Payroll Services for Australian Companies in India
Australia and India share a rapidly growing economic relationship, bolstered by the India-Australia Economic Cooperation and Trade Agreement (ECTA) that entered into force on December 29, 2022. Bilateral trade has expanded to USD 24 billion, with Australian companies investing across technology, mining, financial services, education, and professional services sectors. Major Australian companies including BHP, Rio Tinto, Atlassian, Canva, Telstra, ANZ, and Macquarie Group have established or expanded their Indian operations.
For every Australian company with employees in India — whether through a Wholly Owned Subsidiary (WOS), Branch Office, Liaison Office, or Joint Venture — payroll processing must comply with India's comprehensive statutory framework. This includes mandatory contributions to the Employees' Provident Fund (EPF), Employees' State Insurance (ESI), Professional Tax deductions, and Tax Deducted at Source (TDS) on salaries under the Income Tax Act.
India's Labour Codes, effective from November 2025, have fundamentally changed salary structuring requirements. Basic pay plus dearness allowance must now constitute at least 50% of CTC, and fixed-term employees qualify for gratuity after just 1 year of service. These changes directly impact how Australian subsidiaries structure compensation packages and calculate employer contribution costs for their Indian workforce.
BeaconFiling provides comprehensive payroll services tailored for Australian subsidiaries in India, ensuring full compliance with Indian statutory requirements while delivering payroll reports in formats aligned with Australian corporate reporting standards.
How Australia's DTAA Affects Payroll
The India-Australia Double Taxation Avoidance Agreement (DTAA), signed on July 25, 1991, establishes the framework for managing cross-border taxation between the two countries. The DTAA rates are generally set at 15% for dividends and interest, and 10-15% for royalties and fees for technical services.
Key DTAA provisions that affect payroll include:
- Employment Income (Article 15): Salaries paid to Australian nationals working in India are taxable in India. However, if an Australian employee is present in India for fewer than 183 days in the Australian fiscal year (July 1 - June 30), the salary is not borne by an Indian establishment, and the employer is not an Indian entity, the salary may remain taxable only in Australia
- Fees for Technical Services (Article 12): Intercompany salary recharges from the Australian parent to the Indian subsidiary are typically classified as FTS. The withholding tax is capped at 10-15% under the DTAA, depending on the nature of the service, compared to India's domestic rate of 20%
- Social Security Agreement: India and Australia have a bilateral Social Security Agreement (SSA) that prevents double social security contributions. Australian employees on assignments in India (up to 5 years) can remain covered under Australia's superannuation system and are exempt from contributing to India's EPF, provided they obtain a Certificate of Coverage from Services Australia (formerly Centrelink)
- Permanent Establishment (PE) Risk: The growing use of remote work arrangements post-pandemic means Australian companies must carefully assess whether their Indian employees or contractors could create an unintended PE, which would trigger corporate tax obligations in India
The India-Australia ECTA further supports business operations by reducing tariffs and facilitating services trade, including professional services — which can benefit Australian companies that deploy professionals between the two countries. For a comprehensive overview, see our guide on the India-Australia DTAA.
Document Requirements from Australia
Australia is a member of the Hague Apostille Convention, meaning Australian documents can be authenticated with an Apostille stamp from the Department of Foreign Affairs and Trade (DFAT), rather than requiring embassy attestation. For a comparison, see our guide on Apostille vs. Embassy Attestation.
To set up payroll services for an Australian subsidiary in India, the following documents are typically required:
From the Australian Parent Company
- Certificate of Registration from the Australian Securities and Investments Commission (ASIC) — apostilled by DFAT
- Board Resolution (Directors' Resolution) authorizing the engagement of Indian payroll services — notarized and apostilled
- Intercompany secondment or assignment agreements for expatriate employees — detailing salary split, cost-sharing, and superannuation arrangements
- Certificate of Coverage from Services Australia (for SSA-exempt employees)
- Power of Attorney authorizing an Indian representative to act on payroll and tax matters — notarized and apostilled
- Compensation structure mapping between Australian salary packaging (including superannuation, salary sacrifice) and Indian statutory requirements
From the Indian Subsidiary
- Certificate of Incorporation issued by the RoC
- PAN and TAN cards of the company
- GST registration certificate (if applicable)
- EPF establishment code and ESI registration number
- Professional Tax registration certificate
- Bank authorization letter for salary disbursement
- Employee PAN cards, Aadhaar numbers, and bank account details
Step-by-Step Payroll Process
Setting up and running payroll for an Australian subsidiary in India follows a structured process from registration through ongoing compliance:
Step 1: Statutory Registrations
Complete all mandatory registrations before the first payroll run: PAN and TAN (auto-generated via SPICe+ incorporation), EPF registration with EPFO (mandatory for 20+ employees), ESI registration with ESIC (mandatory for 10+ employees with any employee earning below INR 21,000 gross monthly), and Professional Tax registration in each state where employees are located. Given that many Australian tech companies have offices in Bangalore, Hyderabad, and Pune, multi-state PT registration is common.
Step 2: Salary Structure Design
Design an India-compliant salary structure meeting the Labour Code requirement of basic pay + DA being at least 50% of CTC. Australian companies must translate their salary packaging model — which typically includes base salary, superannuation guarantee (11.5% in 2025-26), salary sacrifice components, and fringe benefits — into India's multi-component structure: Basic Salary, HRA, Special Allowance, LTA, medical benefits, and statutory contributions. For Australian expats, factor in LAFHA (Living Away From Home Allowance), relocation allowances, and home leave provisions.
Step 3: Monthly Payroll Processing
Process payroll by the last working day of each month. Note that India follows a monthly pay cycle, unlike Australia where fortnightly pay is common. Compute gross salary, apply statutory deductions — EPF employee share (12% of basic), ESI employee share (0.75% of gross for eligible employees), TDS on salary based on declared investments, and Professional Tax per state slabs. Generate payslips and cost reports compatible with Australian parent company reporting.
Step 4: EPF and ESI Contributions
Deposit employer and employee EPF contributions by the 15th of the following month. Employer EPF is 12% of basic (split: 3.67% to EPF, 8.33% to EPS capped at INR 1,250). ESI employer contribution is 3.25%, employee is 0.75% of gross. File monthly ECR with EPFO and contribution returns with ESIC. For Australian expats holding a Certificate of Coverage under the India-Australia SSA, document the EPF exemption properly — these employees continue contributing to Australian superannuation instead.
Step 5: TDS Deposit and Quarterly Returns
Deposit salary TDS by the 7th of the following month via Challan 281. File quarterly TDS returns (Form 24Q). For intercompany salary recharges from the Australian parent, apply the DTAA withholding rate of 10-15% on FTS instead of the domestic 20%. Ensure the Australian entity provides a Tax Residency Certificate (TRC) from the Australian Taxation Office (ATO) and file Form 10F on the Indian tax portal.
Step 6: Annual Compliance
Issue Form 16 to all employees by June 15. Note the financial year mismatch — India follows April-March while Australia follows July-June, requiring careful reconciliation for intercompany reporting. File Q4 Form 24Q with the annual salary annexure. Process full and final settlements for departing employees. File the annual FEMA FLA return with RBI by July 15.
Timeline and Costs for Australian Companies
The typical timeline and cost structure for payroll services for an Australian subsidiary in India:
| Activity | Timeline | Approximate Cost (Annual) |
|---|---|---|
| Statutory registrations (PAN, TAN, EPF, ESI, PT) | 2-4 weeks | INR 15,000-30,000 (one-time) |
| Salary structure design and system setup | 1-2 weeks | INR 10,000-25,000 (one-time) |
| Monthly payroll processing (up to 50 employees) | Monthly by last working day | INR 10,000-30,000 per month |
| EPF/ESI monthly contributions and filings | By 15th of each month | Included in payroll processing |
| TDS deposit and quarterly Form 24Q filing | 7th of each month / quarterly | INR 5,000-10,000 per quarter |
| Form 16 generation and distribution | By June 15 annually | INR 5,000-15,000 (annual) |
| Expat payroll management (per expat) | Ongoing | INR 5,000-15,000 per expat per month |
| Full and final settlement processing | Within 2 days of exit | INR 2,000-5,000 per exit |
| Annual payroll reconciliation and reporting | April-May | INR 10,000-25,000 |
Total annual payroll management costs for a typical Australian subsidiary with 30-50 employees in India range from INR 2,50,000 to INR 6,00,000, depending on workforce size, expatriate count, and complexity of intercompany arrangements. For more context, see our blog on Payroll Costs for Foreign Subsidiaries in India.
Common Challenges for Australian Companies
Based on our experience serving Australian clients, here are the most frequent payroll challenges encountered by Australian subsidiaries in India:
1. Financial Year Mismatch
Australia's financial year runs from July 1 to June 30, while India's runs from April 1 to March 31. This three-month offset creates challenges for intercompany reporting, transfer pricing documentation, and annual payroll reconciliation. Australian parent companies need Indian payroll data for their July-June financial year, which straddles two Indian financial years. BeaconFiling provides dual-period reporting to address this mismatch.
2. Superannuation vs. EPF Coordination
Australia's mandatory superannuation guarantee (currently 11.5% of ordinary time earnings) is conceptually similar to India's EPF but differs significantly in structure and administration. While the India-Australia SSA prevents double contributions, Australian companies must understand that EPF contributions are calculated on basic salary only (not total earnings like superannuation), the employer contribution is 12% (split between EPF and EPS), and the employee also contributes 12%. For Australian expats exempt from EPF under the SSA, the company must maintain proper documentation and continue making superannuation contributions to a complying Australian fund.
3. Pay Frequency Transition
Most Australian companies pay employees fortnightly (every two weeks), while India universally follows a monthly pay cycle. This transition can create confusion for Australian HR teams managing the Indian subsidiary's payroll, particularly around cash flow planning, leave accrual calculations, and statutory contribution timelines. All Indian statutory deadlines — EPF/ESI by the 15th, TDS by the 7th — are based on the monthly cycle.
4. Remote Work and PE Risk
Many Australian technology companies — including Atlassian, Canva, and numerous startups — have embraced remote and hybrid work models. If Australian employees work remotely from India for extended periods, this may create a PE risk under the India-Australia DTAA. Similarly, Indian employees working for the Australian parent may trigger compliance obligations. Australian companies must carefully assess the tax and payroll implications of cross-border remote work arrangements.
5. ECTA Benefits and Professional Mobility
The India-Australia ECTA includes provisions for the movement of professionals and recognition of qualifications. While this facilitates easier deployment of staff between the two countries, it also requires careful payroll planning — including determining tax residency status, applying the correct DTAA provisions, and coordinating social security obligations when professionals move between Australian and Indian locations.
Why Choose BeaconFiling
BeaconFiling has deep expertise in providing payroll services to Australian companies operating in India. Our team understands both the Indian regulatory framework and the reporting standards expected by Australian corporate headquarters. We offer:
- End-to-end monthly payroll processing with Labour Code-compliant salary structuring
- EPF and ESI registration, monthly contributions, and return filing
- TDS computation, deposit, quarterly Form 24Q filing, and annual Form 16 issuance
- Expatriate payroll management with India-Australia SSA compliance and superannuation coordination
- DTAA-optimized withholding on intercompany salary recharges
- Dual financial year reporting to bridge the India (Apr-Mar) and Australia (Jul-Jun) mismatch
- Multi-state Professional Tax registration and compliance
- Dedicated support for annual compliance management
Whether your Australian company is a large mining corporation with operations across India or a fast-growing tech company with a development center in Bangalore, BeaconFiling ensures your payroll is accurate, compliant, and aligned with both Indian laws and Australian reporting requirements. Learn more about how we serve companies from Australia on our Australia country page.