To bring in a clear understanding and as a supplement to my blog on expatriate taxation http://ssaravanan-vvu.blogspot.in/2012/07/expatriates-taxation-in-india.html, I have tried to demonstrate here a calculation of expatriate taxation and then finally calculate his / her take home salary in India.
Assumptions
- The expatriate is first time in India and hence he is considered a Non Resident for tax purposes
- His income is split into two parts
- Salary paid by overseas parent for services rendered in India- USD 50,000 per annum
- Income paid by Indian company for services rendered in India - INR 5,000,000 per annum
- He has been given the following perquisites in India
- Furnished housing
- One Motor Car with Driver
- Indian company pays school fees for his children
- Indian company pays for maintenance of the house & domestic help
- The country from which the expatriate is based does not have a Social Security Agreement (SSA) with India, and hence Providend Fund (PF) has to be deducted @12% on both International & Indian salary (effective from 1.10.2008)
- No Other Income for this expatriate in India
- No Other tax savings in India other than 80C
- No Sweat Equity or ESOP
The tax calculation will be as below for the expatriate
Calculation of perquisites
Calculation of Take Home Salary in India is as below
This is a simplified example of expatriate tax and his / her take home salary, but in practice there will be more complicated scenarios which need to be handled according to the relevant laws prevailing at that time
