India - Special considerations for short-term assignments
Special considerations for short-term assignments
Taxation of international executives
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.
Residency rules
Are there special residency considerations for short-term assignments?
There are no special residency rules prescribed for short-term assignments. The residency rules discussed in the above sections, hold valid even for an individual on a short-term assignment.
Payroll considerations
Are there special payroll considerations for short-term assignments?
There are no special payroll considerations for short term assignments.
Taxable income
What income will be taxed during short-term assignments?
An individual is taxed in respect of income earned for services rendered in India irrespective of their residential status. However, in case of an individual on a short-term assignment in India, short stay exemption may be claimed in respect of India taxes subject to the fulfillment of the prescribed conditions in the relevant treaty/Domestic tax law.
Additional considerations
Are there any additional considerations that should be considered before initiating a short- term assignment in India?
Depending upon the treaty provisions, short-term assignments can be planned in a manner so as to avail the short stay exemption. However, if presence of an individual in India creates a Permanent Establishment (PE) for the foreign company then the individual may not be entitled to claim short stay exemption in India.
Per Diem allowance granted on tour, to meet ordinary daily living charges may be claimed as exempt to the extent the amount is actually incurred for the said purpose.
Footnote
1. It may be noted that due to COVID-19 pandemic, respective authorities (Taxation / social security / immigration) may provide relaxations and extensions in the statutory requirements from time to time
Disclaimer
All information contained in this publication is summarized by KPMG (Registered), the Indian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on:
- the Income-tax Act, 1961, (‘the Act’) as amended;
- the Income-tax Rules, 1962 (‘the Rules’) as amended;
- the Employees Provident Fund and Miscellaneous Provisions Act, 1952 as amended (‘the PF Act’);
- the Employees’ Provident Funds Scheme, 1952 (“the PF Scheme”) as amended;
- the Employees’ Pension Scheme, 1995 (“the Pension Scheme”) as amended;
- the Employees’ Deposit Linked Insurance Scheme, 1976 (“the EDLIS”) as amended;
- the Employees’ Pension (Third Amendment) Scheme, 2008;
- the Employees’ Provident Fund (Third Amendment) Scheme, 2008;
- the rules and regulations there under the above laws and various other laws and regulations
as amended from time to time, including judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. Any such change, which could also be retroactive, could have an effect on the validity of our comments. Our views are not binding on any authority or court, and so, no assurance is given that a position contrary to that expressed herein will not be asserted by any authority and ultimately sustained by an appellate authority or a court of law.
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