---
title: "India EOR vs Entity 2026 | Crossover + When to Switch"
description: "India EOR vs own Private Limited Company. EPF employer rate 12%. Entity setup typically INR 1.5L to 6L. Full decision guide."
canonical: https://www.teamed.global/country-hiring-guides/india/eor-vs-entity
---

India · EOR vs entity child

Served by Teamed vetted partner-entity network in India

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

India's EPF employer contribution at 12% applies on both sides of the comparison. But a Private Limited Company in Mumbai or Bengaluru also carries MCA21 filings, state-level professional tax, and a compliance stack that costs roughly INR 1.8 to 3.5 lakh per month to run properly. Here is where the crossover lands, and the structural triggers that the cost line alone does not capture.

Last reviewed 13 June 2026 · India guide

![A view across the skyline of Bengaluru, India, with office towers in the tech district.](/images/country-guides/india-eor-vs-entity.webp)

Illustration · Bengaluru, India

Answer.cite this

An EOR is faster and cheaper at low headcount in India. Incorporating a Private Limited Company takes typically 4 to 8 weeks. Formation typically costs INR 1.5 lakh to 6 lakh all-in. Running it costs roughly INR 1.8 lakh to 3.5 lakh per month.

Those are typical ranges, not law figures. Entity costs vary by city, professional fees, and how much you outsource. The crossover point in India lands around 10 to 18 employees at mid-market tech salaries, because India-based salaries are lower than global averages and the entity overhead amortises more slowly per head.

EPF employer contribution is 12% on both sides of the comparison. India does not have a separate pension.employer_rate key: the EPF contribution already covers both provident fund and the embedded Employee Pension Scheme. The entity side also carries formation costs and ongoing compliance overhead. Those do not appear in the EPF rate.

![A team working through incorporation paperwork at a desk in a Mumbai office.](/images/country-guides/india-eor-vs-entity-polaroid-1.webp)

Sign here

## The crossover maths

EOR cost scales with headcount. One fee per employee per month. Entity cost has a fixed overhead. That fixed line and the EOR line cross at around 10 to 18 employees for mid-market India tech salaries.

Teamed charges from $599 per employee per month. At a typical INR rate that works out to roughly INR 49,900. Your own India Private Limited Company carries a typical fixed monthly overhead of INR 1.8 lakh to 3.5 lakh for payroll bureau, bookkeeping, filings, and compliance admin.

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 at higher salaries. EPF employer contribution at 12% applies on the first INR 15,000 of monthly basic salary (the statutory wage ceiling, currently under Supreme Court review). 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 and salary band.](/tools/crossover-calculator/india)

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 the crossover headcount The crossover is where EOR monthly cost equals entity monthly overhead. For most India mid-market tech salary bands, this is around ten to eighteen employees. Use the Crossover Calculator for your own numbers.
4. Factor in non-financial triggers The maths gives you a headcount threshold. 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 six to ten weeks for entity formation before the first payroll on your own entity. Factor in four to ten weeks extra for bank account opening with a foreign-parented India company. Start the GEMO process while EOR continues running.

## India entity setup: what it actually costs

Forming an India Private Limited Company typically costs between INR 1.5 lakh and INR 6 lakh all-in. The MCA21 filing fee is just INR 1,000 to 5,000 depending on share capital. The gap between that and INR 6 lakh is professional fees, director identification, share structure work, and banking.

Allow typically 4 to 8 weeks from the incorporation decision to your first payroll run. Opening a business bank account for a foreign-parented Indian entity is often the gating step.

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.

| Cost item | Typical range | One-off or recurring |
| --- | --- | --- |
| MCA21 incorporation filing | INR 1,000 to 5,000 (depends on share capital) | One-off |
| Digital Signature Certificates (directors) | INR 2,000 to 6,000 per director | One-off (2-year validity) |
| Memorandum and Articles of Association drafting | INR 10,000 to 50,000 | One-off |
| Company secretary and CA for incorporation | INR 20,000 to 80,000 | One-off |
| Registered office address service | INR 12,000 to 36,000 per year | Recurring |
| PAN, TAN, and GST registration | INR 5,000 to 20,000 (professional fees) | One-off |
| EPF and ESI employer registration | INR 5,000 to 15,000 (professional fees) | One-off |
| Business bank account opening | INR 0 direct (admin time plus delays) | One-off plus monthly fees |
| Employment contracts template and HR policies | INR 20,000 to 80,000 | One-off |
| Shops and Establishments registration (state) | INR 2,000 to 10,000 per state | One-off, renewable |
| **Realistic total setup cost** | **INR 1.5 lakh to 6 lakh** | **Mostly one-off** |

### Why the bank account is the hidden bottleneck

Indian banks apply enhanced due diligence to companies with foreign directors or parent entities. Expect 4 to 10 weeks from account application to activation at most scheduled commercial banks. Delays are longer when the ultimate beneficial owner is not India-resident. This typically turns a 3-week incorporation into a 10-week wait before the first payroll. Plan for it before you set the first payroll date.

## India entity ongoing cost: typically INR 1.8 to 3.5 lakh per month

Running a small India Pvt Ltd typically costs INR 1.8 lakh to 3.5 lakh per month. That covers outsourced payroll, bookkeeping, TDS returns, EPF and ESI filings, professional tax, and HR advisory.

Below around 8 employees, this fixed overhead dominates the per-head cost. Above 20 employees the overhead amortises and the entity starts to look meaningfully cheaper per head.

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.

| Monthly cost item | Typical range | What it covers |
| --- | --- | --- |
| Outsourced bookkeeping and monthly accounts | INR 15,000 to 40,000 | Tally/QuickBooks, monthly P&L, GST reconciliation |
| Payroll service (1 to 20 employees) | INR 10,000 to 30,000 | TDS deduction, payslips, Form 16 prep |
| EPF and ESI administration | INR 5,000 to 15,000 | Monthly ECR filings, challan payments |
| Professional tax filings (state-level) | INR 2,000 to 8,000 | Monthly or quarterly PT returns by state |
| TDS returns (quarterly) | INR 5,000 to 15,000 | Form 24Q, 26Q, corrections amortised monthly |
| Statutory audit and tax filing (amortised) | INR 15,000 to 40,000 | Around INR 1.8L to 4.8L per year divided by 12 |
| Company secretary retainer | INR 10,000 to 30,000 | Board minutes, ROC filings, MCA21 compliance |
| HR advisory and employment law support | INR 10,000 to 30,000 | Contract reviews, policy updates, dispute handling |
| Software subscriptions (HRMS, payroll, accounting) | INR 5,000 to 20,000 | Per-user SaaS licences |
| Insurance amortised | INR 3,000 to 12,000 | Directors and officers plus group health base premiums |
| **Total ongoing monthly** | **INR 1.8 lakh to 3.5 lakh** | **1 to 20 employee Pvt Ltd, metro city** |

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.

## The cost nobody quotes: director liability

India Pvt Ltd directors carry personal duties under the Companies Act 2013. These duties cannot be delegated to advisors or service providers. Late filings attract personal penalties. Repeat defaults can lead to director disqualification.

EOR clients do not carry these duties. Teamed holds them as the legal employer.

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](https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/acts.html), 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-7A)**: 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)**: annually by 30 September. 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 at 12% to 25% per year on the amount due.
- **[TDS deposit](/country-hiring-guides/india/tax-and-payroll)**: by the 7th of the following month. Interest plus penalties run to 3% per month on delay.
- **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.

## When you should stay on EOR

Below around 8 employees, with project-based hires, or while you are still validating the India market, EOR is the right answer. The crossover is a maths threshold. It is not a strategic verdict.

Reversibility matters. Entity setup in India is sticky. Winding down a Pvt Ltd requires a formal strike-off or liquidation process. EOR exit is straightforward.

- **Under 8 India employees on mid-market salaries**: 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.

## When you should switch to your own entity

Above around 15 employees consistently, with a multi-year India plan, or with ESOP scheme needs, your own entity beats EOR on cost. It also unlocks capabilities the EOR structure cannot provide.

The single biggest structural pull for India is the Employee Stock Option Plan (ESOP). Indian Pvt Ltd ESOPs are governed by Companies Act 2013 and have tax advantages that are not available when the employer of record is a third-party EOR entity.

- **Sustained headcount above 15 India employees** at mid-market salaries: 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.

## How Teamed's Graduation Model handles the transition

Teamed graduates customers from EOR to their own India entity on the same platform. Same India specialist. Same employment contracts, novated to the new entity. No break in employee tenure or benefits.

Most providers treat graduation as a re-onboarding event. Employees re-sign and sometimes lose continuous service. Teamed treats it as a stage of the employment lifecycle.

The technical mechanic is **contract novation**: the employment contract transfers from the Teamed partner entity 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](/entity-management), typically 6 to 10 weeks 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.

## How does Teamed handle India employment 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.

Payroll, benefits, and the full India employment law stack run on **one platform**.

**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, itemised** on every invoice. You see the EPF line at 12%, the annual leave accrual at 18 days, and every other India statutory line. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the month the model flips. Start from the India hiring overview. Key sources: [Ministry of Corporate Affairs](https://www.mca.gov.in/) and [EPFO employer portal](https://www.epfindia.gov.in/).

## Frequently asked questions

At what headcount does an EOR stop being cheaper than an India entity?

The crossover typically lands at around ten to eighteen India employees at mid-market tech salaries. Below that, the EOR fee (from $599 per employee per month) is cheaper than the typical entity overhead of INR 1.8 lakh to 3.5 lakh per month. Above it, the entity overhead amortises and per-employee cost falls below the EOR fee. Use the Crossover Calculator to run your own salary band.

How much does it cost to set up an India Private Limited Company?

Typically INR 1.5 lakh to 6 lakh all-in. The MCA21 filing fee is just INR 1,000 to 5,000. The rest is professional fees: company secretary, CA, digital signature certificates for directors, EPF and ESI registrations, employment contracts, and bank account opening costs. The range varies with how much you outsource and how much corporate substance your structure needs.

How long does it take to set up an India entity and run the first payroll?

Typically six to ten weeks from the incorporation decision to first payroll if you go through a CA firm or Teamed GEMO. The business bank account is the gating step for foreign-parented companies. Allow four to ten weeks for a current account to open at a scheduled commercial bank. Indian banks apply enhanced due diligence when the ultimate beneficial owner is not India-resident.

Can an EOR issue ESOPs on my behalf in India?

No. Employee Stock Option Plans under the Companies Act 2013 must be issued by the direct employer, which must be a locally-incorporated entity. ESOPs from your India Pvt Ltd carry tax advantages for employees that are not available when the employer of record is a third-party entity. If your India team expects equity compensation, that is a structural reason to incorporate your own Pvt Ltd even if the headcount crossover has not been reached.

What EPF contribution rate applies on both sides of the comparison?

EPF employer contribution is 12% of the employee's basic salary and dearness allowance. This rate applies whether you employ via EOR or your own entity. India does not have a separate statutory pension employer rate: the EPF contribution covers both the provident fund and the embedded Employee Pension Scheme. The current EPF wage ceiling of INR 15,000 per month is under Supreme Court review and may increase in 2026.

What is Teamed's Graduation Model for India?

Teamed graduates customers from EOR to their own India Pvt Ltd on the same platform. Employment contracts are novated to the new entity on a single date. Salary, EPF contributions, annual leave entitlement, and continuous service date all carry over unchanged. Teamed handles the Pvt Ltd formation through GEMO, completes EPF employer registration, and migrates benefits without any lapse.

Teamed Legal Operations

The India Pvt Ltd formation is only two to three weeks on paper. The bank account is where the timeline lives. We see foreign-parented companies wait eight to twelve weeks for a current account to open. If you start the GEMO process at the crossover point, your first own-entity payroll is three months away, not six weeks. Plan for the bank, not the MCA.

A note from Tom Price-Daniel

EOR is the right answer up to the crossover. Around ten to eighteen employees at India mid-market tech salaries.  
Past that, your Pvt Ltd in Bengaluru costs INR 1.5 to 6 lakh to set up. The bank account takes longer than anyone quotes.  
When the maths flips, we tell you and move you across. That is the only honest version of this.

Tom Price-Daniel · Co-founder, Teamed

## Related India guides

- Hiring in India, overviewparent
- [India employer cost breakdown](/country-hiring-guides/india/cost-breakdown)sibling
- [India tax and payroll guide](/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
- The Graduation Modelcore
- [Entity Management (GEMO)](/entity-management)core
- [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator/india)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 Corporate Affairs (mca.gov.in) and the Employees Provident Fund Organisation (epfindia.gov.in) before relying on any specific framework. Entity setup cost ranges and ongoing cost ranges in this guide are typical market figures based on professional services pricing in Indian metro cities. They are illustrative only and not law figures. Rates cited (EPF employer contribution) are verified figures from EPFO and MCS Online sources. The EPF wage ceiling is currently under Supreme Court review as of 2026 and may change.