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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?
An individual whose stay in India does not exceed 181 days in a particular tax year or 60 days in the relevant tax year and 365 days in the last 4 tax years immediately preceding the relevant tax year, shall be considered as a non-resident in India. Accordingly, they shall be taxable only in respect of income earned for services rendered in India, subject to treaty benefits, if any.
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.
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