How to pay the salaries to staff who are working in foreign for our organization? What are taxes applicable to them? Kindly guide us.
(M.C.Ramesh)
General Secretary
Vidyaranya
Bangalore
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Dear Shri Mittalji,
It is fine. But i would like to add further that if a person who has a work permit to do work in india can do work and is elligible for getting remuneartion. If we are doing activities outside india, it is not permissible as per CBDT Provision as you have mentioned.
Further, As per our view a person who is engaged for the service will come under the double taxation rules in india and as per the act specified rates of tax will be applicable according to the residential country of the person. There are different rates prescribed in the Income-tax Rules for person comming under double taxation rules.
I would like to knoe if there are any other views for the same.
With thanks & regards,
I fully agree with the comments / suggestions given by Mr. Subhash Mittal.
The best option to ask your donor partners to pay the concern staff directly and invoice to be sent to you to adjust to your account. Other option is to pay to the staff in his Ondian account with regular deduction. One of the option is to pay to U to pay to dependent in India as a grant provided if you have an agreement with the staff.
These suggestions are in addition to the advice by CA Subhash Mittaljee as mentioned above.
For obvious reasons I would like to read the last para as 1st since that is most important from organisation’s point of view though other compliance towards individual’s tax deduction is also to take care.
I wonder if any donor would like to prepare the Grant T&C in such a way whereby one or more staff of Indian agency join them on deputation with cost obligation only to foreign agency. This may be highlighted in due course by those seeking visibility.
Hope this make sense.
This is a complicated issue, as it involves several factors, residential status of the individual person concerned, is there a Double Taxation Agreement with the country in which the employee is placed. Sometimes the employee also receives salary / compensation from the foreign agency under which he has been placed. I would suggest that there are several factors please take help of your tax consultant. It may be mentioned that Income Tax Return has separate provision for disclosure of such income for individuals.
However for NGOs additional complication is that without CBDT approval under S.11(1)(c), such expenditure may not be allowed as Application. So be extra cautious while deputing staff outside the country, particularly for long periods.