# Free Contractor vs Employee Cost Calculator

> Compare the true cost of hiring a contractor versus a full-time employee. Free, no sign-up, by Staff Khata.

An employee costs salary plus employer PF, ESI, bonus, gratuity, leave and benefits. A contractor costs the invoice amount plus 18% GST if they are GST-registered (claimable as input credit for most businesses). You deduct TDS from contractor payments under Section 194C (1% or 2%) or 194J (10% for professional fees). Compare the full monthly cost, not just salary against fee.

## Inputs

- Employee Annual Salary (₹)
- Contractor Monthly Rate (₹)

## Frequently asked questions

### What TDS applies to contractor payments?

Section 194C: 1% for individuals or HUFs and 2% for others, for work contracts. Section 194J: 10% for professional or technical services (2% for technical services and certain other payments).

### Can a long-term contractor be treated as an employee?

If the person works fixed hours under your control like an employee, authorities and courts may treat them as one, making PF, ESI and gratuity payable. Keep genuine contracts for genuine independent work.

Use the calculator: https://staffkhata.com/free-tools/contractor-vs-employee-cost-calculator