4.6.2.5 Payment of Taxes
Tax liability in India can either be discharged through the advance tax mechanism or the tax withholding mechanism . Under the advance tax mechanism , one estimates the entire year ’ s tax liability and deposits through 3 annual installments i . e . September 15th ( 30 per cent ), December 15th ( 30 per cent ) and March 15th ( 40 per cent ). This method applies to freelancers and consultants where the responsibility to ascertain and deposit tax lies with the expatriate .
The tax withholding mechanism applies to expatriate employees where the employer , instead of the expatriate himself , is required to deduct the tax and deposit this into the government treasury on a monthly basis . In India , this is commonly referred to as tax deduction at source or TDS .
4.6.2.6 Tax Reporting In India
Remuneration , as is attributable to and taxable in India during a financial year needs to be reported to the Indian tax authorities through a return of income . This is to be submitted in Form ITR 1 by July 31st of the following financial year .
4.6.2.7 Other Issues A few other issues as may have bearing are
( i ) Visa - An expatriate employed to India needs to secure an employment visa from the Indian High Commission . Change over to another visa type or extending the visa from within India is a difficult process . ( it is not a difficult process )
( ii ) Registration - All foreigners working in India need to do a one time registration with the FRRO . A booklet is then issued by the FRRO . Each state of India has an office of the FRRO which operates under the Ministry of Home Affairs .
( iii ) Exchange Control Norms - Current exchange control norms provides that an expatriate may receive 100 per cent of his salary outside India provided that his income is liable to tax in India as per the provisions of Income Tax Act , 1961 ..
( iv ) End of Deputation - All foreign nationals on work deputation to India are required to obtain a No Objection Certificate ( NOC ) from the Income tax office prior to their departure . This NOC is to be produced at time of immigration .
4.7 Indirect Taxes
Indirect taxes are levied on goods and services and are different from direct taxes which are levied on profits . Indirect taxes are primarily classified into
( i ) Customs duty ( ii ) Excise duty ( iii ) Service tax ( iv ) Central Sales Tax ( CST )/ Value Added Tax ( VAT ) ( v ) Works Contract Tax ( vi ) R & D cess
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