Expatriate Tax
The personnel of multinational corporations expands outside the borders of their home countries as a result of the globalization of their commercial operations. In order to maximize their potential, these workers—often referred to as “Expatriates”—are recruited into other nations. As a result, the idea of the “Expatriate Tax” was born.
Given its market potential, India has been the favored investment location for international groups looking to expand their commercial activities. As a result, there has been a significant rise in the number of workers or expatriates moving to India for temporary or permanent employment. These assignments may have a variety of goals, such as project implementation or exchanging technical expertise.
This requires sufficient planning and preparation with regard to the Expat tax and regulatory system in India since the mobilization of these employees or expatriates frequently raises major tax and regulatory concerns in front of these multinational corporations.
After three or four years of their initial arrival, the global income of these employees or expatriates may be subject to tax in India, along with the reporting of all assets and liabilities owned or held by employees or expatriates whether in India or outside India. The income earned in India by these employees or expatriates is taxable in India. It is crucial for these workers or expatriates to comprehend the parts of the revenue from employment that are subject to expatriate tax. This calls for the requirement of planning.
By developing plans that are effective and comply with regulations, our team of experts in ex-pat tax helps multinational organizations mobilize their resources.
How does SalahKaro help in regard to Expatriate Tax?
- Planning and advice for the assignment’s structure depending on the particular requirements of the companies;
- Planning and advice on a proper structure so that the risks associated with base erosion profit shifting and permanent establishment can be handled;
- Examining secondment agreements and other legal requirements
- Expat Tax Companies aid businesses in the application process for visas and work permits for their foreign employees in India;
- Assistance from ex-pat tax professionals on cost recharges for such arrangements and secondment agreements from the perspectives of withholding and transfer pricing;
- Providing expatriate tax service with information on a variety of difficulties from the time they arrive in India till the assignment is complete;
- Advice from ex-pat tax experts on several exemptions and benefits that may be available under tax laws and regulations of the Double Taxation Avoidance Agreement;
- Providing ex-pats with guidance on their ability to claim foreign tax credits and the types of paperwork needed to do so in light of applicable tax regulations;
- Helping businesses to register with the tax and other authorities;
- Computation of employees’ withholding taxes and other social security contributions, such as provident funds, on a monthly basis;
- Filing an Indian expat’s income tax return;
- Obtaining an approval letter from the Indian Tax Authorities for ex-pats before they leave India;
- Representation before the tax authorities and litigation support all the way up to the Supreme Court in the event that the income tax return is chosen for audit or inspection.
FREQUENTLY ASKED QUESTIONS
The taxability of an expat’s income is dependent upon his residential status. In case the ex-pat is a ‘resident’ in India as per the income tax law, then the global income of such ex-pat is taxable in India. In case the ex-pat is a ‘non-resident’ or ‘resident but not ordinarily resident’, then in such cases, only the income deemed to be received in India or income deemed to accrue or arise in India shall be taxable.
. While it depends upon the organization’s policies, it is usually noticed that the employees are not well-versed with the taxation laws of the country in which they are working as ex-pat. Therefore, the employers in such cases undertake taxation compliance on behalf of the employees. In India, Form 30A is filed by the employer in case he undertakes to bear all the tax compliances on behalf of the ex-pat employees.
In the case of double taxation, it needs to be examined whether there is a DTAA between the resident country of the ex-pat and India. If there is one, then the ex-pat employee can claim relief as per the provisions of DTAA.
The due date for filing income tax returns of ex-pats (for non-audit cases) is 31st July after the end of the financial year (i.e., 31st March). However, ex-pats are required to intimate about their tax compliances to the Foreigners Regional Registration Office (FRRO). Therefore, the ex-pats shall file their returns within the original due dates unless the FRRO provides an extension along with the extension granted by the income tax department.
