Working in Delhi?
Delhi: Taxes, Social Security and Health
Becoming a Fiscal Resident of Delhi
Foreigners working in Delhi on a long-term basis are subject to Indian income tax laws. You count as resident for fiscal purposes if one of the following two cases applies to you:
- You have been physically present for over 181 days in the past fiscal year.
- You have been physically present in India for 365 days or more during the preceding four fiscal years.
The Indian fiscal year runs from 1 April to 31 March of the following calendar year. However, at the time of writing in 2017, there’d been talks of aligning the taxable year to match the calendar year, possibly as early as 2018.
However, the two cases above are only an approximate guideline and Indian law makes a further distinction between “residents not ordinarily resident” (RNOR) and “residents ordinarily resident” (ROR). If you are an expat living and working in Delhi, you’ll probably be considered an RNOR for the first two years. In this case, you need only declare your income within India in your tax return. If you aren’t sure of your fiscal residential status, you can find out with this online residential status calculator.
Once you start counting as an ROR, you have to tax all income from non-Indian sources as well or claim tax relief under a Double Taxation Avoidance Agreement. To find out whether you can benefit from such an agreement, consult the financial authorities in your usual country of residence or visit the Income Tax Department website of the Indian Ministry of Finance.
Every employee working in Delhi is taxed at a rate of 0–30%, depending on their total income. The tax-free threshold is 250,000 INR for both genders.
Social Security: Restricted and Rudimentary
The two main social security schemes run by the Indian government are the Employees’ Provident Fund Organization (EPFO) and the Employees’ State Insurance Corporation (ESIC). These bodies are struggling to replace the traditional family network of support in India, which has been shaken up by migration and urbanization.
Although India’s social security system is rather rudimentary, covering only a minority of the country’s large workforce leaving out the informal sector in particular, expats working in Delhi are likely to be covered. This is due to the fact that India’s workforce is divided into an organized (formal) and an unorganized (informal) sector for the purpose of social security. Employees in the organized sector, including expats, are theoretically eligible for social security.
In practice, however, even basic coverage is not guaranteed, as the government often lacks adequate means to enforce its policies, especially in smaller cities and rural areas. Moreover, a minimum old-age pension or basic healthcare in a public hospital may not live up to the standards upheld by many expats.
Social Security Agreements — Ideal for Expats
India is rapidly extending its network of bilateral social security agreements. A standard social security agreement regulates the social security contributions of expats in the countries concerned: it is supposed to make sure that payments and benefits can be transferred between countries. Please check the Emigration Services website of the Ministry of Overseas Indian Affairs for detailed and up-to-date information on those various agreements.
If your usual country of residence has signed a Social Security Agreement with India, you might be able to continue your social security contributions in your country. However, this often presupposes a particular kind of employment contract and a work assignment in India that does not exceed 60 months (in most cases). Check with your social security administration back home whether or not your stay in India will exclude you from your national pension plan and other insurance schemes. Company pension plans and private policies often become necessary to bridge that gap.
Quality Healthcare — A Privilege Not All Can Afford
There is no shortage of healthcare facilities and doctors in Delhi if you have enough money to pay for them, that is. The problem is not that good healthcare is not available in India — it’s just not accessible to vast parts of the population. A majority of hospitals and hospital beds are in the private sector and thus hardly affordable to people without extra health insurance. Public hospitals, on the other hand, often lack sufficient resources both in terms of staff and equipment. Most hospitals, private or public, can be found in urban areas, making it even harder for the less affluent rural population to access.
All this doesn’t usually concern expats working in Delhi. Do make sure, however, to sort out your health insurance coverage before relocating. Big multinational companies often offer their expat employees a comprehensive benefits package that includes private health insurance. If this is not the case, try negotiating an extra allowance to cover your medical expenses or to finance a medical insurance policy. Health insurance coverage for India should always include repatriation expenses in case you need to return home for serious illnesses or major surgeries.
One of the first things you should do after moving to Delhi is to locate your nearest hospital or the hospital where you would like to be taken in case of an emergency. Ambulance services not affiliated with any particular hospital may be at a loss as to where to go and what to do if you don’t instruct them. Be aware that not all ambulance staff have sufficient medical training or even lifesaving equipment onboard.
Moreover, ask your embassy for recommended doctors and medical facilities. The private healthcare sector in India can be very fast-moving and there’s often a huge turnover among highly qualified staff. Hence, it’s important to know where — and by whom — the best medical care is currently being provided.
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