This article is designed to discuss and highlight broadly some of the tax implications and issues arising in determining the tax liability of expatriates in India. This paper does not address all the issues exhaustively and professional advice must be obtained prior to any decision being made, based on the facts of individual cases.

FISCAL YEAR

The fiscal year in India is from April 1 to March 31.

GENERAL

In India, residents are taxed on their global income whereas non-residents are taxed on their income that is sourced or received in India. Hence, income in India is taxed on the basis of residence and source. The impact of this method of taxation is the possibility of double taxation. Hence, the provisions of Double Tax Avoidance Agreements (DTAA) are utilized, where possible, to minimize or avert the incidence of double taxation.

Salaries or employment income is generally dealt with in the DTAA’s under the Articles relating to ‘Independent Personal Services’ or ‘Dependent Personal Services’.

The total income of a person who is resident in India includes all income from whatever source derived, which is received / accrues in India or which is received / accrues / arises outside India. Hence, a resident is taxed on global income.

The income of a non-resident is that which is received in India, accrues or arises in India or is deemed to accrue or arise in India. Hence, income of a non-resident, arising from his employment or profession in India, other sources of income in India or sale of assets is taxable in India.