Salary to Expats including Foreign Directors FAQ`s?

Q) Can Indian subsidiary pay salary to expats including Foreign Directors?

Ans: Yes, If the Expats are contributing towards the management and operation of Indian Company, the Indian company can pay salaries to the Expats including foreign directors.

Q) Are there any special provisions related to salary payments as per FEMA?

Ans: Yes, The FEMA provisions are different for the Expats who are not permanent residents and are sent on deputations and the permanent residents.

In case of non-permanent residents, there is no bar on repartiation and Expats can remit his entire net salary (excluding taxes, contributions to PF and other statutory deductions) abroad for

maintenance of his family without any prior permission from RBI.

However in case of permanent residents prior approval of RBI is required if the amount exceeds US$ 1,00,000 per person per annum.

Q) Does company law prohibits payment of salary to foreign Directors?

Ans: There is no law in India which prohibits payment of salaries to Foreign Directors.

Q) What are the TDS (Witholding) and Income Tax provisions?

Ans:  Income Tax as per the provisions of The Income Tax Act, 1961 has to be paid on

the entire salary accrued/paid to such EXPAT employee in India.

In case of a foreign expatriate working in India, the remuneration received by him, under the head ‘Salaries’, is deemed to be earned in India ,if it is payable on account of services rendered in India as per the provision of Section 9(1)(ii) of the Income Tax Act. Thus the Income is taxable in India.