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Working in India - Residency in India & Tax Incidence - EY - India

Working in India

Residency in India & Tax Incidence

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The incidence of tax depends on the residential status of the individual, which is determined basis the number of days for which an expatriate is present in India in a particular fiscal year and the year before.

Basic conditions of residency


An individual is considered to be a tax resident, if he or she is present in India for:

  • 182 days or more in a fiscal year; Or
  • 60 days or more in a fiscal year band 365 days or more during the preceding four fiscal years. The 60 days may be extended to 182 days in certain cases.

However, if none of the above mentioned conditions are satisfied, the individual is classified as a non-resident (NR).

Taking the classification further, there are two kinds of tax residents:

  • Resident and not ordinarily resident (RNOR) - Conditions for establishing RNOR
    • The individual has been a nonresident in India at least in 9 out of the preceding 10 fiscal years.
    • The individual has been in India for 729 days or less during the preceding 7 fiscal years.
  • Resident and ordinarily resident (ROR) - If an individual does not satisfy both these additional conditions, he is classified as an ROR.
Tax Incidence

Tax Indice

Income tax rates and tax compliance requirements


India follows a system where the employer is responsible for deducting taxes at source from salary payments made to employees. The taxes are required to be deposited with the revenue within seven days from the last day of the month in which such payments are made. However, for the payments made in March, taxes are required to be deposited by April 30, following the end of the fiscal year.

The tax rates for the fiscal year 2012-13 for an individual are set out below:

For every individual (other than those mentioned above) (below 60 years)

S. No.

Income Range

Tax percentage

1

Up to Rs 200,000

No tax / exempt

2

200,001 to 5,00,000

10% of the amount exceeding 200,000

3

5,00,001 to 10,00,000

30,000 + 20% of the amount exceeding 500,000

4

Above 10,00,000

130,000+30% of the amount exceeding 1,000,000

For resident Senior Citizens aged 60 years or more but less than 80 years

S. No.

Income Range

Tax percentage

1

Up to Rs 2,50,000

No tax / exempt

2

2,50,001 to 5,00,000

10% of the amount exceeding 250,000

3

5,00,001 to 10,00,000

25,000+ 20% of the amount exceeding 500,000

4

Above 10,00,000

125,000+30% of the amount exceeding 1,000,000

For resident Senior Citizens aged 80 years or more

S. No.

Income Range

Tax percentage

1

Up to Rs 5,00,000

No tax / exempt

2

5,00,001 to 10,00,000

20% of the amount exceeding 500,000

3

Above 10,00,000

100,000+30% of the amount exceeding 1,000,000

Education cess of 3% is levied on the income tax.

 


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Contacts

  • Sonu Iyer  
    Tax Partner & National Leader
    Human Capital Services
    Tel: +91 11 66233160
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