4.6.2.1 Residential Status
A foreign national deputed to work in India normally attains the status of a Resident but Not Ordinarily Residents ( NOR ). This status generally runs for 2-3 years from the initial year the person comes to India . Furthermore , where the stay of such a person gets restricted to less than 182 days in India during a particular tax year , in normal course such person would get classified as a non resident .
As long as one retains the status of NOR or non resident , he will not be required to report his global income in India except that as is earned in India .
4.6.2.2 Taxability under DTAA
India has signed DTAA with virtually most developed countries and many developing countries . Provisions of DTAA have an inherent advantage that they override domestic law provisions i . e . the expatriate may choose to be governed by DTAA provisions if found more favorable compared to domestic law provisions .
4.6.2.3 Taxable Income
Remuneration received that is attributable to services rendered in India is taxable in India . Any holiday period which precedes or succeeds the period of service in India , is considered part of the service contract of employment for India . Let us examine some components of remuneration and their taxability
( i ) Basic salary , hardship allowance and bonus are fully taxable in India .
( ii ) Perquisites - Perquisites like free accommodation , provision of car , club facilities , leave travel allowance are subject to income tax in the hands of the employee as per prescribed values .
4.6.2.4 Rates of Individual Taxation
Personal tax rates are on a slab rate basis , the highest slab rate and that which normally effects expatriate is 30 percent on taxable remuneration .
Rate of Taxes - Individual
Figure 18
Income Slab ( Rs ) Rate of tax ( per cent ) Upto 2,00,000 2,00,001 to 500,000 10 500,001 to 10,00,000 20 Above 10,00,001 30
3 For individual earning upto ` 500,000 , tax rebate allowed effectively enhancing threshold from ` 200,000 to ` 220,000 Besides , there is a surcharge at 10 per cent in case income exceeds `10 million and education cess at 3 per cent of the tax payable . Effectively , personal tax rate in India is 33.99 per cent for financial year 2013-14 .
Nil
38