Moving to bangalore - Please help me make a decision

ajrulez

Hi,

I work as a Sr. Software Engineer for a global telecommunication giant. I have an offer from their India operations but I am not able to make a final decision. Please note that the position they are offering me is not as an expat employee, but as a local employee of their Bangalore R&D.

I have been unable to make a final decision, and am tired of asking them for more time. I know it's ultimately my decision but I would appreciate if some experienced people chime in with their opinions and help me come to a decision.

A little bit about me first - to help you guys judge the situation better - I am 26.5 years of age, born in Chicago, lived in Delhi from the time I was 4 years of age until I was 16, and moved back to US after that. I am a dual citizen of US and India (well officially an Overseas Citizen of India, which is not quite equivalent to dual citizenship).

Goes without saying, I know Hindi quite well, am aware of Indian culture & society as a whole (barring changes in last decade). I don't think words like culture shock apply to my case, which is good.

I have about 4 years of experience in software development (on Windows, embedded platforms, Linux). My current salary in Chicago is about US $85,000 per year. The salary I have been offered in Bangalore is INR 1,100,000 (11 lakhs) per year. This salary includes all fringe benefits that they are going to provide but excludes bonus, if any.

I am getting standard relocation benefits, such as shipment of my personal belongings, one-way air fare to Bangalore, and 2 weeks of temporary accommodation along with a company vehicle.

So I guess I have the following questions:
1. Is the salary being offered to me competitive for my level of experience in Bangalore (the location is close to HAL airport, I think couple miles east of HAL)?
2. What is the average monthly rent for a 1-bedroom and 2-bedroom apartment with medium comfort level, preferably close to HAL airport?
3. About how much will I pay in taxes (I am single, no dependents)? I know answer to this depends on each individual, but I am just looking for a worst case scenario.
4. I do not know native language of Bangalore (Kannada - pardon me if I spelled it wrong. No disrespect intended). Is that going to be a problem?

Also, please feel free to add anything else that you guys want.

Thanks & Regards,
AJS

Prashant.M

It is very good for your level of experience.

1 Bedroom - around 10,000 PM (Per Month); 2-Bedroom - around 15,000 PM. Depends on location and facilities. Search around on Indiamike.

This also depends on a few factors like Savings, Home Loan etc., maybe around 15,000 PM. This is just a guess, please get it verified.

No but it would be good to know.

__________________
Happiness is just a thought away

Jayanna.B

@ ajrulez

Hi...

Continuing with Prashanth's view following are just my thoughts!

Considering your educational qualification & experience - whether this salary is good one or not, personally I have no idea at all.

But by drawing 11 lakhs/p.a definitely you can lead the good life in Bangalore that much assurance you can have. Once again all this depends upon your living style.

Let's assume u sell out expenses on month basis as follows for a well living being style:

Rent : 20,000
Car : 10,000 (emi)above average good vehicle
Food : 15,000
Misc : 10,000

Still you can save approx 4-5 lakhs per annum. You can save more than this. Or you may have to sell out more those are all depends upon you only! right ?

And as far Kannada language concerned - you need not to worry - people here very freindly, cool & supportive.

For your living support always there is english! Why worry ?

On your own interest you can learn the language & mingle more with society. As far I am concerned, sincerely expect you to learn & speak Kannada, as well.

These factors are all just depends how you take the things in life, nothing else.

Otherwise you can have cool & colorful life in Bangalore!
Welcome to Bangalore if at all you decide to come over here.

Jay

jone_it

Hi, ajrulez

I'm in process of relocating too (from the UK by non-expat conditions) and will work guess where? near HAL! ^_^

I compared how your income was converted to Indian conditions with how it was done for me. Simple currency conversion shows your gross salary decreased about 4 times which doesn't look great (although I don't know US taxing) because I don't believe life in B-lore is 4 times cheaper than in US. At least it's 2 times cheaper than in the UK (non-London area), so in my case my net salary was halved and I accepted it.

OTOH, as you don't have dependants, 11 lakhs should be just plenty to maintain your costs and doing some savings, particularly if you don't insist on posh lifestyle.

OTOH again, I could say the same about your US income: to me, you could save much more from the stated US salary or even have enough funds to visit India twice a year if you like it. ^_^

So, I'd consider this offer as lowering your financial state, if I don't miss anything specific about living in US.

Languages. I don't know any of Hindi or Kannada, but when I asked foreigners who live in local Indian families what lang is more important to master, they all prioritised English over everything (but I already know it) then Hindi and only then local mother tongue. So, I do plan to study an Indian language and it'll be Hindi.

I did some tax investigations and calculations which leaded to me to the following several conclusions:

a) For high salaries (like in IT industry) Indian income tax (along with educational and other normally applicable cesses) is just equivalent to a non-taxable allowance of 3 or 4 lakhs (I forgot the exact figure now) then 34% from anything on top.

b) For some things like rental payments or medical expences you pay BEFORE tax deductions, up to specific allowances which are fixed in your employer contract. Anything on top of the allowances is normal taxable money. Technically, you pay by net money then claim back your tax for all applicable non-taxable allowances in the end of each year. I'm not sure if employers make any attempts to roll out this earning oddities over a year. Hence the statement about depending on personal circumstances as it makes different allowances to work with different effect.

Hopefully, my personal investigations may help you to make an optimal decision.

LilBoy BigTown

Hi Arjulez,

I agree with most of the stuff that others have said.

Although it may appear that you are being shortchanged as far as remunerations go (converting from USD to INR), for someone with your level of experience, I don't think its even remotely inferior.

Seeing that you are single, you can live comfortably, specially if the bonus you talked about kicks in. Let us know how it all goes.

thejag

3 out of 4 of your questions are monetary in nature. not knowing the local language will not hamper you too much. there are tonnes of folks in IT in Bangalore from outside the city and they survive with just Hindi and English.

if you're worried about the money don't bother moving... seriously.

you can live comfortably and still save a little bit. and with taxes and expenses and needing to have a social life (you likely dont have family in bangalore, so youll need something to keep your mind occupied when youre not at work) saving 5L (or $10K) will be difficult. if you save more in the US then your savings here will not amount to much when you return to the US. OTOH if you just blow all of what you earn in the US and dont save.. (edit) well... less to burn may be a blessing in disguise...


So id say come on down if youre willing to give this move some time.

traveller.1

Ok so before I comment, let me state my situation. I am an Americn but work in India. I get paid an American salary and spend a great deal of time in India, like 6 months a year. I would spend more time, but then India wants to tax me about 35% of gross world wide earnings. So I do have an excellent idea of both countries.

Financially speaking, wealth is relative. 11 lakhs is a lot of money in India, but its less than $2000 a month. You can not afford to pay a mortgage on a house in the States, so in essence you are closing the american door atleast for a while. So it isnt like you can come to India make abunch of money and pay cash for ahouse when you are 35 with a wife and kid. Yes in the mean time you can live well in India, but so can you in the states with 85 grand. Monetarily you are being screwed. Out of the 11 lakhs about 4 lakhs is going to be taxes. So you are left with 7 lakhs. Jayanna has an estimate of 55000 for expenses per month so that is about 6 and a half lakhs more gone leaving you with 55000 rupees per year. You have lived in the States since you were sixteen so I assume your folks are there. So if you travel once a year to the states, your dad is going to have to chip in for your air fare!!!, since your company wont. Also you go to a place like TGIF or something and some food and a couple of drinks costs you about 2000 rupees. So dont do it.
A lot of guys are going to say that as an unmarried tax filer in the States also you are probably in the 30% bracket, but there you can take the individual allowance, deduct, healthcare, home mortgage, retirement plan, IRA, donations, etc and with finacial planning pay taxes on a very small fraction of your income, and render the bulk exempt from taxes. I do. In India the sheltered amount is a couple of lakhs so it really does you no good.

Now right about now many guys are bristling and saying Most Indians would be delighted to have 11 lakhs per year. Its a lot of money, etc. Yes it is for Indians. I would guess you are accustomed, to a nice house, clean surroundings, movies, cable, internet, vacations, and all the tyrappings of America that make it the highest per-capita comsumer nation on earth. Your salary here will deprive you of that consumtion that you are accustomed to. Please note that I am not debating the merits of that consumption, but simply stating it. In my view for an Ameericvan its just not enough. Now if your job s in jeopardy in Chicago then its a whole new situation.

You have to love India to want to do it. Your reason has to be non financial, otherwise it makes no sense.
Why does one go any where to work? Perhaps to better his station in life, or because he hates the place he is at, and loves where he is going. What is your reason. Financial is not one of them.

My advice for 85+ grand American do it otherwise dont. You have nothing to gain unless the task, project etc is such that it can give you a carerer boost.

Unless you dislike living in America, or love living in India more, it makes no sense.

LilBoy BigTown

I think the OP is aware of the fact that financially, he will be disadvantaged. If thats how you look at it, it will never make sense unless you are on an ex-pat package.

A couple of other things you raised like mortgage and family etc isn't on OP's radar either, not saying they are irrelevant. I don't suppose anyone wanting to live and work in India does so purely for building wealth.

Although there is another wealth that you could accumulate working in India (experience and local knowledge) which in days to come could ultimately fatten a persons pay packet.

I am also surprised that on a 11 lakh income, the tax works out to be 4lakhs. Is that after accounting for all the available deductions? I can see plenty of good points in what you have said, but somehow I am not convinced its as bad a proposition.

traveller.1

Lil boy big town: The tax component is not a computed number but an estimate. The exemption I think my accountant told me believe is 1 lakh, and then one lakh can be sheltered. I believe the tax is 30% and then a 5% surcharge on top of it. SO it may well be less, but a lakh less or more will not change the basic feasibility.

Interestingly after reading your post I looked up your profile, a finacial planner!!

may be my view is wrong for every one but me, and may be people live and work here (some) for the sheer joy of working long hours. Thats fine. I am not in a debate. I am expressing my view which Need not convince the OP, he just needs to consider it and make his own mind up.

85 grand is a lot of money in the states. He can take 11 lakhs (his entire years Indian salary) from it come to India each year, live it up, have his fill and have money left over. Working in India does not afford him that choice

LilBoy BigTown

Perhaps you should look for a new accountant. The exempted amount is Rs 160,000.

Tax on a salary of Rs 1,100,000 is less than 3 lakhs. Take a look at this link. This is from the Income Tax Office. It has a calculator which allows you to work out your taxes. http://www.incometaxindia.gov.in/

Not entirely sure if this allows for the deduction under Section 80CC, if it doesn't, the tax will be reduced further.

A lakh here or there may not mean much to you, but if I was earning 11 lakhs a year, and had a choice of whether I pay 1 lakh in tax or not, I know what I will be doing. And I don't have to be a financial planner to figure that out.

What you said about coming to India and living it up, it appears you are solely looking at the financial side of things when the OP hasn't shown any inclination about saving or building a future corpus of funds. The question was if that amount of money was commensurate with his experience or not. I would say its fine for his experience and sufficient for a single person without any commitments.

Now the term "sufficient" is subjective. However since the OP is considering the offer, I dare say he isn't aspiring to live like an emperor. He has lived in India for a long time and must have a general idea of what lifestyle 11 lakhs a year would allow him.

jone_it

Totally agree!

BTW, taxation seemed changed for 2009 and 10% surcharge has been abolished, wow! (previously I calculated it for 2008-2009). http://www.simpletaxindia.org/2008/0...-rates-in.html

So, the new simple thumb-rule (eliminating multiple progressive bands) for high-earning IT male would be: your full tax (including cesses) is equivalent to just deducting 3.2 lakhs as non-taxable income then taxing anything remaining by 30.9%. The rule works for any non-senior male earning >=5 lakhs annually, for women and seniors non-taxable equivalents will change to 3.3 and 3.46(666.66) lakhs correspondingly.

For the OP it means 2.41 lakhs deducted from 11 gross.

ajrulez

Mucho thanks to every one who spent their valuable time presenting their opinion trying to help me. I appreciate it :-)
I was on a road trip for last 6 days, hence I didn't get a chance to participate in this discussion.
This discussion is proving to be helpful since now I have more questions to ask myself based on your opinions. I usually like to reply to each person individually, so I guess I am gonna do that next :-)

Thanks again, I really appreciate your help.

ajrulez

Thanks for the information, Prashant. Here's my comments :-)

Over the last 5-6 days, I got a chance to talk to a couple of guys I know who are from Bangalore. Both these guys said that 11 lakhs is fairly respectable salary, and probably most guys with similar experience get around 9 lakhs. That being said, they also added that they know guys with similar experience in the same field who make 13-14 lakhs per year. Hmm man this situation is more tricky than what I had thought at the time I applied to the position :-)

I googled some rental apartments around that area, and if their online prices are close to what they'd ask for, then I think your estimate is pretty accurate.

I'll continue looking I guess.

Hi Jay, thanks for your response. It's sounds upbeat and makes me want to at least try Bangalore hehe - "cool and colorful life" - who doesn't want that eh?

Anyways, based on the estimate you provided along with some of my own research, opinions from other people it seems like my core expenses are going to be something like following:

Salary - 11,00,000 per year
------------------------------------------------------------
Rent - 01,20,000 per year (going with estimated 10K per month)
Car Payment - 01,20,000 per year (going with your estimate)
PF-Gratuity - 00,90,000 per year (I asked HR about this)
-------------------------------------------------------------
Now, since all above are part of my flexible benefit plan, these expenses are going to be pre-tax.

Please correct me if I am wrong with the above statement, and based on that the following tax estimates (assuming I don't invest in any other tax-saving plans or anything)

Taxable Income = 07,70,000 per year
Estimated Tax = 01,44,660 per year (based on http://law.incometaxindia.gov.in/Tax...s/taxcalc.aspx)

This tax kinna seems low not sure if their thingy works correctly.
----------------------------------------------------------------
Money to spend = 06,25,000 per year
Food & Misc = 03,00,000 per year (based on your estimates)
----------------------------------------------------------------

That leaves me with an estimated 3 lakhs per year in savings - provided I don't have any big budget expenses or travel.

Are my calculations reasonable??

Thanks

ajrulez

Haha..thats awesome man!! If I do end up moving there it'll be just cool to know that I am not the only "new addition" to the town

Thanks for your opinion man :-)
Taxing in US is pretty straight forward. I like the fact that here we get one base salary + whatever bonus, and all that is taxed. In India, it is relatively confusing - there's one salary component, one bonus component, and one flexible benefits component.

Anyways, I pay about 27% of my salary in taxes. Lets say I get around USD 62,000 after paying taxes. And In India, I'll get about INR 6,25,000 (~ USD 13,000) after taxes - based on my calculations in the previous post.

So yeah, that is almost a fifth of what I get in hand here (given the current exchange rates)

Totally! I can easily travel to India or any other country about 2 times an year. I guess I won't be able to do that with my Indian salary

And yeah, lowering my financial state is indeed my biggest concern. I even thought along the lines that hey, given this salary I can just work for 10 more years and retire in India...haha. Just kidding.

Yah I guess you are right. All the official work is conducted in English :-) although it might be a little alienating if I end up in a cafeteria with a group of guys talking in their native language.

BTW, I can help you with Hindi hehe. I lived in India for like 12-13 years; I know it pretty well.


Yep, your reply did help me. I clarified a bunch of things from the HR chick based on your comments :-) It's a good thing they are giving me pre-tax allowance for vehicle payments and gas

ajrulez

Thanks man, yah I never expected their offer to be even half of what I make in the US, so I am cool with that part. From my personal research so far, I calculated that if someone (with a common, not so unique job) makes a third of their US salary in India (after all the currency conversion) then it comes out to be a pretty even proposition.

I'll let you and others who posted about my decision soon :-)

Thanks