There is always a plenty of hullabaloo around the news of a job opportunity in a new geography. While you may be excited about moving to a new country, and to experience a brand new culture, you may also be grappling with many doubts — What are the legislations in the host country? Or, how things are going to change back home, in terms of taxes and social security?
If you are planning to go out, be aware of the terms and conditions of your employment contract and your company’s global mobility policy well in advance. You may get introduced to new terms such as tax equalisation, hypothetical tax, relocation payouts and benefits, which are important to understand given the monetary impact they may have on you.
A basic research around the tax rates of the host country and the social security regime will be very useful. There is often a misconception with shorter assignments that if the number of days of stay in the host country is less than 182 days, there is no tax liability in that country. This may not always be true and depends on the variety of variable factors, such as place of payment of salary, you and your employer’s residential status in India and the host country, and so on. Remember to file your host country tax return on time. Other than ensuring compliance, this return may also be a ticket to get some tax benefits back home in case your income is getting doubly taxed and may also be required for your visa extension.
Back home, your taxability depends on your residential status, which is linked with your physical presence in India in the relevant financial year. If you are an Indian citizen going abroad for the purpose of employment, you can be a non-resident by spending less than 182 days in the year of departure and can escape from the taxability of your worldwide income. Therefore, manage your physical presence in India by maintaining a travel calendar as a single additional day in India can change your tax bill.
With the new provident fund regulation for international workers in India, it is important to note that you may become an international worker if you are moving to a country with which India has a social security agreement in place, unless you have obtained a Certificate of Coverage.
India has currently entered into social security agreements with