Dual Compensation for International Onsite Assignments in India

Introduction

When an employee from India gets an international onsite opportunity, the payment structure can vary. Typically, employees receive salaries aligned with local market rates, but specific policies, negotiation skills, and the nature of the assignment can influence whether they receive an additional form of dual compensation. This article explores the different scenarios and considerations involved.

Scenarios for Onsite Assignments in India

Local Salary:

In most cases, employees working on foreign assignments receive a salary based on local market rates, which might be higher than their Indian salary. This is the most common practice, reflecting the cost of living and market conditions in the host country.

Home Salary

Some organizations choose to pay their Indian employees their local salary while providing additional allowances. These allowances cover living expenses, relocation costs, and other expenses incurred during the assignment. It is important to note that such allowances may be tax-free in the host country, but the Indian salary may be taxed in India.

Dual Compensation

In rare cases, employees can negotiate a package that includes both their Indian salary and an additional stipend for the duration of the assignment abroad. This is less common and often depends on the company's policies and the employee's negotiation skills. Negotiating terms that include both salaries can offer significant benefits, but it requires advanced planning and strong negotiation abilities.

Tax Implications

When dealing with dual compensation, tax implications are a crucial factor to consider. Employers and employees need to be aware of tax treaties and local laws. In many cases, employees may face taxation in both the host country and India. It is essential to discuss these matters with HR or management to ensure compliance and understand the tax obligations.

Short-Term Assignments

For short-term assignments, most companies offer additional allowances to cover the cost of living abroad, such as accommodation, travel, and dining. These allowances are usually tax-free in the host country. However, the employee's Indian salary remains subject to tax in India. Some companies may provide credit cards, hotel bookings, and other necessary services to ease the transition.

Long-Term Assignments

For longer-term assignments, companies often provide a deputation allowance to meet the demands of the onsite work. This allowance helps cover living expenses and other costs associated with the assignment. Some companies may even facilitate the process of changing the employment status to reflect the new location, although this is not always possible.

Conclusion

The specifics of dual compensation for international onsite opportunities in India depend on the company's policies, the nature of the assignment, and negotiations conducted prior to relocation. It is crucial for employees to clarify these details with their HR department or management to ensure a smooth and tax-compliant assignment. Understanding the different scenarios can help employees make informed decisions and negotiate favorable terms.