Expat Tax Compliance, Under Indian Income Tax Act, 1961

Expat Tax Compliance
An expatriate means a person based in a foreign country working in India (inbound) or a person based in India (likely Indian citizen) working abroad (outbound).

Under Indian Income Tax Act, 1961 (‘ITA’), incidence of tax depends on the residential status of the taxpayer, and the place and time of accrual or receipt of any income.

The income arising on account of employee- employer relationship is taxable as “Salary” and it includes salary, allowances, perquisites, provident fund contributions, income received from previous employers, retirement benefits, salary arrears, profits in lieu of salary, income on termination of employment etc.

Income from salary will be considered as accrued in India if it is earned through services provided within India. This includes the period of rest and leave that is preceded and succeeded by services rendered in India and forms part of contract of employment. If the Recipient is entitled to the benefit of the DTAA with any country, then the provisions of the DTAA will have to be seen for determining the scope of taxation of salary.