US meaning of PEO, co-employment alongside your own registered entity, presumes you already employ people in India; most buyers searching the term do not. What matters either way is the statutory stack the provider must run, provident fund, state insurance and tax withholding, because that stack is where Indian employment compliance actually lives.
PEO versus EOR in the Indian context
A US-style PEO shares employer responsibilities with a client that already has its own entity and payroll registrations; an EOR is the sole legal employer where the client has none. India has no statutory co-employment regime equivalent to the US model, so providers marketing PEO India to foreign companies are in practice selling employment through their own Indian entity, which is the EOR structure. The distinction is not pedantry: it decides whose name is on the employment contract, who is registered with the provident fund and state insurance authorities, and who answers to an inspector. Ask any provider directly which entity will employ the worker and hold the registrations, and read the contract to confirm the answer.
The statutory stack: provident fund
Employees working in covered establishments in India, including foreign nationals, contribute to the Employees' Provident Fund at a fixed 12% of salary, and the employer must make a matching contribution, depositing both shares, 24% in total, with the fund. Out of the employer's share, an amount equal to 8.33% of salary is allocated to the pension fund, with that allocation capped at a salary of INR 15,000 per month for Indian employees. The provident fund regime applies mandatorily to establishments with twenty or more persons, which any serious provider's employing entity will exceed, so a compliant Indian payslip shows these lines every month; a quote that does not surface them is incomplete.
State insurance, gratuity and the wider frame
The Employees' State Insurance scheme applies to employees earning up to Rs 21,000 per month: the employer contributes 3.25% of wages and the employee 0.75%, at rates in force since 1 July 2019. Higher-paid professional hires typically sit above the ESI ceiling, so the line appears only for lower wage bands. India's Parliament has passed four consolidated labour codes intended to reorganise this landscape, but their implementation has been deferred, so the existing acts continue to govern in the meantime. Gratuity, leave and state-level shops and establishments registrations round out the stack a provider administers, and the statutory figures above come from the sources listed below.
What to check in a PEO India quote
First, that employer provident fund contributions are itemised on top of gross salary rather than absorbed into a blended rate you cannot audit. Second, which entity employs the worker, in which state it is registered, and whether it actually holds the provident fund and ESI registrations it claims. Third, how the provider handles exits: notice, gratuity accrual for longer-tenured staff and full-and-final settlement have fixed local mechanics, and offboarding fees vary widely between vendors. Verified pricing for the providers that publish it is in our comparison tables. Nothing on this page is legal or tax advice; the statutes and your contract control.
Questions people ask about peo india
Is a PEO in India the same as an EOR?
Commercially, almost always yes: India has no US-style statutory co-employment regime, so providers selling PEO India to foreign buyers employ the worker through their own Indian entity, which is the EOR structure.
What are the provident fund contribution rates in India?
The employee contributes 12% of salary and the employer matches it, with both shares, 24% in total, deposited to the fund. Of the employer's share, 8.33% of salary goes to the pension fund, capped at INR 15,000 per month of salary for Indian employees.
Who is covered by ESI and at what rates?
Employees earning up to Rs 21,000 per month in covered establishments. The employer contributes 3.25% of wages and the employee 0.75%, rates effective since 1 July 2019.
Do India's new labour codes change these rules?
Four consolidated labour codes have been passed by Parliament but their implementation has been deferred, so the existing statutes continue to apply until the codes take effect.