India

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate Progressive tax rate – 0 to 30%. Plus surcharge at 10% of tax if income exceeds INR 5 million and 15% of tax if income exceeds INR 10 million and health and education cess of 4% of tax and surcharge. Income upto INR 250,000 is not taxable.
Tax period April 1 to March 31
Tax residency / Domicile according to domestic law The residential status of an individual is determined on the basis of number of days of stay in India during a fiscal year April to March. An individual is considered to be “Resident” in India if his stay exceeds 182 days in India in a particular financial year. Further , if his stay exceeds 729 days in the last 7 years and he is a “Resident” in India in atleast 2 out of the 10 preceeding financial years then is residential status would be “Resident and Ordinary Resident”. Else his residential status is “Resident but Not Ordinarily Resident”.
Tax registration A person earning any income in India is required to obtain registration by applying for Permanent Account Number (PAN) (which is a unique identification number in the tax records ) with the tax authorities. PAN is to be quoted on every document that is submitted before the tax authorities in India.
Employment income definition Salary includes any amount received from the employer in the nature of allowances, perquisites, advance and arrears of salary. Perquisites include stock options, rent free / concessional accomodation, car, concessional loan, etc. provided by the employer.
Examples of tax exemption Leave encashment, House Rent Allowance, relocation expenses, gratuity, etc. are exempt subject to certain conditions and upto prescribed limits.
Specific expatriate concession Expatrites from countries with which India has Social Security Agreements are not required to contribute to Social Security (Provident Fund) in India, if such expatriates produce a Certificate of Coverage from the Social Security Organisation in their home country.
Income of board members Sitting fees, remuneration and commission.
Tax returns An individual whose taxable income (from salary and all other sources) during the fiscal year exceeds INR 250,000 is required to file a Return  of Income. The Return of Income for the fiscal April to March is to be filed by July 31 of the subsequent year.
Tax payments The employer is liable to withhold tax on salary at the rates (10 to 30%) applicable to the employee and deposit the same with the Treasury. Thus, entire tax on salary is withheld at source. Where the salary is paid by the Indian employer to the expatriate coming to India, it will withheld taxes. The employee is liable to pay tax on interest income and any other income he earns in India. Entire tax liability is to be discharged before the filing of the Return of Income.
TAX TREATIES
Employment income / income from board members Article 15 / 16 / 17 of the Double Tax Avoidance Agreements between India and other countries.
INTERNATIONAL SOCIAL SECURITY
Cross border employments Expatriates are required to contribute to Indian Social Security (Provident Fund) in case they are working for a organisation to which Provident Fund Regulations apply. Only those expatriates which are from countries with which India has a Social Security Agreement are not required to contribute to Social Security in India.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Not Applicable.
Social Security Cost as % from gross salary and absolute amounts Both the employer and employee are required to contribute  12% of the basic salary and dearness allowance (if paid) to the Provident Fund each month.
IMMIGRATION
Work permit While a person comes to India and if his stay exceeds 180 days then he need to needs to obtain a residential permit from the Foreign Regional Registration Office (FRRO) in India.
Visa The employee should come to India on an Employment visa.
Residency permits / registration certificate Employment Visa and FRRO registration.
Driving license International Driving permit required.
STOCK OPTION PLAN Any stock options received for the period the employee renders service in India will be taxable in India as a perquisite. The trigger for taxability is the allotment of shares. The difference between the value of the shares alloted and the exercise price is the perquisite value.
ARTICLE 15 OF THE OECD MODEL
183 days Stay not to exceed 183 days.
Notion of employer Salary should not be borne an Indian Company.
Existence of a permanent establishment Salary should not be claimed as a deduction while computing profits of a Permanent Establishment in India.
Akram Khan
Partner
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Direct line: 022-61586252
Address: 2nd Floor, Esplanade House, 29 Hazarimal Somani Marg, Fort, Mumbai – 400001, Maharashtra, India
www.mazars.in

Sonalee Godbole
Partner
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Direct line: 022-61586253
Address: 2nd Floor, Esplanade House, 29 Hazarimal Somani Marg, Fort, Mumbai – 400001, Maharashtra, India
www.mazars.in

Urja Mehta
Assistant Manager
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Direct line: 022-61586276
Address: 2nd Floor, Esplanade House, 29 Hazarimal Somani Marg, Fort, Mumbai – 400001, Maharashtra, India
www.mazars.in

Priyanka Jain
Assistant Manager
Send Email
Direct line:022-61586224
Address: 2nd Floor, Esplanade House, 29 Hazarimal Somani Marg, Fort, Mumbai – 400001, Maharashtra, India
www.mazars.in