Quick answer: To hire without an entity means employing or engaging people in India without registering your own Indian company. The usual route is an employer of record, whose Indian entity becomes the legal employer and runs payroll, EPF, ESI and TDS. The other route, contractors, works only for genuinely independent professionals.
- A foreign company cannot run Indian salary payroll itself, because TDS under s.392 needs an Indian TAN.
- An EOR employee gets full Labour Code rights: appointment letter, PF, gratuity, leave and bonus where eligible.
- Payments to a foreign company’s Indian contractors are taxable in India, and the contractor files their own return.
- A subsidiary needs at least 2 directors, one resident in India for 182 days or more in the financial year.
What are your options for entity-free hiring in India?
Two. Plus the entity you are trying to avoid.
| Employer of record | Contractor agreement | Own subsidiary | |
|---|---|---|---|
| Legal employer | The EOR | None | You |
| Time to first hire | Days | Days | Months |
| Employee rights | Full | None by law | Full |
| Misclassification risk | Low | High if they work like staff | Low |
| Exit | Notice under the EOR contract | End the contract | Close or sell the company |
An International PEO is sometimes sold as a fourth option. In India it usually works the same way as an EOR, so ask whose entity signs the appointment letter.
When are contractors the wrong choice?
When they behave like employees. Indian courts and the EPFO look at how the work is actually done. The label on the contract counts for little.
Let’s say a developer works only for you, 9 to 6, in your Slack, on a monthly retainer, for two years. That looks like employment. If it is challenged, you may owe back PF, gratuity and penalties.
A Contractor of Record can add vetting, invoicing and payment rails on top of a contractor agreement, which helps with paperwork and tax forms. It does not change what the relationship is.
Does hiring through an EOR create tax risk for you?
Not if roles are set up properly. The EOR employs the person. You get an invoice.
That invoice covers salary, employer contributions and the service fee, with 18% GST added unless the supply qualifies as an export of services.
Risk returns if an Indian employee habitually signs customer contracts for your foreign company. That can create a permanent establishment, and as the EY alert on a Chennai tribunal ruling shows, officers do look at who actually closes deals.
Our guide on how to hire international employees without an entity covers set-up. The piece on starting a business in India without entity formation covers the wider picture.
How does Remunance let you hire in India without an entity?
Remunance is the Indian employer for your team through Remunance Services Pvt Ltd, its own entity in Pune. Onboarding takes as little as 2 working days from a signed contract. For freelancers who really are independent, we also offer contractor engagement and compliance. To check which route fits each role, get a free hiring-route review.
What else do people ask about hiring in India without an entity?
Can a foreign company hire employees in India directly?
Not as a practical matter. Indian salary payroll needs an Indian TAN, PF and ESI registrations, so foreign companies use an EOR or set up an entity.
Is it legal to hire through an employer of record in India?
Yes. The EOR is a registered Indian company and the legal employer, so all Indian employment law applies to it.
How much does it cost to hire without an entity in India?
You pay salary, employer contributions and the EOR’s service fee. Remunance’s fee starts at USD 99 per employee per month.