Being a densely populated nation, India has abundance of skilled, semi-skilled and unskilled labour. However, with the growing interaction between nations and diffusion of technology and creativity, the influx of foreign nations or expatriates have increased to a greater extent.
With the advent of Information Technology and advanced business opportunities, the numbers of foreign nationals coming to India for employment purposes has witnessed an exponential growth.
In the light of the same, it is the duty of the nation to ensure that the rights and duties of such individual are secured, since every individual is entitled to protection and preservation of their human rights as per Universal Declaration of Human Rights, irrespective of being the national of a state or not. Respecting the same, India has strived to introduce and amend laws governing foreign nations employed in India in a timely manner.
LAWS APPLICABLE TO EXPATRIATES IN INDIA
In India, the employment of foreign workers is primarily governed by the Foreigners Act, 1946 (hereinafter referred to as “the Act”) and the Registration of Foreigners Act, 1939 (hereinafter referred to as “the Registration Act”).
Introduced with an intent to provide the Central Government sufficient power to regulate the entry, presence and departure of a foreigner in and from India, the Act defines the term “foreigner” as an individual who is not the citizen of India. The said Act also empowers the Central Government to prescribe conditions as to the residence of a person in a particular place along with imposition of restriction of movement.
Under the Act, the Central Government may also prohibit the person from engaging into a specific activity in India. This signifies that the conditions on the movement and employment of a foreign national can be imposed and/or regulated by the Central Government. . The Registration Act mandates the foreigner to register with the specified authority his presence within the boundaries of Indian territory upon their arrival.
As mentioned above, even though the foreign employees are majorly governed by the Act and the Registration Act, but all labour laws that regulate the employment relationship in India are applicable to the foreign workers in India, like there counterpart Indian workers. These include the Maternity Benefit Act, 1961; the Payment of Bonus Act, 1965; Employees Provident Fund and Miscellaneous Provisions Act, 1952; Industrial Disputes Act, 1947, State Insurance Acts, etc.
For example, benefits such as provident fund which is provided to national employees is also given to the foreign employees working in India as a social security benefit.
In the case of Johnny Paul Pierce v. The Union of India [WP (c) No. 13263 (2020)], the Kerela High Court clarified that the discretion to grant and extend the visa of a foreign national is under the exclusive domain of the Central Government since the sovereignty and security of the country stands at the highest pedestal and judicial review in this regard should be limited and minimal.
EMPLOYMENT VISA FOR FOREIGN NATIONALS
Employment visas is one of the primary and key requirements for employment of foreign nationals/expatriates in India. The Government requires a foreign national to hold either a business visa i.e., ‘B Visa’ or an employment visa i.e., ‘E Visa’ for working in India.
A foreigner who is highly skilled and/or is a qualified professional, is eligible for getting an employment visa (hereinafter referred to as “e-Visa”) by the Indian Government. However, it is pertinent to note that e-Visas shall not be granted for occupations wherein qualified Indian professionals are already available, and for clerical, routine and ordinary jobs.
Additionally, such foreign national must also draw an annual salary of more than USD 25,000 so as to be eligible for getting an e-Visa in any sector. However, this lower limit of income shall not be applicable on ethnic cooks, translators or language teachers, workers of Embassy/ High Commission in India.
When the period of permanent residence of an applicant in a country is more than 2 years, the country of origin or domicile shall provide the e-Visa to the individual. The employer and the details of the establishment have to be clearly indicated in the application form.
Validity of e-Visa
A technical/expert who is coming to India under a bilateral agreement between the Foreign Government and the Indian Government or under a collaborative agreement, shall be granted the e-Visa for the period specified in the said agreement or a period of five years, whichever is shorter. Such individual shall be allowed multiple entries in the country.
A three-year visa shall be granted to highly skilled foreign personnel who would be deploying their services in the IT sector or software sector, along with multiple entry facility.
In the cases which do not fall within the above mentioned two categories, a two-year visa shall be granted to the foreign individual or the term of assignment as agreed, whichever is less.
Registration with FRO/FRRO
When an employment visa has been issued for a period of more than 180 days, it must carry a valid endorsement meaning that the visa holder must register the same with the Foreigners Registration Office (hereinafter referred to as “FRO”)/ Foreigners Regional Registration Office (hereinafter referred to as “FRRO”) within 14 days of their arrival. When such duration is less than 180 days, registration is not mandatory with the FRRO/FRO.
The FRO/FRRO holds the discretionary power to extend the period of e-Visa granted to a total of five years from the date of issue of the initial visa, which shall be done on a year-to-year basis.
TAXATION OF EMPLOYMENT INCOME
The residential status of an individual becomes a determining factor for taxation in India which is calculated based on the number of days of physical presence of a person in India in a financial year. Hence, in order to be assessed as a ‘resident’ in India for the purpose of taxation, the individual must be:
- present in the country in a fiscal year for a period of 182 days or more,
- present in the country for a period of 60 days or more, and has been in the country within the preceding four years, for a period of 365 days or more.
Foreign nationals are only subject to income tax in India on the income that they have derived by an Indian source or received in India during the relevant fiscal year, subject to any exceptions under a double taxation treaty.
However, Section 10(6)(vi) of the Income Tax Act, 1961 (hereinafter referred to as “the IT Act”) provides an exception to it. It provides for exemption on taxes on remuneration received by a foreign employee working for an enterprise, for services rendered by the foreign employee during his stay in India, if the following conditions are fulfilled:
- The foreign enterprise is not engaged in any trade or business in India,
- The foreign national’s stay does not exceed 90 days in aggregate during the relevant fiscal year’
- The remuneration received by the said foreign national employee isn’t liable to be deducted from the income of the employer that is chargeable under the IT Act.
Being one of the most populated country in the world, India has produced some the greatest minds in the past and has also witnessed the brain drain movement for quite a long time. Just as Indian nationals migrate to different countries to deploy their services, foreign nationals also enter India for seizing an available employment prospect.
However, the Government needs to ensure protective measures while providing e-Visas to foreign nationals as it is the Government’s duty to not only look after the security and well-being of its nationals but also the foreign nationals residing and working in India. Hence, the Central Government being a watchdog, strictly regulates the entry, presence and exit of a foreign national from and into India.
– Team AMLEGALS assisted by Ms. Mehar Kaur (Intern)
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