Indian payroll for a foreign employer — can I handle this myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: withholding follows where the employment is exercised, split payroll arrangements must still report the whole taxable amount, and social security applies through India's provident fund rules subject to any social security agreement.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Our employee works from India but we pay the salary abroad — is Indian tax due?
Yes, on the salary attributable to the work done in India. Where the salary is paid, into which account and in which currency does not decide the question; the employment being exercised in India does. That is the point most foreign employers miss, because the money never touches India and nothing in their own payroll system flags it. The obligation is to withhold on the Indian portion and report it, and the employee has a personal Indian filing position sitting behind that. Deal with it from the start of the assignment rather than at the year end.
We have no Indian entity — do we still have a payroll obligation?
Having no Indian company does not remove the obligation, because it follows the employment rather than the employer's place of incorporation. A foreign employer with staff working in India generally has to operate Indian withholding on the salary attributable to that work and report it. There is a social security question alongside it, since India's provident fund rules can apply to the employment, subject to any social security agreement between India and your own country. Both need answering before the first payroll run, not after the employee has been working in India for months.
Part of the salary is paid in India and part offshore — what gets reported?
The whole taxable amount, not only the part that runs through the Indian payroll. A split payroll is a payment convenience, not a division of the taxable salary: the offshore element attributable to Indian service is taxable in India in the same way as the locally paid element. In practice one payroll has to carry the full picture, which means the two payrolls exchanging figures each period and somebody reconciling them. A split payroll reported in halves is among the easier things for the department to notice.
Does our employee working in India have to be in the provident fund?
It has to be tested rather than assumed. India's provident fund rules can bring an employee working in India into the social security system, including where the employer is overseas, and the treatment of an international worker is not the same as that of a local hire. Where a social security agreement exists between India and the employee's home country, it may relieve or coordinate contributions, but relief is not automatic. It depends on the terms of that agreement and on the supporting documentation being obtained before you rely on it.
Does a social security agreement mean we can skip Indian contributions?
Not by itself. An agreement between India and the employee's home country sets out how contributions are coordinated, and any relief depends on its terms and on the paperwork being obtained from the home country authority before you rely on it. Employers frequently assume the agreement operates automatically because the two countries have one, stop contributing, and later find the position unsupported when it is examined. Establish which agreement applies, what it actually covers for this employee, and what evidence must be held — and keep contributing until that is settled.
We never operated Indian payroll for our employee there — how do we fix it?
By establishing the exposure before making any payment. Work out the period over which the employee has been exercising the employment in India, the salary attributable to it including anything paid offshore, and what should have been withheld and reported in each period. From that, the correction can be made through payroll and the employee's own Indian filing position brought into line with it, since the two have to agree. The provident fund position needs the same exercise. The consequences of the delay depend on the periods involved and are worked out on the facts.
What is DTAA?
DTAA — a Double Taxation Avoidance Agreement — is India's term for a tax treaty. It allocates taxing rights between India and the other country, caps withholding on cross-border payments, and gives relief for income taxed twice by either exempting it or crediting the foreign tax. Relief is claimed, and from the Indian side that normally means a tax residency certificate, Form 10F and Form 67. See DTAA relief.
How does a remittance actually work, and is it taxed?
A remittance is a transfer of money, not a category of income, and moving your own funds between your own accounts is not what creates tax. What can create tax is the income behind the money and the rules of the country it leaves. India, for instance, collects tax at source when a resident individual remits abroad under the Liberalised Remittance Scheme, and requires certification before certain payments leave. The transfer is the trigger for paperwork rather than for tax. See the LRS and tax collected at source.
