Tax Advice
 

Hi All,

Brand new to the forum and to the expat life.

My wife has been offered an International Assignment by her employer based in Gurgaon. We had said it was only viable if we both had employment and so I too have been offered a role, however employed directly by the Indian arm of the company.

They are offering me either a direct permanent contract against which I will pay tax on earnings and PF on 24% of the basic salary. I understand that I can largely write-off the PF as you can't get it back until you are 58 and need to keep a bank account in India etc.

The second choice is to invoice monthly for my hours, pay 10% tax deducted at source by my employer and then complete an Indian Tax return to be assessed on any extra tax.

I am also a director of a web based business in the UK and we will be renting our house so may have to do a tax return anyhow?

My question is simple to ask and hard to answer: Which contract method gives me the most money in hand?

I suspect the answer is speak to a tax consultant and that being the case, can you make a recommendation?

Many thanks,

Gary

Re: Tax Advice
 

Hi Gary....just to say Welcome to the forum :)

I'm not based in India so no help to,you whatsoever. I suspect that Tax consultant would be the correct answer but let's see if any India residents have any ideas.

Re: Tax Advice
 

Hi SnakeGary

I've also just arrived in Gurgaon and am in a similar situation to yours as outlined in your August post (ie being offered the local contract as the "trailing spouse"). I'm wondering what you decided to to in the end, if you got any independent tax advice and in general, how things are going for you.

Any insights you can share with a newbie would be much appreciated.

Thanks

Re: Tax Advice
 

Hi NomadicTribe,

In the end it was clear that paying tax through the employer was best.

I also lucked out and they agreed to extend their tax consultants to me too, at least for the first year.

Suggest you engage with Gurgaon Connections or the Delhi Network (depending on where you are living) and ask about local tax advisors.

If you have not lived in India for the last 7 years but have been in India for 182 days of the tax year then you get classed as resident but not ordinarily resident which means only your Indian income is eligible, as long as you haven't controlled a business from India. Best seek advice.

If you want to send me an email address I would be happy to share my 6 months worth of wisdom on living in Delhi.

G

Re: Tax Advice
 

Hi SnakeGary,

I hope you've figured that this is incorrect:

"I understand that I can largely write-off the PF as you can't get it back until you are 58 and need to keep a bank account in India etc."

You can get back the PF if you leave India. It takes a few months to process your PF account closure and you'll need to have a bank account in India until that happens.

Re: Tax Advice
 

I was not aware, many thanks I will look into it.

What I had said above I had read online so it must be true;).

Gary

Re: Tax Advice
 

Hi Gary,
Trying to private message you but I can't as I don't have more than 3 posts. Are you able to PM me as I have a question for you.

Thanks
Tania

Re: Tax Advice
 

Actually I will try again now as this is the 3rd post.

Re: Tax Advice
 

Unless the rules have changed recently this depends on your home country meeting Indian govt. reciprocity requirements - which the US and UK don't because National Insurance in the UK and Social Security/Medicare (?) in the US aren't funds as such so have no such thing as a refund of 'contributions'.

AndyD 8-)₹

Re: Tax Advice
 

Which was also my original understanding.

You can draw a pension at age 58 but only if you keep a bank account active in India until then.

Re: Tax Advice
 

I am from India and immigrated to Canada 4 years ago (I was only 34 then :)). I applied for "PF account withdrawal" at the time of my relocation and the funds were credited in 3-4 months.

Indeed, Indians don't even need to move out of the country or reach 58 to be able to access their funds. People who lose their jobs and and are unemployed for 2 months can apply to withdraw their PF.

Here are the withdrawal rules:

http://taxguru.in/finance/things-peo...dent-fund.html

"Under the EPF Act, you cannot withdraw the full amount in your provident fund account before the age of superannuation. However, if you suffer permanent and complete disability or are moving abroad to settle, you can withdraw this amount."

Re: Tax Advice
 

On the pf.. For indian residents when u quit a job you have the option to withdraw and it is subject to income tax as per the tax rate applicable to the person since it will be added into income for that year.. Since .. Alternatively you can transfer that to accumulate with pf contributions of ur new employer in india (only tobavoid having to pay tax on it) .. I suspect the first option of withdrawal should be available to anyone .. And as someone has already posted earlier there Amy b a need to have an Indian account for the time it takes to receive and hence would be prudent to plan for that.. They can b show

Re: Tax Advice
 

EPF withdrawal is not taxable if the employee had atleast 5 years of employment in India (5 years of employment don't have to be for the same employer).

If you apply to withdraw with less than 5 years of employment, then the portion of PF balance that corresponds to the employer's contribution and total interest are taxable. Employee's contribution which was claimed as income deductions under section 80C is also taxable.

Re: Tax Advice
 

Economic Times Article
IWs [International Workers] from non SSA countries [UK, US, Canada are non SSA] will need to wait till the age of 58 before they can withdraw the PF amount lying in India.

AndyD 8-)₹

Re: Tax Advice
 

Wow, that article is a revelation. It is dated 2011, hopefully, there has been some improvements to the PF rules.