Expatriate Income Tax Return Services
In India, an individual’s income is taxed at graduated rates, depending on his/her residential status in India and income level. Non-employment income is taxed at a variable rate according to income type.
Who is foreign national in India?
Any individual who is not a citizen of India is considered a foreign national.
However, whether a foreign national is liable to pay Indian income tax is dependent on the individual’s physical presence in India, regardless of their citizenship or the purpose of the stay.
According to India’s Income Tax Act (ITA), there are three levels of residency for tax purposes:
• Resident but not ordinarily resident (RNOR)
• Resident and ordinary resident (ROR)
Tax Liability in India
A Resident Ordinary Resident is subject to tax on his global income in India. Resident Not Ordinary Resident and Non-Residents are generally subject to tax in India only in respect of India source income that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India.
Salary received in India or for services provided in India, rental income from a house property in India, capital gains on sale of assets in India — be it shares or house property, income from fixed deposits or savings bank account in India are instances of income which would be taxed in the hands of not just tax residents of India, but also Resident Not Ordinary Resident and Non-Residents.
The Indian tax year runs from April 1 to March 31. Total income tax is calculated in accordance with the tax rates and rules that stand on the first day of April of the assessment year. Income earned in a year is taxable in the next year. The year in which income is earned is known as the financial year, while the next year in which income is taxable is known as the assessment year.
Double Taxation Avoidance Agreements (DTAA)
Most expatriates worry about “double taxation” – paying taxes to two different countries on the same income. A foreign taxpayer working in India may be able to reduce taxable income in their country of primary residence (and double taxation) under a double taxation avoidance agreement.
As a service Octagona can:
• Draft cost-effective, tax-compliant and easy to administer compensation structure
• Payroll tax
• Income Tax Return filing