Other Taxes Guide for Expats
Apart from income tax, there are several other taxes you will need to pay if you are performing financial and real estate transactions in India.
Capital Gains Tax
This applies to the purchase and sale of property (30%) and gains through stocks and shares and financial instruments, which can range from 10% to 40% depending on the nature of the instrument, and the period for which the investment was held. You will need the advice of a tax professional to know how much your tax liability is, and ways to reduce it.
A useful website for understanding the Capital Gains Tax in India is http://www.charteredclub.com/capital-gain-tax.
If you own residential property in Bangalore, you will have to pay an annual tax on the property, which varies depending on the zone you live in, and the size of your property. Taxes may be self-assessed and paid to the Municipal Corporation, and you can calculate the tax due by using the Corporation website http://1113.sasbbmp.com.
If you purchase a new vehicle, you will need to pay a lifetime road tax, which is calculated according to the price of your vehicle, and is usually around 8% of the cost of your vehicle.
Apart from these major taxes, the only other taxes you are liable for are those which will already be built into goods and services.
Service Tax (10.3%) on any services you might avail of. Service providers will usually add this on to their fee, so be prepared for this jump in the bill.
VAT (5% for essential commodities and 12.5% for non-essential commodities). This is sometimes included in the sale price in stores and tills, and in other places, it will be added on. Be sure to ask if a price includes tax, as there is no standard system.
Luxury Tax (12.5%) This is a state government tax that you will see quite often if you eat out in upmarket restaurants, or stay/eat in five star hotels. This is never reflected in the published price of room and food/beverage, so it can increase your bill significantly.