India: Living There - Tax Issues
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Living There
Residents of India are subject to tax on their worldwide income. You become a resident for taxation purposes if you have stayed in the country for 182 days or more within the tax year (April 1 - March 31), or you have stayed for 60 days or more within the tax year and an aggregate of 365 days for the preceding four years.
Three main sources of income are taxable: Salary, Income from House Property, and Capital Gains. Allowable deductions vary in accordance to the source.
A standard deduction of 30% for repairs and collection charges, interest payments relating to loans used for the construction, acquisition, and repairs of the property are deductible from rental income, which is covered by income from house property.
The total income derived from each of the sources, except income from capital gains, less allowable deductions, is aggregated to arrive at the gross total income. A further deduction is allowed from the gross total income.
Tax exemption for a resident woman is INR135,000 (US$2,908) and a resident senior citizen is entitled to a tax-free amount of INR185,000 (US$3,984). Residents who are over 65 years of age are allowed to deduct from taxable income a maximum of INR 15,000 (US$323) for medical insurance premiums, while those who are below 65 may deduct a maximum of INR10,000 (US$215). Further, residents may also deduct a maximum of INR100, 000 (US$2,154) for investments in life insurance and other savings plans. The gross total income less the further deductions is the net taxable income which is subject to the following rates:
The following tax rates are as of tax year ending March 31, 2006:
2006 INCOME TAX |
|
| TAXABLE INCOME, INR (US$) | MARGINAL TAX RATE |
| Up to 100,000 (US$ 2154) | nil |
| 100, 000 - 150,000 (US$3231) | 10% on band over US$2,154 |
| 150, 000 - 250,000 (US$5384) | 20% on band over US$3,231 |
| Over 250,000 (US$5384+) | 30% on all income over US$5,384 |
| Source: Global Property Guide | |
Furthermore, residents are also subject to the 2% Education Cess on the total income tax liability and a 10% surcharge on the income tax liability on income greater than INR1 million (US$21,538).
India - more data and information
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