Banking, Money and Taxes in India

Banks in India have a reputation for cumbersome bureaucracy, but most provide convenient services once you 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 you must 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 adapting to local culture 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 valued at 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.

You 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 that can exchange foreign currency.

Digital payment methods have become immensely popular in India. Platforms like UPI (Unified Payments Interface), Paytm and Google Pay are widely used for everyday transactions, making them convenient for both residents and expatriates. These platforms allow for seamless transactions without cash, which is particularly beneficial for expats who may not carry large amounts of Indian currency.

Useful links

• Reserve Bank of India

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. International and foreign-owned banks such as Standard Chartered Bank and HSBC also operate in India.

Opening a bank account

Non-residents can hold a select few types of bank accounts in India. 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 you if you 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 require you 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 you provide the necessary documents. Some bank accounts can be opened online without the need to go into a branch physically. Many people have their company open an account for them, often with an international bank.

To open a bank account in India, you will generally need to provide proof of identity, proof of address, copies of your passport and visa and a mobile phone number. Some bank accounts require applicants to provide a 12-digit Aadhaar number (Indian identification number) and 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, carrying cash when travelling outside major cities is advisable.

Useful links

• Unique Identification Authority of India (UIDAI)

Taxes in India

If you live in India for 182 days or more a year, you are considered a tax resident and must pay tax on your local income. Personal income tax in India is progressive up to 30 percent.

India has full double tax avoidance agreements with many countries, and you should confirm whether your home country falls under this list.

If you earn above a given threshold, you must file an individual tax return, and you can do this yourself online. Given that taxes in India are relatively complicated, if you aren't especially tax-savvy or simply prefer that a professional complete the process, you can enlist the help of an accountant or tax consultant.

The new tax regime has become the default for individual taxpayers, including non-residents. This means you will now be taxed under this regime unless you opt for the old tax regime, which allows for various deductions and exemptions.

Getting a tax number

In India, a tax number is called 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 when filing tax returns.

The best resource for getting a PAN in India is the Tax Information Network website. Many tax-related processes, including linking the Aadhaar 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.

Useful links

• Tax Information Network
• Income Tax Department