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
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