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Contractor of Record in India
Engage and pay Indian contractors through Aniday's partner entity in India
Under a Contractor of Record (COR) arrangement, Aniday's partner entity in India becomes the contracting party with your independent contractor. We run the classification check against the Indian control and integration tests, sign a compliant contract for service, deduct and deposit the TDS an Indian payer owes, collect the PAN, GST and IP paperwork, and pay in INR — while your contractor keeps working directly with your team. You get the talent without an Indian entity, and without the misclassification risk sitting on your books.
Not sure whether the role is a contractor or an employee? Compare with Employer of Record in India for full-time hires — we tell you which one applies before you sign anything.
India's employment Snapshot
What is a Contractor of Record in India?
India has no single statute that defines an independent contractor. The Supreme Court decides who is an employee by looking at control and supervision, how far the person is integrated into the business, and the economic reality of the arrangement; a contractor is governed by the Indian Contract Act 1872, not the labour codes. A Contractor of Record is an Indian company — Aniday's partner entity in India — that signs the contract for service with the contractor on your behalf, so the contractor is engaged by an Indian counterparty that deducts the right TDS, keeps the records the Income Tax Department expects, and carries the classification liability.
COR is the right fit for genuinely independent work: project-based developers, part-time advisers, fractional roles and consultants who set their own hours and serve other clients. If the role is full-time, supervised and permanent, it is employment under the four labour codes — use Employer of Record in India instead. We tell you which one applies before you sign anything.
Aniday in India — through our in-country partner entity
Our Address: Express Towers, Nariman Point, Mumbai, Maharashtra, India
(contracting party, payer, TDS deductor, compliance owner)
What Aniday's Contractor of Record covers in India
Everything between "we found the person" and "the person has been paid, on time, with the right paperwork".
Classification check against the Indian control and integration tests
Before onboarding we assess who controls the work, whether the person is integrated into your organisation, who bears the economic risk and whether they serve other clients — the factors Indian courts use. If the answer is "employee", we say so and route the role to EOR.
A compliant contract for service, signed by our Indian partner entity
Scope, deliverables, fees, confidentiality, non-exclusivity and a written IP assignment — because under the Copyright Act 1957 the author stays first owner of most commissioned work, and section 19 requires any assignment to be in writing.
Invoicing and payment in INR, one invoice to you
One invoice from Aniday to you in USD or SGD; NEFT/IMPS transfer in rupees to the contractor on the agreed cycle. The contractor never has to chase a FIRC, a purpose code or an RBI realisation deadline, because the payment is domestic.
TDS deducted, deposited and certified
An Indian payer must deduct tax at source on professional fees (10%) or technical fees (2%) above ₹50,000 a year. Our partner entity deducts it, deposits it, files the quarterly TDS return and issues Form 16A, so the contractor gets full credit on their own return.
Misclassification liability sits with Aniday
If a contractor engaged under our COR is later found to be an employee, the provident fund and ESI arrears, gratuity and Code on Wages claims are our problem to resolve, not yours — that is what the fee pays for.
Convert to an employee when the role grows
When a contractor becomes full-time, we move them onto an employment contract under our India EOR with PF, ESI, gratuity and statutory leave — same contact, same platform.
Contractor rules in India at a glance
The facts that decide whether a contractor engagement in India is clean. All figures are the current rules as of September 2026; sources are listed below the table.
| Topic | India rule |
|---|---|
| Employee vs contractor | No statutory definition of "independent contractor". Courts apply the control and supervision test, the integration test and a multi-factor economic-reality test. The four labour codes (in force from 21 November 2025) define a gig worker as someone who earns outside a traditional employer–employee relationship; the Social Security (Central) Rules 2026 put the levy and e-Shram duties on platform aggregators, not on a client engaging a professional directly. |
| Who can be a contractor | Indian residents with a PAN. A PAN is mandatory — without one the payer must deduct tax at 20%. Foreign nationals working in India need an Employment Visa tied to an employer; for them the route is EOR with a work visa. |
| Income tax | Contractors report business or professional income at the new-regime slabs (nil to ₹4 lakh, 30% above ₹24 lakh; the section 87A rebate makes income up to ₹12 lakh tax-free). Eligible professionals can use the presumptive scheme (old s.44ADA, now s.58 of the Income-tax Act 2025): 50% of gross receipts deemed income, up to ₹75 lakh if at least 95% of receipts are digital (₹50 lakh otherwise). Businesses use s.44AD on the same logic. Advance tax is due quarterly. |
| Withholding on the payer | An Indian payer deducts TDS on professional fees at 10% and technical fees at 2% once payments to a person exceed ₹50,000 in a year (old s.194J, now s.393 of the Income-tax Act 2025); contract work under old s.194C at 1% (individuals) or 2% above ₹30,000 per contract or ₹1 lakh a year. A foreign payer with no Indian presence does not deduct TDS. Under COR our partner entity is the deductor and issues Form 16A. |
| GST | 18% on most services. Registration is compulsory once aggregate turnover exceeds ₹20 lakh (₹10 lakh in special-category states). Export of services to a foreign client is zero-rated under a Letter of Undertaking (LUT); a supply to our Indian partner entity is a domestic supply, so a registered contractor charges 18% and we take the input credit. E-invoicing applies only above ₹5 crore turnover. |
| Social security | No employer PF or ESI for contractors. Self-employed people can contribute voluntarily to the National Pension System (NPS), the Atal Pension Yojana or PPF. Gig and platform workers register on e-Shram under the Code on Social Security 2020; the aggregator contribution applies to platforms. |
| Intellectual property | Copyright Act 1957 s.17: the author is first owner. Only commissioned photographs, paintings, portraits, engravings and films made for valuable consideration pass to the commissioner by default (s.17(b)); software, text, designs and everything else stay with the contractor unless assigned. An assignment must be in writing (s.19) — Aniday's contract includes one that flows the rights to you. |
| Invoicing | No prescribed format for unregistered persons; GST-registered contractors must issue tax invoices with GSTIN, HSN/SAC code and place of supply. Contractors who invoice foreign clients directly need an FIRC or e-FIRA from their bank with the right RBI purpose code (P0802 for software consultancy, P1006 for business consulting) and must realise proceeds within the period FEMA prescribes. Under COR the contractor invoices our Indian entity in INR and none of that applies. |
| Currency and payment | INR is not freely convertible; FEMA governs inward remittances. Direct payment from abroad arrives by SWIFT, Wise, Payoneer or PayPal (PayPal auto-withdraws to INR). Under COR the contractor is paid in rupees by NEFT/IMPS/RTGS from our partner entity; you pay one Aniday invoice in USD or SGD. |
| Data protection | Digital Personal Data Protection Act 2023; DPDP Rules notified 14 November 2025 with phased commencement — consent, notice, breach-reporting and cross-border duties become enforceable on 14 May 2027. Aniday's partner entity is the data fiduciary for contractor data it collects. |
| If it goes wrong | Reclassification exposes the hirer to provident fund and ESI arrears with interest and damages, gratuity, leave and notice claims and penalties under the Code on Wages and Code on Social Security. A foreign company also risks a permanent establishment: a "dependent agent" PE if the contractor habitually concludes contracts on its behalf, and a "service PE" under many Indian treaties if services are furnished in India beyond the treaty's day-count threshold. |
Sources. TDS sections, thresholds, slabs and the presumptive scheme from the Income Tax Department (Income-tax Act 2025, in force 1 April 2026); GST registration, LUT and e-invoicing rules from CBIC; FEMA export-of-services and purpose-code rules from the Reserve Bank of India; labour codes and the Social Security (Central) Rules 2026 from the Ministry of Labour and Employment; Copyright Act 1957 s.17 and s.19 from India Code; DPDP Rules 2025 from MeitY. Last verified 2026-09.
How Contractor of Record works in India
Three steps take you from "we want to engage this person" to the contractor's first payment.
Status check and contract
We test scope, hours, supervision and exclusivity against the Indian control and integration tests to confirm COR is the right vehicle, then Aniday's partner entity in India signs the contract for service with the contractor covering deliverables, fees, confidentiality, written IP assignment, data-handling and termination terms.
Onboarding and paperwork
We onboard the contractor: PAN and Aadhaar-based identity check, GST status, bank details and the TDS classification (professional vs technical), all filed into a compliance pack you can hand to your auditors.
Work, invoicing and payment
The contractor works with your team, and approved invoices or timesheets roll into a single Aniday invoice to you. The contractor is paid in INR on the agreed cycle, TDS is deposited and Form 16A issued each quarter, and payment records are kept for the tax authorities and for you.
COR, EOR or contractor management software — which one in India?
| Contractor of Record | Employer of Record | Contractor management software | |
|---|---|---|---|
| Who is the counterparty | Aniday's partner entity in India contracts with the contractor | Aniday's partner entity in India employs the person | You contract directly from abroad; the tool only handles documents and payouts |
| Best for | Project work, part-time specialists, advisers, fractional roles | Full-time, supervised, ongoing roles | Companies that already have counsel, an entity or a risk appetite for classification |
| Classification risk | Assessed by Aniday; liability carried by Aniday | None — the person is an employee | Stays with you |
| TDS, PF, ESI, gratuity | TDS deducted and certified by our partner entity; no PF/ESI for contractors | PF, ESI, gratuity, statutory leave and TDS on salary handled | No TDS (foreign payer); contractor sorts GST, FIRC and advance tax alone |
| Convert later | Contractor → EOR employee in days | — | Manual |
🇮🇳 FAQs about Contractor of Record in India
Can I hire a contractor in India without a local company?
Yes. A foreign company can contract directly with an Indian resident, and no TDS applies because the payer has no Indian presence — but the contractor is then left to handle GST registration, the LUT, FIRC paperwork and FEMA realisation deadlines alone, and you carry the classification, IP and PE exposure. Under Aniday's Contractor of Record, Aniday's partner entity in India is the contracting party, so you need no Indian entity and the compliance sits with an Indian company.
Is TDS deducted when the contractor is paid?
Yes, because the payer is an Indian entity. Professional fees attract 10% and fees for technical services 2% once payments exceed ₹50,000 in a financial year (old section 194J, now section 393 of the Income-tax Act 2025); a contractor without a PAN is deducted at 20%. The deducted tax is deposited against the contractor's PAN and certified on Form 16A, so it is a credit on their own return, not an extra cost. We classify each engagement as professional or technical at onboarding.
Does the contractor need to register for GST and charge 18%?
Only once their aggregate turnover crosses ₹20 lakh a year (₹10 lakh in special-category states). Below that they invoice without GST. A registered contractor invoicing our Indian partner entity charges 18%, which we recover as input credit — it is not passed to you as a cost. Zero-rating under a Letter of Undertaking applies only when the contractor exports services to a foreign client directly.
Who owns the code or content my Indian contractor produces?
Without a written assignment, the contractor does. Section 17 of the Copyright Act 1957 makes the author the first owner; only commissioned photographs, paintings, portraits, engravings and films pass to the person who paid for them by default. Software, documents and designs do not. Section 19 requires an assignment to be in writing, signed, and to identify the work and the rights. Aniday's contract for service includes that assignment and a licence for the contractor's pre-existing materials, so ownership is settled before the first deliverable.
What happens if the contractor is found to be an employee?
The hirer faces provident fund and ESI arrears with interest and damages, gratuity, statutory leave and notice claims, and penalties under the Code on Wages and the Code on Social Security. A foreign hirer can also be found to have a permanent establishment in India. Under our COR that exposure sits with Aniday's partner entity as the contracting party — and our classification assessment is designed to stop the engagement being set up that way in the first place.
Do the new labour codes or the gig-worker rules apply to my contractor?
The four labour codes took effect on 21 November 2025. The Code on Social Security 2020 defines gig and platform workers and the Social Security (Central) Rules 2026 (notified 8 May 2026) require platform aggregators to register workers on e-Shram and pay a contribution. Those duties fall on aggregators such as delivery and ride-hail platforms, not on a client engaging a professional directly. What matters for your contractor is the classification test — if the person is really an employee, the codes' PF, ESI and wage protections apply regardless of what the contract says.
How is the contractor paid, and how fast can Aniday set one up in India?
In rupees, by NEFT, IMPS or RTGS from our Indian partner entity, net of TDS, on the cycle set in the contract — monthly is standard, milestone-based is common for project work. You pay one Aniday invoice in USD or SGD. Set-up typically takes 3–7 business days from the classification assessment to a signed contract, provided the contractor's PAN, GST status and bank details are ready.
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