Visa delays turn taxing for H-1B holders

H-1B holders stuck in India due to visa stamping delays are facing risks of job loss, salary cut and becoming liable to pay local income tax.Many Indians working in the US on H-1B permits, and are back in India for visa renewals, are stuck here because of delays in getting visas stamped, after the Trump administration began strictly scrutinising social media activities of applicants.With interviews pushed back to March, April or even later, jobs are at stake for some, especially those working in small companies like startups, said immigration experts. Another complex issue that is cropping up is over taxation, as those staying in India for an extended period may become subject to Indian income tax, either as non-residents or as tax residents.Many US companies with employees who are unable to return are in touch with immigration experts, lawyers and consulting firms to figure out compliance and taxation issues, these firms told ET.Some companies are also directly approaching the US embassy and consulates to request early appointments for their employees.“If for any reason, employees of US companies need to spend time in India, there could be potential tax implications both for such employees as well as their US employers that need careful evaluation,” said Parizad Sirwalla, partner and national head, tax – global mobility services, at KPMG.126533354In case the H-1B holder stays in India for 182 days or more in a financial year, they become a ‘resident’ for tax purposes in India, according to Ankita Singh, founder of law firm Sarvaank Associates. Some US companies are allowing limited remote work from India for the employees stuck here or are reassigning employees temporarily to India-based affiliates.From an employer perspective, this requires detailed examination on whether their activities while in India create any potential corporate tax liability for the foreign employer, said experts.Employers in the US are more concerned about compliance and tax exposure rather than immigration compliance when allowing remote work from India, said Singh.“The question of H-1B professionals continuing to work remotely from India during visa stamping delays is being addressed through legally cautious, interim arrangements rather than any settled legal position,” said Tanmay Banthia, partner, Taraksh Lawyers and Consultants.Compensation during this period (where employers are working remotely from India) is not uniform and is governed by contractual discretion and internal policy, Banthia said.Meanwhile, there are cases where professionals who are stuck in India are seeking help from lawyers so that they avoid termination.“There are a few instances where the firms in the US have given an ultimatum to employees to join back once they exhaust their paid leaves or face termination,” Sukanya Raman, country head at immigration law firm Davies & Associates, told ET.Families split, expenses riseWith visa delays stretching for months, some employers are stepping forward to support stranded employees by requesting consulates to expedite visa appointments, said Raman.But many large companies are restricting the nature of work that can be performed from India by these employees.In addition, families are split often with one spouse or children stuck in the US while the primary earner is stuck in India, or vice versa, said Singh of Sarvaank Associates.“There are scenarios where they continue paying US rent, car leases and utilities to keep their US life afloat, while potentially earning no salary or a reduced salary.”In some instances, small US companies that lack the legal infrastructure to handle this complexity are forcing employees to resign or go on unpaid leave.Key HR issues surfacing include performance evaluation challenges, inability to perform core job functions due to compliance restrictions, insurance and benefits coverage while abroad, time zone management, and team coordination difficulties.H-1B holders are also increasingly being questioned at US ports of entry and, in some cases, refused re-entry due to unauthorised remote work from abroad, said immigration experts.“Prolonged periods spent outside the US—nearing six months—can invite questions at the port of entry about whether the individual has effectively disengaged from US employment,” said Keshav Singhania, head - Private Client at law firm Singhania & Co.