--- title: "India Employee Benefits 2026 | Statutory + Competitive" description: "India benefits 2026: 18 days earned leave, 26 weeks paid maternity, 12% EPF, gratuity after 5 years. Competitive package guide for employers." canonical: https://www.teamed.global/country-hiring-guides/india/benefits --- India · Benefits child Served by Teamed vetted partner-entity network in India # What *India employee benefits* must you provide in 2026? India mandates 26 weeks of fully paid maternity leave, one of the longest statutory entitlements in Asia. The competitive benchmark adds group health insurance, gratuity planning from day one, and ESOP equity that tech candidates increasingly expect. Last reviewed 13 June 2026 · India guide ![A wide boulevard lined with trees in a sunlit Indian city, office towers visible in the background.](/images/country-guides/india-benefits.webp) Illustration · India Answer.cite this India requires 18 days of earned paid leave per year, plus 17 central government public holidays. Maternity leave is 26 weeks fully paid for a first or second child. There is no central law requiring paid paternity leave in the private sector. The Employees Provident Fund requires 12% employer and 12% employee contribution on basic salary and dearness allowance. Gratuity becomes payable after 5 years of service. It is a statutory obligation, not a discretionary bonus. ![A woman holds a sleeping newborn wrapped in a light cotton cloth in a bright, airy room.](/images/country-guides/india-benefits-polaroid-1.webp) Out of office ## What benefits must you provide India employees by law? The law sets clear floors. You must provide 18 days of earned leave per year. Maternity leave for a first or second child is 26 weeks, fully paid. EPF contributions are 12% from the employer and 12% from the employee on basic salary and dearness allowance. Sickness benefit under ESIC is 70% of average daily wages for up to 91 days per year, but only applies to employees earning below the ESIC wage ceiling. | Statutory benefit | Minimum (2026) | Source | | --- | --- | --- | | Earned (privilege) leave | 18 days per year (Factories Act basis; varies slightly by state act) | Occupational Safety Health and Working Conditions Code 2020; Factories Act 1948 s.79 | | Public holidays | 17 central gazetted holidays per year (additional state holidays common) | Central Government holiday circular 2026 | | Maternity leave and pay (first or second child) | 26 weeks fully paid. Eligibility requires 80 days worked in the preceding 12 months. | Code on Social Security 2020 Chapter VI | | Paternity leave (private sector) | No central law mandates paid paternity leave for private sector employees. Many employers offer 5 to 15 days contractually. | No central statute | | ESIC sickness benefit | 70% of average daily wages for up to 91 days per year (for employees below the ESIC wage ceiling) | Employees State Insurance Act 1948 s.46; Code on Social Security 2020 Chapter VI | | Employees Provident Fund (EPF) | 12% employer + 12% employee on basic salary and DA | Employees Provident Funds and Miscellaneous Provisions Act 1952; Code on Social Security 2020 | | Gratuity | Payable after 5 years of continuous service at 15 days last drawn salary per completed year | Payment of Gratuity Act 1972 s.4; Code on Social Security 2020 | ## What does a competitive India benefits package look like? For tech and professional services hiring in 2026, the competitive benchmark adds: group health insurance (mediclaim), an enhanced leave policy, a mobile and internet allowance, a learning budget, meal vouchers, and ESOP or ESPP for senior roles. The full enhanced package typically costs 150,000 to 500,000 rupees per employee per year on top of base salary and statutory contributions, depending on seniority and city. | Benefit | Typical mid-market cost | What it gets you | | --- | --- | --- | | Group health insurance (mediclaim) | 8,000 to 25,000 rupees per year per employee (family floater: 20,000 to 60,000) | Hospitalisation, day-care procedures, pre- and post-hospitalisation costs | | Personal accident cover | 1,000 to 3,000 rupees per year | Accidental death and disability payout | | Term life insurance (group) | 500 to 2,000 rupees per year | Death benefit typically 3 to 5 times annual CTC | | Mobile and internet allowance | 12,000 to 30,000 rupees per year | Salary-structured allowance, partially tax-exempt | | Meal vouchers (Sodexo, Zeta) | 12,000 to 26,400 rupees per year | Tax-exempt under perquisite rules up to 2,200/month | | Learning and development budget | 10,000 to 50,000 rupees per year | Courses, certifications, conferences | | Variable pay (performance bonus) | 10 to 20% of annual CTC at target | Retention and performance alignment | | ESOP or ESPP (tech and funded startups) | Market-rate grant (no statutory minimum) | Senior candidate differentiator; vesting typically 4 years with 1-year cliff | [Model your loaded benefit cost on the Employer Cost Calculator](/tools/employer-cost?country=IN) to see the full picture for a specific salary and package. ## What EPF contribution should you offer? The law requires 12% employer EPF contribution on basic salary and dearness allowance. This is not optional. The competitive question is how you structure CTC to manage the EPF base, and whether you offer a National Pension System top-up. Three common structures employers use in India: - **Minimum compliance (12% employer + 12% employee on basic salary and DA).** Covers the legal floor. The effective cost depends heavily on how basic salary is set relative to total CTC. A lower basic salary reduces the EPF liability but reduces the employee's long-term retirement corpus. - **Voluntary Provident Fund (VPF) option.** Employees may voluntarily contribute above the 12% floor into the EPF at the same interest rate. Employers cannot mandate this but can facilitate it as part of a flexible benefits structure. - **National Pension System (NPS) employer contribution.** An employer NPS contribution of up to 10% of basic salary qualifies for tax deduction under Section 80CCD(2). For mid-to-senior hires this is a meaningful tax-efficient retirement top-up. NPS is separate from EPF and can run alongside it. ### The EPF wage ceiling and its practical effect The statutory EPF wage ceiling is currently INR 15,000 per month of basic salary and DA. Contributions are mandatory on earnings up to this ceiling. For employees earning above this, contributions on the excess are voluntary. The ceiling is under judicial review as of 2026 and may increase. Structuring high basic salaries above the ceiling may change once a new ceiling is set. ## Gratuity: India's most distinctive statutory non-wage benefit Gratuity is a mandatory lump-sum payment. It becomes owed once an employee completes 5 years of continuous service. The formula is 15 days of last drawn basic salary per completed year of service, divided by 26 working days. Gratuity is payable on resignation, retirement, or death. Gratuity is not a bonus. It is a legal obligation under the Payment of Gratuity Act 1972, applicable to every organisation with 10 or more employees. Once triggered, it cannot be waived by contract. ### What the formula produces For a senior engineer on a basic salary of 80,000 rupees per month with 6 years of service: the gratuity owed is (80,000 x 15 x 6) divided by 26, which equals approximately 276,923 rupees. The tax-exempt ceiling is ₹2,000,000 for private sector employees covered by the Payment of Gratuity Act. Amounts above this are taxable as salary income. ### Practical implications for employers - **Provision from day one.** Gratuity accrues silently even though it is paid only on exit. Employers who do not provision for it face a cash-flow event after 5 years. - **Group gratuity insurance.** Most medium and large employers fund the liability via a group gratuity scheme with LIC or a private insurer. The annual premium is tax-deductible as a business expense. - **Death or disability exception.** Gratuity is payable immediately if an employee dies or becomes permanently disabled, regardless of service length. - **Part-year rounding.** If an employee completes 6 months or more in the final year, that year is counted as a full year for the gratuity formula. ## Group health insurance: the 2024 to 2026 competitive shift Group health insurance (mediclaim) moved from optional to expected for tech and professional services hiring over 2024 to 2026. The minimum competitive offer now covers the employee plus dependants, with a sum insured of at least 500,000 rupees per family. What competitive India employers offer in 2026: - **Group mediclaim with family floater.** Sum insured of 500,000 to 1,500,000 rupees per family. Day-care procedures and pre- and post-hospitalisation coverage are now standard. - **Mental health cover.** IRDAI's 2024 circular mandating insurers to include mental health in group health plans has pushed employers to verify that their policies comply. Counselling sessions and teleconsultation apps are increasingly part of the employee experience. - **Top-up plans and OPD cover.** Mid-market employers offer a personal top-up layer (super top-up policy) and outpatient reimbursement of 10,000 to 20,000 rupees per year. These are valued by employees as practical day-to-day benefits, not just catastrophe cover. - **Wellness benefits.** Gym reimbursements, step challenges, nutrition consultations. Cost is modest (2,000 to 6,000 rupees per employee per year) but surveys show strong candidate preference. - **Paternity and adoption leave top-up.** Absent a central law, employers who offer 10 to 15 days of paid paternity leave stand out significantly, particularly for tech and startup candidates. The cost of a compliant group mediclaim with a 500,000 rupee sum insured for an employee plus two dependants typically runs 18,000 to 40,000 rupees per year depending on city, insurer, and employee age band. Family floater plans covering parents add 30,000 to 80,000 rupees per year per employee and are a competitive differentiator in senior hiring. ## How does Teamed handle India benefits for you? Teamed becomes your legal [employer of record](/lp/employer-of-record) in India for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency. EPF registration, gratuity provisioning, ESIC compliance, and the full India employment law stack run on **one platform**. **Real HR and legal experts** set up and administer EPF, ESIC, and professional tax registrations, manage gratuity fund provisioning, and operate broker relationships for group health insurance and group life cover. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Employer cost **passes through at cost, itemised** on every invoice. India compliance is manageable when you start correctly. It gets complicated fast when you don't. Most teams **graduate** from ad-hoc contractor arrangements to a properly structured EOR once they realise the EPF, ESIC, and gratuity obligations apply whether you acknowledge them or not. The question is whether you want that to feel easy **until it isn't**, or whether you want it handled from day one. What is included in Teamed's standard EOR fee: - EPF and ESIC registration and monthly contribution filings - Gratuity liability provisioning and group gratuity scheme coordination - Earned leave tracking and encashment calculations - Maternity benefit administration under the Code on Social Security - Professional tax deduction and remittance (state-by-state) - Full and final settlement calculation within 2 working days of exit What clients pass through at cost on the invoice: - Group health insurance and personal accident premiums - Group gratuity insurance premiums - Group term life and disability insurance premiums - NPS employer contributions above the mandatory floor - Meal voucher and allowance pass-throughs The benefits package is bespoke to the client's positioning. Teamed's job is to make the operational mechanics frictionless, not to dictate the package. Key sources: [Ministry of Labour and Employment](https://labour.gov.in/), [EPFO (Employees Provident Fund Organisation)](https://www.epfindia.gov.in/), and [ESIC (Employees State Insurance Corporation)](https://www.esic.gov.in/). 1. Confirm EPF and ESIC thresholds Check whether each hire falls within the EPF and ESIC wage ceilings. These determine whether contributions are mandatory or voluntary for that individual. 2. Register the employee on EPF and ESIC portals New employees must be enrolled within the statutory window. Delays attract penalties under the Code on Social Security. 3. Structure the CTC correctly The split between basic salary, HRA, allowances, and variable pay affects the EPF base, tax efficiency, and take-home pay. Get this right at offer stage. 4. Arrange group health insurance Group mediclaim must be in place from the employee's first day. Teamed coordinates the insurer addition; the premium passes through at cost on the invoice. 5. Begin gratuity provisioning Gratuity accrues from day one even though it is paid only after five years of service. Plan the liability now to avoid a cash-flow event at exit. ## Frequently asked questions How much earned leave must India employees receive by law? The minimum earned (privilege) leave is 18 days per year under the Factories Act and the Occupational Safety Health and Working Conditions Code 2020. India also has 17 central government gazetted public holidays. State Shops and Establishments Acts may set slightly different leave entitlements for commercial office employees, so check the applicable state act for each location. How long is maternity leave in India and is it fully paid? Statutory maternity leave for a first or second child is 26 weeks, fully paid at full wages. Eligibility requires the employee to have worked 80 days in the 12 months before the expected delivery date. For a third child the entitlement reduces to 12 weeks. The employer pays the benefit directly; ESIC may reimburse eligible employers. Is there statutory paternity leave in India? No central law requires private sector employers to provide paid paternity leave. India's statutory paternity leave applies only to central government employees. Most competitive private sector employers voluntarily offer 5 to 15 days. Including at least 10 days of paid paternity leave in your policy is a meaningful differentiator in the current hiring market. What is EPF and how much must I contribute as an employer? The Employees Provident Fund (EPF) is India's mandatory retirement savings scheme. Employers must contribute 12% of an employee's basic salary and dearness allowance. Employees contribute 12% on the same base. Part of the employer contribution funds the Employees Pension Scheme (EPS). EPF applies to organisations with 20 or more employees; voluntary coverage below this threshold is permitted. When is gratuity payable and how is it calculated? Gratuity becomes payable when an employee completes 5 years of continuous service and then leaves for any reason, including resignation, retirement, retrenchment, or death. The formula is 15 days of last drawn basic salary per completed year of service, divided by 26. The tax-exempt ceiling for private sector employees is ₹2,000,000. There is no cap on the number of service years in the formula. Teamed Legal Operations Gratuity is the benefit that catches foreign employers by surprise. It accrues silently for five years and then lands as a lump-sum obligation at exit. Employers who provision for it from day one treat it as a cost of employment, not a shock. A note from Tom Price-Daniel India mandates 26 weeks of paid maternity leave. That is one of the longest statutory entitlements in Asia. Gratuity is not a bonus. It becomes a legal obligation once a hire crosses five years, and no contract can waive it. EPF is the floor. Group health insurance and a well-structured CTC are what move the best candidates in India's competitive tech market. Tom Price-Daniel · Co-founder, Teamed ## Related India guides - Hiring in India, overviewparent - [India working time and leave](/country-hiring-guides/india/working-time-and-leave)sibling - [India employer cost breakdown](/country-hiring-guides/india/cost-breakdown)sibling - [India tax and payroll](/country-hiring-guides/india/tax-and-payroll)sibling - [India termination and severance](/country-hiring-guides/india/termination-and-severance)sibling - [Employer of Record overview](/lp/employer-of-record)core - [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool - [Talk to an expert](https://www.teamed.global/contact)CTA A note on this page. This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Ministry of Labour and Employment and the Employees Provident Fund Organisation for India, or speak to a qualified professional, before relying on any specific framework.