I have been offered a job by a Australia-based company. I will be working in India. As it doesn’t have any office in India, my contract will be from Australia. If the company provides me a salary slip, will it be valid for filing taxes in India? If yes, what should be the structure of the salary?
Salary for services rendered in India is taxable in India, irrespective of the place of receipt of salary. As you would be rendering services in India, salary earned by you from an Australian company will be taxable in India, irrespective of where you receive it. Under the income tax law, the employer is required to withhold applicable tax on the salary income. However, in your case, if no India income tax is withheld by your Australia-based employer, you may calculate your taxable salary income and deposit it under the advance tax mechanism as per the following schedule, during the financial year—15% of total tax by 15 June, 45% of total tax by 15 September, 75% of total tax by 15 December, 100% of total tax by 15 March.
You may also make the deposit under self-assessment tax before filing the India income tax return. However, in this case, interest for delay in deposit or non-deposit of advance tax will be applicable.
Note that there are exemptions available (subject to conditions) under the India income tax law on certain salary components, such as house rent allowance, leave travel concession and so on. Eligibility of such tax benefits on the salary expected to be received from the Australian employer may be analyzed separately. Ideally, the Australian employer should not withhold tax before paying salary into your India bank account in view of the relief available under India-Australia Double Tax Avoidance Agreement.
Sonu Iyer is tax partner and people advisory services leader, EY India. Queries at firstname.lastname@example.org