India’s tax system has been revised heavily over the past decade. As it stands now, there is personal income tax, value added tax (instead of sales tax), service tax, property tax, luxury tax, capital gains tax, tax on corporate income, securities transaction tax, and excise and customs duty.
India’s tax year runs from April-March. There is no special tax regime for expatriates in India. Tax incidence of an individual solely depends upon his residential status, which in turn depends on his physical presence in India. Any expat employee who has stayed in India for more than 181 days in a tax year has to pay tax on his entire income irrespective of whether he receives it in India or outside India. However if your home country happens to be one with which India has entered into a Double Taxation Avoidance Agreement (DTAA), the residency aspect may be resolved under the tie-breaker clauses of the relevant DTAA.
Anyone who earns taxable income in India, expat or otherwise, is required to apply for a Permanent Account Number (PAN) with the Indian Income Tax Authorities upon their arrival in India. This is a one-time registration and will be quoted in all your correspondences with the tax authorities.
