Expatriate tax ebook - India
Facts and figures
Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation
Pre arrival procedures
Expatriates (especially non Indian nationals) who require a work visa must apply for this before taking up employment in India. It is, therefore, important that the expatriate’s employment contract and benefit package are structured tax efficiently before the contract is submitted to the immigration department.
Employment visas
Non Indian nationals coming to India to take up employment should apply for an employment visa or work permit first.
Tax year
The Indian tax year runs from 1 April until 31 March.
Tax returns and compliance
The employer’s reporting obligations are to file a withholding tax return for each quarter as shown below:
| Quarter | Due date |
|---|---|
| April – June | July 15 |
| July – September | October 15 |
| October – December | January 15 |
| January – March | June 15 |
Employers are also required to issue salary certificates to employees.
Employees have to file an individual tax return each year, normally by 31 July.
Failure to comply with requirements can result in penalties and/or interest liability.
Income tax rates
Assesment year 2009 - 2010 (Financial year 2008 - 2009)
Taking the cases of an individual being non-resident and a resident person (but excluding a resident woman) who is below 65 years old, the following rate of income tax applies:
| Taxable income (Rs) | Rate of income tax |
|---|---|
| 0-150,000 | NIL |
| 150,001-300,000 | 10% of the amount by which the total income exceeds Rs. 150,000 (refer note 1) |
| 300,001-500,000 | Rs,15,000 (refer note 2) plus 20% of the amount by which the total income exceeds Rs.300,000 |
| over 500,000 | Rs.55,000 (refer note 3) plus 30% of the amount by which the total income exceeds Rs.500,000 |
Note 1: The maximum amount not chargeable to tax in the case of a resident woman is Rs. 180,000 and in the case of a resident person who is 65 years or more old, it is Rs. 225,000
Note 2: Rs. 12,000 (in the case of a resident woman under 65 years old) and Rs.7500 (in the case of a resident person who is 65 years or more old) to be substituted in place of Rs.15,000.
Note 3: Rs. 52,000 (in the case of a woman who is under sixty five) and Rs. 47,500 (in the case of a resident senior citizen who is over sixty five), to be substituted in place of Rs.55,000
Sample income tax calculation - 2008/2009
| INR | |
|---|---|
| Basic pay | 500,000 |
| Dearness allowances | 50,000 |
| Other allowances | 10,000 |
| Gross salary | 560,000 |
| Less | |
| Profession tax | (2,500) |
| Exempt allowances | |
| (depending on the nature of allowance and subject to satisfaction of necessary conditions, as may be applicable) | (20,000) |
| Taxable income | 537,500 |
| Tax – In case of individual other than resident woman and senior citizen | |
| At first 150000 | nil |
| next 150000 @ 10% | 15,000 |
| next 200000 @ 20% | 40,000 |
| on balance 37,500 @ 30% | 11,250 |
| Tax bill | 66,250 |
| Add : surcharge | nil |
| Add : cess @ 3% | 1,988 |
| Total tax bill INR | 68,238 |
Note : The surcharge @ 10% is applicable only when the total income exceeds Rs. 1,000,000.
Information about India:
Last updated 6 May 2008
This information has been provided by Walker Chandiok Grant Thornton, the Indian member firm within Grant Thornton International Ltd and is for informational purposes only. Neither Walker Chandiok Grant Thornton or Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.
Disclaimer
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