India and China have no social security agreement. A Chinese employee working for an Indian company is therefore not exempt from Indian provident fund by a certificate of coverage, and, as the EPF rules are generally applied, a foreign national from a country without such an agreement is treated as an international worker with contributions on full salary. For income tax, the treaty's 183-day test rarely helps a secondee whose cost is borne by the Indian subsidiary, so the employer should withhold tax on salary under Section 392 of the Income-tax Act, 2025. Cost the assignment on both counts before the person travels.
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Key facts
| Social security agreement | None between India and China |
|---|---|
| Provident fund | International worker rules: contributions on full wages, without the usual wage ceiling, as generally applied; the rule has been litigated, so confirm the current position |
| Income tax | Indian tax on salary for work done in India, under Section 392; treaty relief only if the three Article 15 conditions are met |
| Residence | Resident if 182 days or more in the year, or 60 days plus 365 days in the four preceding years (with exceptions); resident taxpayers are taxed on world income, subject to special rules |
| Chinese side | Chinese individual income tax and social insurance rules for those who stay on the Chinese payroll; confirm with a Chinese adviser |
| Equalisation | Plan a tax equalisation policy and budget for gross-up |
| Data | Employee data moves between countries; see the data protection guide |
Income tax
- Treaty test: under Article 15, salary of a Chinese resident for work in India is taxable only in China if the person is in India for 183 days or less in the period, the employer is not an Indian resident, and the cost is not borne by a PE in India. A secondee at the cost of the Indian subsidiary fails the last two.
- Withholding: the Indian employer deducts tax on salary under Section 392 of the Income-tax Act, 2025, and deposits it by the 7th of the following month.
- Residence: a person who stays long enough becomes resident in India and may be taxed on world income, subject to the not ordinarily resident rules. A tax adviser should model the case before travel.
- Allowances: housing, school fees and travel are taxed as perquisites unless exempt, so negotiate the pay package net of tax or with a clear gross-up.
- Chinese side: leaving the Chinese payroll, the tax residence consequences in China and the credit for Indian tax need Chinese advice.
Provident fund and the missing agreement
- India has social security agreements with a number of countries, which let detached workers stay in their home system on a certificate of coverage. There is none with China.
- Under the EPF scheme rules for international workers, a foreign national working in a covered establishment who is not from an agreement country is generally treated as a member from the start. Contributions are normally on the full wage, and the employer's share also applies.
- Withdrawal rules for international workers differ from those for domestic members, and the rules have been challenged in the courts, so confirm the position when you set the pay structure.
- Include the employer's contribution in the cost of the assignment budget.
- Do not treat the Chinese social insurance contribution as a substitute. India does not give credit for it.
Secondment, local contract or business trip
| Model | Employer for Indian tax | Points to watch |
|---|---|---|
| Short business trip (meetings, no productive work) | Chinese employer | Visa category, 183-day count, PE risk if staff conclude contracts |
| Secondment to the Indian subsidiary | Indian subsidiary directs the work and bears the cost | Salary taxed in India, EPF, recharge priced under transfer pricing and Withholding Tax on the reimbursement |
| Local Indian contract | Indian subsidiary | Cleaner for Indian law; Chinese employment status and social insurance on exit need planning |
The secondment letter
- State the employer of record, the reporting line, the term, the pay split and the tax treatment.
- Say who bears Indian tax and provident fund, and how gross-up works.
- Add confidentiality, intellectual property assignment and return-to-China terms.
- Make sure the Indian subsidiary controls the work, or the employee may be seen as working for the parent and create PE risk.
Immigration and registration
Visa, registration and security clearance steps are covered in relocating Chinese staff. Align the tax and immigration plans so that the visa category matches the real work.
Costing the assignment
- Salary and allowances, Indian tax and any gross-up.
- Employer provident fund and other statutory costs.
- Housing, school, medical cover and travel.
- Advisory and immigration fees.
- Transfer pricing mark-up on the recharge.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, MOFCOM (China), SAFE (China) and the Ministry of External Affairs (India).
Frequently asked questions
Is there a social security agreement between India and China?
No. There is none, so a certificate of coverage is not available for Chinese staff.
Does a Chinese employee in India have to join the provident fund?
As the EPF rules for international workers are generally applied, a foreign national from a country without a social security agreement is covered and contributions are on full wages. Confirm the current position, as the rule has been litigated.
Is a Chinese employee's salary taxable in India?
Salary for work done in India is taxable in India unless the three Article 15 conditions are met, including that the cost is not borne by the Indian subsidiary. A secondee usually fails this.
Who deducts tax on the salary?
The Indian employer, under Section 392 of the Income-tax Act, 2025, by the 7th of the following month.
Does China give credit for Indian tax?
China gives a credit for Indian tax paid on income taxable in India under the treaty, subject to Chinese rules. A Chinese adviser must confirm the mechanics.
Can I keep my Chinese employee on the Chinese payroll while working in India?
It is possible for short trips. For a long assignment, the work is done for the Indian subsidiary and Indian tax and provident fund normally apply.
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Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Chinese rules change often; confirm current requirements before acting.