When do you graduate from an EOR to your own India entity?

The calculation below uses INR 49,900 as the illustrative INR equivalent of the Teamed fee at approximately 83 INR per USD. This is illustrative, not a fixed INR price. The actual INR amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.

All entity cost figures in this table are typical ranges. They cover outsourced payroll, bookkeeping, statutory filings, TDS returns, EPF/ESI administration, and HR advisory for a small India Pvt Ltd. They are illustrative, not law figures. Actual costs vary with the city, the complexity of your setup, and the benefits programme you run.

The crossover compresses as the entity's fixed overhead spreads over more people. EPF employer contribution at 12% applies on the first INR 25,000 of monthly wages (the statutory wage ceiling since 17 September 2026). Above that ceiling, many employers contribute voluntarily at 12% on the full basic. At higher salary bands, the EPF cost line grows on both sides of the comparison equally, so it does not change the crossover significantly.

Run the Crossover Calculator with your own headcount.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned India headcount. This is the fixed variable cost. It grows linearly as you hire.

2. Estimate the entity fixed overhead

   Typically INR 1.8 lakh to 3.5 lakh per month for a small India Pvt Ltd. This covers payroll bureau, bookkeeping, EPF and ESI admin, TDS returns, and HR advisory. This cost does not grow much until headcount exceeds twenty.

3. Find your crossover point

   The crossover is where EOR monthly cost equals entity monthly overhead. There is no fixed number for it. It moves with the EOR fee, your entity quote, and how fast you are growing. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a planning point. ESOP needs, permanent establishment substance, and market-validation reversibility are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow anywhere from a few weeks to several months before the first payroll on your own entity. Opening the bank account for a foreign-parented India company is often the slowest step. Start the GEMO process while EOR continues running.

These are typical ranges. They are not law figures. There is no law that sets what a Pvt Ltd costs to form. The range reflects real market rates for professional services in metros like Bengaluru and Mumbai. It varies with how much substance and complexity your structure needs.

That government cost is Karnataka's published stamp duty plus the tax-number fees, stamp duty varies by state, and we are waiting on direct confirmation from the live incorporation form before we treat it as settled.

Why the bank account is the hidden bottleneck

Indian banks apply enhanced due diligence to companies with foreign directors or parent entities. The account can take longer to open than the company takes to register. Delays are longer when the ultimate beneficial owner is not India-resident. The bank, not the registration, usually sets the date of your first payroll. Plan for it before you set the first payroll date.

These figures are typical market ranges for a small India Pvt Ltd with 1 to 20 employees in a metro city. They are illustrative. They are not law figures. Actual costs depend on whether you outsource or hire in-house, which city your entity is based in, and the complexity of your payroll and benefits programme.

Above 20 employees, dedicated India HR capacity and an in-house finance or compliance manager typically become necessary. The cost band widens at that point. Professional tax rates also vary by state, adding a variable layer that grows with headcount spread across states.

Most cost comparisons skip the director-liability dimension because it is hard to put a number on. It is worth naming explicitly before you decide.

Personal director duties under Companies Act 2013

Under the Companies Act 2013, every director of an India Pvt Ltd must act in good faith to promote the objects of the company, exercise reasonable care and skill, and avoid conflicts of interest. A director who signs financial statements they have not reviewed is personally on the hook for any material misstatement. These are personal duties. They cannot be outsourced.

The compliance treadmill

• Annual return (Form MGT-7; MGT-7A only for small and one-person companies): within 60 days of the Annual General Meeting. Late filing attracts penalties on directors personally.
• Financial statements (Form AOC-4): within 30 days of the AGM. Defaults attract MCA penalties and, after repeated defaults, director disqualification under section 164(2).
• Director KYC (Form DIR-3 KYC): once every three financial years, by 30 June, plus an update within 30 days of any change in contact details. A single missed filing deactivates the Director Identification Number, blocking any future filings.
• EPF monthly ECR: on or before the 15th of the following month. Late payment carries damages of 0.25% to 1% of the arrears for each month of delay, capped at the arrears, plus interest at 12% a year.
• TDS deposit: by the 7th of the following month. Interest runs at 1.5% a month on tax deducted but paid late, and 1% a month on tax not deducted on time.
• Shops and Establishments renewal: annually, per state of operation. Missing one state renewal creates a compliance gap that surfaces on due-diligence checks.

Each filing is individually manageable. Stacked across a year and multiple states, they consume real management attention. An EOR carries all of these on its own entity.

• While your India team is small: EOR is cheaper every month. The entity overhead has nothing to amortise against.
• Market validation phase: you are hiring 1 to 3 people to test commercial fit. Pvt Ltd formation commits capital, management time, and at least two directors before you know whether the India market will deliver.
• Project-based or short-term hires: 6 to 18 month engagements where the formation cost will not amortise before the project ends. India also has no statutory cap on retrenchment compensation years of service, so exiting an entity with long-tenure employees adds a further layer of cost.
• Multi-state operations that are still small: Shops and Establishments compliance is state-specific. Each new state adds recurring filings and professional tax registration. At low headcount, this multi-state overhead multiplies the entity cost well above the illustrative range.
• Uncertain equity structure: if your parent entity structure is still changing, adding an India Pvt Ltd during a restructure creates transfer pricing, FEMA, and beneficial ownership complexity that is easier to avoid with EOR.

• Sustained headcount past your crossover point: the entity overhead amortises across enough people that per-head cost falls below the EOR fee.
• ESOP and equity compensation: issuing ESOPs to India-based employees under the Companies Act 2013 requires an India Pvt Ltd employer of record. Teamed as the EOR cannot issue ESOPs on behalf of your entity. Once your India team expects equity as part of their compensation package, entity formation becomes structurally necessary.
• Permanent establishment substance: some cross-border tax structures require actual India substance (employees, registered address, banking) in your own entity. The Ministry of Finance takes a narrow view on whether EOR employment counts as PE-creating activity. For long-running India operations, own-entity substance is cleaner.
• Government contracting and regulated sectors: certain government tenders, defence-sector work, and SEBI-regulated activities require the contracting party to be a locally-incorporated entity. If your India market strategy includes these verticals, entity formation is a prerequisite.
• Employer branding and recruitment: for senior hires in Bengaluru or Mumbai, being able to say the employment contract is directly with your India entity signals commitment to the market. At the senior level, this can be a recruiting advantage.

The technical mechanic is contract novation: the employment contract transfers from Teamed to your new India Pvt Ltd on a specified date. All terms carry across. Salary, EPF contributions, annual leave entitlement, and continuous service date all remain unchanged. The employee sees a different employer name on their payslip. Nothing else changes.

What we do operationally:

• Stand up your India Pvt Ltd through GEMO, including bank account opening, while EOR continues running in parallel.
• Complete EPF employer registration and ESI registration for the new entity.
• Novate every active employment contract on a single effective date.
• Migrate ongoing EPF and benefits without any lapse or break in the contribution record.
• File final EOR-period EPF ECRs and open new ECR on the entity from the novation date.
• Provide the same People Ops specialist as the post-graduation primary contact.

The Graduation Model exists because every other EOR makes this hard. We treat the move as something we help you plan for from the day you hire your first employee through us.

Real HR and legal experts handle your India hires from the first offer letter through every EPF ECR and annual TDS return. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips. Start from the India hiring overview. Key sources: Ministry of Corporate Affairs and EPFO employer portal.