Banks in India have something of a reputation for cumbersome bureaucracy, but most of them provide convenient services once expats have managed to navigate the red tape. Paying taxes can also be challenging but is much easier with the help of a local specialist.
Another thing expats will have to get used to is the Indian numbering system. In the Indian numbering system, the lakh and crore are the main terms to be familiar with. Lakh is a unit that equals 100,000, while 100 lakhs is one crore or 10 million. Globally, commas are put after every three digits when dealing with large numbers. In India, a comma is placed after every two digits past the 100,000 mark (1,00,000). This can be confusing, especially when dealing with financial statements. This way of dealing with numbers is an interesting and perhaps unexpected element of culture shock in India.
Money in India
The official currency in India is the rupee, abbreviated as INR, and it's controlled by the Reserve Bank of India (RBI).
The rupee is technically subdivided into 100 paise, but coins that are valued less than 1 rupee are no longer in circulation. Getting change is often difficult in India, so keeping a stock of smaller denominations is wise.
Here are the frequently used banknotes and coins in India:
Notes: INR 10, 20, 50, 100, 200, 500 and 2,000
Coins: INR 1, 2, 5 and 10
To get local currency, there are several factors to consider. India restricts visitors and tourists from bringing any Indian currency into the country, while residents can bring in a maximum of INR 25,000, and large sums of foreign cash must be declared. It's best to explore the different options for obtaining local rupees in the country.
Expats can exchange money at the airport, though the rate is unlikely to be favourable. It's possible to exchange money at local and international banks in India, and there are also organisations or money changers approved by the RBI where foreign currency can be exchanged.
Banking in India
The Indian banking sector is robust and offers numerous services in public, private and international banks. Public sector banks include Punjab National Bank, Central Bank of India, Bank of Baroda and State Bank of India. Private sector banks include ICICI Bank and HDFC Bank, while international and foreign-owned banks such as Standard Chartered Bank and HSBC also operate in India.
Opening a bank account
A select few types of bank accounts in India can be held by non-residents. Some may only apply to Non-Resident Indians (NRIs) and persons of Indian origin (PIOs), while the main account type available to all foreign citizens in India is called the Non-Resident Ordinary Rupee Account Scheme, also known as NRO accounts.
Most banks offer a non-resident (NRO) savings or current account for expats who earn an income in India. Features vary between banks but account holders will at least be provided with debit or credit cards as well as internet and phone banking.
Most NRO accounts will require expats to maintain an average quarterly balance. While the amount may differ depending on the bank, failure to maintain the balance will result in a penalty fee.
Opening a bank account is normally a simple process if expats provide the necessary documents. Some bank accounts can be opened online, without the need to physically go into a branch. Many expats have their company open an account for them, which is often with an international bank.
To open a bank account in India, expats will generally need to provide proof of identity, proof of address and copies of their passport and visa as well as a mobile phone number. Some bank accounts require applicants to provide a 12-digit Aadhaar number (Indian identification number) as well as a 10-character PAN or permanent account number (tax number). For information on Aadhaar, visit the official Unique Identification Authority of India (UIDAI) website.
Credit cards and ATMs
ATMs and bank branches are easily accessible in major cities and towns. Credit cards are widely accepted and most banks offer internet banking services. Still, it's advisable to carry cash when travelling outside of major cities.
Taxes in India
Expats who live in India for 182 days or more in a year are considered to be tax residents and will have to pay tax on their local income. Personal income tax in India is progressive up to 30 percent.
India has full double tax avoidance agreements with many countries, and expats should confirm whether their home country falls under this list or not.
Individual taxpayers earning above a given threshold must file an individual tax return and expats can do this themselves online. Given that tax in India is relatively complicated, expats who aren't especially tax-savvy or simply prefer for a professional to complete the process can enlist the help of an accountant or tax consultant.
Getting a tax number
In India, a tax number is referred to as a Permanent Account Number or PAN. Not all expats in India will need to obtain a PAN, although this unique identifier is essential in certain instances, including for filing tax returns.
To get a PAN in India, the best resource is the Tax Information Network website. Here, many tax-related processes, including linking the Aadhar with the PAN, can be done swiftly online provided the available e-services and support.
For the latest info, also see the Indian Government's Income Tax Department website.