How is recruitment commission calculated in India?
Recruitment commission in India is commonly quoted as a percentage of the candidate's annual CTC, and 8.33% is a frequent figure because it equals one month of a twelve-month year (1/12). It is a market convention, not a legal rate; the percentage is whatever the client and recruiter agree in writing. India, 30 October 2026.
At a glance
- 8.33% x annual CTC = one month's CTC.
- CTC = cost to company, the full yearly cost to the employer. It is higher than the in-hand pay.
- Fee is normally due after the candidate joins, with a replacement period if they leave early.
- Tax (TDS) and GST may apply to your invoice; check with a CA.
How do I calculate 8.33% of CTC?
Fee = annual CTC x fee %.
| Annual CTC | Written as | Fee at 8.33% | Fee at 15% | Fee at 20% |
|---|---|---|---|---|
| Rs 6,00,000 | Rs 6 lakh | Rs 49,980 | Rs 90,000 | Rs 1,20,000 |
| Rs 12,00,000 | Rs 12 lakh | Rs 99,960 | Rs 1,80,000 | Rs 2,40,000 |
| Rs 30,00,000 | Rs 30 lakh | Rs 2,49,900 | Rs 4,50,000 | Rs 6,00,000 |
Example only. Fee percentages other than 8.33% are shown purely to illustrate arithmetic, not as market rates.
Which part of CTC should the fee use?
CTC can include fixed pay, variable pay, employer PF and gratuity. Your agreement should say which: fixed CTC only, or fixed plus variable at target. A fixed-only definition lowers the fee. Example: CTC Rs 12,00,000 where Rs 2,00,000 is variable. Fee on fixed only (Rs 10,00,000) at 8.33% = Rs 83,300. Fee on total CTC = Rs 99,960.
How is a freelancer's share calculated?
When a consultancy shares its fee, the split is theirs to set. Example: consultancy bills Rs 99,960; you receive 50% = Rs 49,980 (before any TDS or GST treatment on your side).
What about replacement and refunds?
Typical terms offer a free replacement or a refund if the candidate leaves within a set number of days (for example 60 or 90). Example: fee Rs 99,960, 90-day clause, prorated refund, candidate leaves on day 30: 99,960 x (90 - 30) / 90 = Rs 66,640. Your own agreement decides whether refund or replacement applies.
Tax and GST
Your income is generally taxable. The client may deduct TDS before paying you, and GST may apply to your invoice depending on turnover and registration. Confirm the section, rate and thresholds with the Income Tax Department and a chartered accountant. As of 2026-10-30 the TDS rate on commission or brokerage is 2% and on professional fees 10% (2% for technical services), under the Income Tax Department chart; the section numbers changed for payments from 1 April 2026.
How is this different from the 8.33% in PF?
The employer's EPS contribution is also 8.33% of wages but is unrelated to recruitment fees. Do not confuse them.
FAQ
Is 8.33% mandatory? No. It is a custom, not a rule.
Is the fee paid on offer or on joining? Normally on joining; confirm in writing.
Can the candidate be charged? Recruiters should not charge candidates.
Does LiveRec take a cut? No.
Next step: use the fee agreement template as a starting point and have an Indian lawyer adapt it.
Related
Sources
- Income Tax Department of India: https://www.incometax.gov.in
- TDS on commission or brokerage and on professional fees: Section 194H commission or brokerage: 2% from 1 October 2024 (5% before); section 194J professional fees: 10% (2% for technical services); for payments on or after 1 April 2026 the Income Tax Department says the old sections 192-194T are consolidated into sections 392 and 393 of the Income-tax Act, 2025, so use the new references on forms (Income Tax Department TDS rates chart: https://www.incometaxindia.gov.in/documents/20117/42998/TDS-Rates_2026-01-20_02-48-40_a44c15_en.pdf/5ced020c-5670-ccab-840c-ab3eb62e8b84, checked 2026-10-30)
- GST on recruitment services: https://www.gst.gov.in GST registration is required for service suppliers above Rs 20 lakh aggregate turnover (Rs 10 lakh in special category states), with exceptions such as reverse charge (CBIC FAQ, https://cbic-gst.gov.in/aces/Documents/faq-on-gst.pdf, checked 2026-10-30; CBIC documents are dated, so confirm the current threshold)
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.