Job and Taxes

Indian government’s social security schemes like EPFO or ESIC are available depending on your type of work.
Outside the big cities, state hospitals are not efficiently equipped so private health insurance is a good option.
The services industry and manufacturing sector as always developing in the country.
Unlike the US, there are no double tax payments or high tax charges in India.
When you start working in India, you will find that you are part of a fast-moving and diverse economy in the world. Being the second most populated in the world, it also claims the second position of having the largest labor force on the globe.

According to the experts, India is still far from reaching its full economic potential. India has shown signs of recovery since their decline in 2012, and, in 2016, had a GDP growth rate of 7%. It has the probability to be the next economic superpower but an inadequate infrastructure is believed to be keeping them from achieving this prestigious position.

There is always a competition for skilled jobs because of the huge number of qualified people working in India. Therefore, many international companies outsource work to India. Due to multinational companies, the number of expats working in India is on the rise thanks to the Indian government who has encouraged foreign trade and relaxed its hold on the economy since 1991.

Job and Taxes – Economic Sector

Indian farmers mainly grow rice, fruit, wheat, tea, spices, sugarcane and vegetables. Around 65% of the Indian population, directly or indirectly, depends on the agricultural sector which currently contributes to 17% of the GDP. This includes employees in modern agricultural industries as well as traditional village farmers and their families.

Employing around 27% of the active population, the service sector is responsible for 54% of the national GDP. The following fields have grown faster in the economy: information technology, IT-enabled services, telecommunications and financial, social, personal, cultural, and recreational services. ‘Financial services’ is an umbrella term referring to those working in insurance companies, banks, real estate firms and the like.

The industrial sector creates jobs for nearly 25% of the Indian working population. Besides being the second largest cement producing country in the world, sub-sector industries that employ considerable numbers of people are textiles, mining, chemicals, transport equipment, pharmaceuticals, software, and machinery.

Job and Taxes – Taxation

A few years ago, the Indian tax system underwent some substantial changes in order to increase trade and investment in the country. With some exceptions, foreigners living and working in India are also subject to the Indian taxation laws. Does Your Home Country Have a DTAA?

Since April 2011, income tax rates for people working in India are:

0% for an annual income not exceeding INR 250,000.
10% for income between INR 250,000 and INR 500,000 per year.
20% for the income bracket with an upper limit of INR 1,000,000.
30% for people earning more than INR 1,000,000 per year.
Foreign investors and companies or international employees working in India, who do not have resident status, can also avoid double taxation if their country is under the DTAA (Double Taxation Avoidance Agreements) list. For more detailed information and an up-to-date list, do check the relevant section of the Income Tax Department website.

It is important to note that the Indian fiscal year runs from 1st April to 31st March, with income tax returns due by the end of July. Also, to find out which specific tax rules apply to you, visit the Income Tax Department website by the Government of India.

Social Security

There are only two major social security plans in India, the Employees’ Provident Fund Organization (EPFO) and the Employees’ State Insurance Corporation (ESIC). As it is a very basic social security system, it caters only to a small percentage of the country’s workforce. The EPFO runs a provident fund, also known as a pension scheme, and an insurance scheme which grant EPFO members and their families reasonable benefits during old age, disability, and support in case of death of the primary breadwinner. The ESIC, on the other hand, covers employees whose pays are less than INR 21,000/- providing them with basic healthcare and social security benefits. Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram are the only states where the ESIC scheme has not been implemented.

Expats: Excluded Employees

If a company is covered by the EPFO, its employees have to pay 12% of their income for social security, especially if they work in India for more than 183 days in a year. However, some expats are given the status ‘excluded employee’ where India has mutual social security agreements with some European countries, which entitles their citizens to keep contributing to the social security back home instead.

India has social security agreements with countries like Norway, Australia, Japan, Portugal, the Republic of Korea, Belgium, Denmark, France, Germany, Hungary, Luxembourg, the Netherlands, Finland, Sweden, Austria, Canada, the Czech Republic, and Switzerland. Negotiations with other countries are always in progress, so for updated information, check the Emigration Services website of the Ministry of Overseas Indian Affairs.

Health Insurance

Do note that most hospitals are in the private sector, and are not covered by public health insurance.

While most expats are likely to work for companies that are part of the EPFO or ESIC schemes, there may be problems with public healthcare provisions. Many foreigners do not prefer the public facilities in India as they are often poorly maintained and lack good medical equipment. In rural areas, a good hospital with adequate facilities is far from home. So, it is advisable to always check on the closest medical care accessible to the place you stay.

But many international private insurance companies are entering the Indian market and it is in your best interest if you have adequate health insurance coverage before going to India. Good medical treatment is available in India as the private sector makes up 75% of the hospitals and 40% of the hospital beds in India.

Land of Opportunities

The most common reasons, which lead foreign employees to India, are expat assignments. Due to the country’s monetary growth and available market, multinational companies as well as new investors look forward to open branches and businesses in India.

The country lacks in widespread and efficient infrastructural provisions thereby giving a negative to foreigners. But some see this as a business opportunity as there are significant tax incentives for businesses willing to participate in the development, maintenance, and operation of infrastructure facilities in the country.

The private healthcare sector is generally considered to be a treasure-trove for foreign investors and skilled medical recruits from abroad. Employment opportunities for expats can be found in teaching or tourism too, where demand exceeds supply. Nevertheless, you can still look for suitable jobs on the search engines like Monster, Shine and NaukriHub.