One thing I am quickly coming to terms with is my non existence here in India. Everything is done through the man / husband/ Indian income earner. The mobile phone is in Rez’s name, I had to sign at the FRRO that my reason for being in India was ‘staying with husband’ and joint bank accounts mean diddly squat to the tax authorities here as regards me – they are just interested in Rez.
So this morning we had a tax briefing, courtesy of PwC, for 45 minutes about tax residency status, social security (aka the Provident Fund) and what allowances and benefits are taxed here (that would be everything you can think of basically). Don’t worry, I won’t bore you with the details of the conditions that must be met for residency and non residency for tax purposes and it’s effects *yawns* but I thought you would be interested in a couple of things.
The bank interest rate here is between 4 and 5%. Read that and weep UK savers. I’ve just topped up my ISA and I think I might have been better off transferring the cash here at that interest rate. Still, with currency transaction charges and exchange rate charges the benefit might be wiped out. That’s what I am consoling myself with anyway. I genuinely can’t remember when interest rates on savings was that high in the UK. To add to that, the first INR 10,000 / £100 in interest received is tax free. Yes, tax free!
So the tax bands and rates here are as follows:
Income up to INR 250,000 / £2,500 is tax free
INR 250,000 to 500,000 / £2,500 to £5,000 is taxed at 10%
INR 500,000 to 1,000,000 /£5,000 to £10,000 is taxed at 20%
INR 1,000,000 to INR10,000,000 / £10,000 to £100,000 is taxed at 30%
Then income over INR 10,000,000 / £100,000 attracts an additional 12%
On top of that there is a mandatory 3% tax for something – I didn’t quite get what it was for.
There is also a social security contribution called The Provident Fund. The employee and employer pay into this equally i.e. matched contributions. This accumulated balance is then paid out upon retirement or at 58 years of age, whichever is sooner. Can you imagine that – collecting your pension at 58 instead of 68?
As there is no international agreement between the UK and India for social security contributions the money contributed has to remain here after we have left. We have to maintain an Indian bank account so that when the time comes we can draw down the contributions. So we will have to have an Indian bank account for about 9 years after we have left the country. I’m not sure how that is going to work but that’s an issue for when we do leave.
When we come to renew visas and the FRRO form next year Rez (not me) has to provide forms to show that tax has been paid by his employer and that he has submitted his tax return. You can’t apply until this has been done. That’s one way of ensuring the Revenue collect taxes due.
Thankfully, PwC will be handling all of this for Rez so I don’t have to worry my pretty little head about it! 😉