When seeking employment abroad, ensure you verify job offers and contracts thoroughly to avoid fraud or disputes. For any issues, utilize the strengthening of machinery for redressal of public grievance, file under RTI Matters, or approach the Directorate of Public Grievances for assistance.
Tax Implications of Overseas Employment: What to Know for Indian Employees
Deputation vs Transfer
- Deputation involves a tripartite agreement where the employee continues to be subject to the deputing company's policies. The deputing company retains a lien on the employee's employment.
- The transfer involves a clean break in employment, with the employee joining the foreign company as a fresh employee. The transferring entity has no control over the employee's terms post-transfer.
Social Security Considerations
Under the Employees' Provident Fund (EPF) Act, the employer and employee must contribute 12% of the employee's basic wages to the EPF. International Workers (IWs) are required to contribute their full salary, not just basic wages. Exemptions are only granted if the IW contributes to a social security program in their home country that has an agreement with India.
- The Payment of Gratuity Act provides for a lump-sum payment upon termination of employment after 5 years of continuous service.
- It's unclear if the duration of deputation abroad counts towards continuous service.
Tax Considerations - India follows both residence and source-based taxation. Residents are taxed on global income, while non-residents are taxed only on India-sourced income.
- Factors to consider include potential permanent establishment (PE) risks for the foreign company, the employee's Indian tax position, and double taxation avoidance agreements.
In case of disputes regarding misconduct by government personnel, you can file complaints against govt employees or lodge a complaint against public authorities. If issues arise with public service matters, filing an Indian public authorities complaint or raising grievances of public authorities is also an option.
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