- Your Indian entity stays the legal employer and signs every appointment letter.
- EPF becomes compulsory once your establishment employs 20 or more people.
- ESI covers staff earning up to ₹21,000 a month, usually from 10 employees.
- In Maharashtra, Shops and Establishments registration applies from 20 workers since 1 October 2025.
On this page
Why does PEO mean two different things in India?
Because Indian providers sell two separate services under the same three letters.
Some use it for a co-managed model. Your subsidiary employs the team, and the provider runs onboarding, payroll and the filing calendar on your registrations. Others call their employer of record service a PEO, even though their own entity is the employer.
The name on the appointment letter settles it. Ask for a sample before you sign.
| Question to ask | True PEO | EOR |
|---|---|---|
| Whose entity employs the staff? | Yours | The provider’s |
| Whose TAN files the quarterly Form 138? | Yours | The provider’s |
| Who owes EPF damages on a late deposit? | Your entity | The provider’s entity |
| Can you start without an Indian company? | No | Yes |
What does a PEO actually run for your Indian entity?
It operates your statutory calendar, while the liability stays with you.
That means salary TDS deposited by the 7th of each month, the EPF return filed by the 15th, quarterly TDS statements and Professional Tax. Many PEOs also handle benefits, leave records and exits. This is a form of co-employment, so draw the lines of responsibility in writing.
Here is where foreign parents get caught. Suppose the provider files an ECR six weeks late. EPFO raises damages against your establishment code. The rate is 0.25% of arrears a month for a delay under two months, rising to 1% a month after four, under the EPF Scheme, 2026 as summarised by Cyril Amarchand Mangaldas. Your contract with the PEO can shift the cost. It cannot shift the legal default.
When should you choose a PEO over an EOR?
When you already own an Indian subsidiary and want the employment contracts to stay on it.
A PEO suits a company with an entity but no HR team in India. An EOR suits a company that is still testing the market, has a handful of hires and does not yet want the cost of a subsidiary. Our guide to choosing the best PEO in India covers selection, and the PEO vs ASO vs HRO comparison separates the outsourcing models. Hiring across several countries is a different question, covered under international PEO.
How does Remunance run PEO-style compliance for an existing Indian entity?
Remunance’s compliance management service runs the filings on your own registrations: TDS, quarterly TDS returns, Professional Tax, Labour Welfare Fund, monthly EPF ECRs and ESIC. You keep the entity and the contracts. We keep the dates. If that is the gap in your India set-up, compare EOR and PEO for your team.
What else do people ask about PEOs in India?
Is a PEO the same as an EOR in India?
Not quite. A PEO works on your entity, and an EOR employs staff on its own. Some providers blur the two in marketing, so check whose name sits on the payslip.
Can a foreign company use a PEO without an Indian entity?
Not in the true sense. Without an entity there is nothing for the PEO to run payroll on, so the provider is acting as an EOR.
Who is liable if a PEO gets payroll wrong?
Your entity, as the registered employer. The PEO can agree to indemnify you, but EPFO, ESIC and the tax department pursue the employer on record. Compare that with payroll outsourcing, where the split is similar.
Planning a hire in India?
Our founding team has run payroll and hiring in India for 22+ years, first as Remunance Systems, which was later acquired by ADP.