In the last decade, there has been a substantial increase in the number of foreign nationals (expatriates) employed with multinational corporates coming to India for short/long-term assignments. The purpose of these assignments may vary ranging from sharing of technical know-how to implementation of new projects/policies or bringing in leading industry practices. This necessitates adequate preparation in respect of the tax and regulatory framework of the country by such corporates and their employees.
The complexities of the tax system could result in higher tax costs, compliance and double taxation issues in relation to expatriates that need resolution. There is greater vigilance by the tax authorities in India, especially in the case of foreign employees. Further, as per the Indian income tax law, a person may be liable to tax on his global income in India after three to four years of his first arrival in India. This necessitates the need for planning at the initial stage itself.
Key service offerings
- Advise on planning the Indian assignment with respect to its commencement, tenure, etc. to enhance tax benefits
- Providing assistance from tax and regulatory perspective in respect of employment contracts of expatriates.
- Assistance in addressing Indian tax issues keeping in view the prevailing tax laws
- Determine an expatriate’s residential status in India during the period of assignment
- Analyse tax equalisation agreements between the employees and the employer from tax and regulatory perspective
- Analyse taxability of income in the home and host country and advise on the tax impact of the same
- Advise on exemption and tax credit mechanism to determine that income is not doubly taxed under different jurisdictions or appropriate credit for foreign taxes is claimed
- Determine taxability of employer’s and employee’s contributions to retiral benefits of the home country, whether mandatory or otherwise, during the Indian assignment.
- Handhold the expatriate for compliance requirements from their time of entry to their departure from India including tax registration, deregistration, filings, etc.