Expatriate Taxation
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INCOME TAX FOR FOREIGN NATIONALS / EXPATRIATES IN INDIA
BACKGROUND
Any individual who is not a citizen of India is considered a foreign national. However, whether a foreign national is liable to pay Indian income tax is dependent on the individual’s physical presence in India, regardless of their citizenship or the purpose of the stay.
According to India’s Income Tax Act (ITA), there are three levels of residency for tax purposes:
Non-resident – these individuals are not liable to income tax;
Resident but not Ordinarily Resident (RNOR) – these individuals are taxed on their worldwide income; and
Resident and Ordinary Resident (ROR) - these individuals are tax only on their Indian sourced income.
To qualify as a non-resident, an individual must not stay in India for more than 182 days during a fiscal year (FY), or more than 365 days in four consecutive FYs preceding the relevant FY. Any individual not meeting these conditions becomes a resident for tax purposes either as a ROR or RNOR.
The Indian tax year i.e. Fiscal year (FY) runs from April 1 to March 31. Total income tax is calculated in accordance with the tax rates and rules that stand on the first day of April of the assessment year.
Components of Income
In India, Income is categorised in 5 categories i.e.
Income from Salary
Income from House Property
Income from Business of Profession
Income from Capital Gains
Income from Other Sources
FILING INCOME TAX RETURN
Income tax return has to be filed online. A computation of income will be prepared taking into account the income of the Assessee. Since most of the expatriates are working in India, they will be treated as RESIDENT and worldwide income will be taxable.
The income tax return has to be filed by 31st July for the preceding Fiscal year (FY).
FLOW OF WORK
FLOW OF WORK:
Preparation of Computation of income on the basis of the analysis of:
All bank statements
Form 16: Salary cum TDS certificate
Investment Details,
Rental Income if any,
Income from sale of shares and derivates, if any,
Interest income from Fixed deposits, bonds or any other securities
Analysis of Worldwide income:
To study all the source of income
Tax paid if any along with TIN No.
Income Tax Return Filed
Study of DTAA between India and respective countries to avoid double taxation and take credit of taxes already deducted in home or any other country in terms of provision of DTAA and Indian Income Tax Act
Details of Foreign assets to be prepared being mandatory to be filled up in Income Tax Return Form being Resident of India
Details of Indian Assets and Liabilities to be prepared for persons having income more than 50 lakhs to be filled up in Income Tax Return Form
Filling of Income Tax Return Form
OTHER GLOBAL TAX MOBILITY OFFERINGS:
Planning of assignments, business trips, permanent transfers or local hiring.
Drafting of assignment letters, employment agreements and letters of intent.
(Re)design and (re)implementation of global mobility tax policies.
Assignment Structuring
Planning opportunities, permanent transfers or local hiring.
Advice and implementation of tax savings opportunities e.g. salary split.
Implementation of special tax provisions for minimization of total tax costs.
Tax Planning & Analysis
Analysis of international social security treaties.
Advice and implementation of social security savings opportunities.
Implementation of special provisions for minimization of total social security costs
Social Security Analysis
Analysis of tax treaty provisions, including tax planning opportunities.
Advice on local compliance regulations, including processing for tax payments.
Advice on multi-national taxation of equity remuneration and avoidance of double taxation.
Equity Rewards
Income tax return preparation, including coordination of global tax return preparation.
Expatriation and repatriation meetings in home and host countries.
Tax equalization, assignment costs, hypothetical tax and salary calculations.
Tax Compliance
Analysis of payroll requirements in both home and host country.
Year-end compensation review, including implementation of wage tax savings opportunities.
Advice on processing of expense reimbursement
