Taxes To Be Paid By An Indian Expatriate

As a citizen of India, it is your legal duty to pay taxes

. Taxes are the lifeblood of a country, as it is a citizen's contribution to the operation and governance of civil society. Countries have stringent rules on tax apportionment and requirement, with many penal as well as financial consequences for non-compliance.

With the world becoming increasingly borderless, many individuals move to other countries for work or business. As they do, their tax responsibility is not excused by mere change of location as this required payment depends upon one's nationality. Only when one changes their allegiance to another country would this fiscal responsibility be extinguished.

In order to fulfill this financial responsibility to the country of origin when in another country of residence, the following are guidelines that need to be complied with to avoid running afoul of the law.

Filing Returns. Each citizen is required, depending on their national law, to file an income tax return. This is a report of an individual's income for one particular year. This income is then measured and amounts would be apportioned to determine the tax liability of the individual. In filing returns, expats can do so either electronically or through their home country's embassy in their country of residence.

Tax Exemptions. This is where expats enjoy some measure of comfort from payment of taxes. In international law, there are countries that enter into tax treaties. These bilateral agreements often provide for tax breaks or exemptions to expats in their respective countries entering the treaty. This exemption is done reciprocally as a measure of respect and cooperation between nations. Consequently, when an expat is in a country where their country of origin has a tax treaty with the country of residence, then some form of tax break or exemption is provided and enjoyed. Thus it is important that the expat learns and understands the provisions of these treaties to get the full measure of the benefits they provide.

Taxability. Once the individual expat understands the filing requirements and the exemptions, the taxable amounts can be determined. While many think that this must be determined at the outset, only upon an itemization and determination of exemptions can the tax liability be determined. The full and final amount can be determined after completion of the documentary requirements. In order to be fully aware of the taxability, it would be best to engage the services of an accountant or tax lawyer, especially if you are overseas and liable to pay taxes.

Payment of Taxes. Once these returns are filed, depending upon the amount reported, a commensurate amount of taxes need to be paid. This needs to be paid for by an individual. Upon payment of the tax, a receipt would be provided for the tax paid for that particular year.

Many think that as an expat, one is outrightly exempted from their tax responsibility in their home country. As a matter of law, expats still need to declare their income, determine their exemptions and then pay the amounts as required. This responsibility is not about location but about one's civil duties to their home country.

by: Bobby Castro

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