Tax equalisation ensures an expat neither gains nor loses financially because of the India tax environment. The company bears the actual India tax, while the employee bears a hypothetical tax equivalent to what they would have paid in their home country. Not every company applies tax equalisation, but without a clear policy, expatriate employees may face unexpected tax liabilities.

When an expat remains on a home-country payroll but works in India, a shadow payroll computes the India tax liability on that compensation and helps ensure correct withholding without actually paying the employee through an India payroll. It is commonly required where India tax obligations exist, but the employment arrangement remains offshore.

Filing requirements depend on factors such as residential status, the nature of income earned, applicable tax treaties, and statutory thresholds. Even where treaty relief is available, a tax return may still be required to formally claim the benefit. We assess filing obligations as part of the engagement and advise on the appropriate compliance requirements.

Foreign nationals working in India may be required to contribute to the Employees’ Provident Fund unless a Social Security Agreement exemption applies. Where contributions have been made, withdrawal on departure is subject to specific rules and procedures. We assist with both SSA exemption assessments and PF withdrawal requirements, where applicable, at the end of the assignment.