Salary Income in South Africa and India

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2011 Mr. A has salary income in South Africa and India both. The company is transferring some part in South Africa via South Africa office and another part in Indian account via India Office. Mr. A will stay in South Africa for atleast 10 months in F.Y. 2011-12. The salary which is getting transferred in South Africa and India is after tax at both countries. There is DTAA between South Africa and India. So, where should the return be filed? And, under which status? Can he have normal bank accounts in India and transfer money from South Africa? If yes, how can he avoid tax on that transferred money, which is already been taxed in South Africa?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

27 June 2011 It is clear that the assessee is an NRI.

*

An NRI having taxable income in India is required to file his return in India also,
whether he files or not his return in SA..

*
In case of NRI Indian Income is taxable. Salary of SA is not taxable and as such not forming part of his Total Income.

*
So, here he will show Indian Income and TDS thereon, if any, and file his return.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

27 June 2011 In my view after a certain period of becoming NRI, he should have opened a NRE a/c here in India.

I think, there is no tax on the remittances
made by him from SA.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2011 Thx for the info.

But is it necessary to open the NRE account. And, if yes, can Mr. A still hold the normal savings accounts? How will the accountant show that the money in NRE account is already taxed in South Africa and is not needed to be taxed in India? How can the money in NRE account be used in India, when Mr. A will return to India finally?

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2011 Just putting the query in open mode again.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

22 July 2025 Here’s a clear summary addressing your queries about salary income in South Africa (SA) and India:

1. Residential Status and Tax Filing
Since Mr. A will stay in South Africa for at least 10 months in FY 2011-12, his residential status for Indian tax purposes will likely be NRI (Non-Resident Indian) for that year.

As an NRI, he is liable to pay tax in India only on income received or accrued in India.

Salary earned and taxed in South Africa is not taxable in India under Indian domestic law.

However, he must file an Indian Income Tax Return (ITR) if he has taxable income in India (like salary credited to India, or any other income).

Salary received in South Africa need not be declared in India if he qualifies as NRI for the whole year.

2. Where to File Tax Returns?
File tax return in South Africa on global income as per SA tax laws.

File tax return in India only on income taxable in India (salary credited or accrued in India).

The DTAA between India and South Africa helps avoid double taxation by giving credit for taxes paid in one country against taxes payable in the other, if applicable.

3. Bank Accounts in India
As an NRI, Mr. A should ideally open an NRE (Non-Resident External) account to remit foreign earnings to India.

NRE accounts allow repatriation without any restrictions and interest earned is tax-free in India.

He can also hold Resident Savings Bank accounts only if he becomes a resident again; otherwise, normal savings accounts must be converted to NRO (Non-Resident Ordinary) accounts.

NRO accounts are for income earned in India, repatriation is limited and interest is taxable.

4. Avoiding Tax on Money Transferred from South Africa
Amounts transferred from South Africa to India via NRE account are considered remittances of already taxed income and not taxable again in India.

To prove the tax has already been paid in South Africa, keep South African tax payment proofs and relevant documentation.

While filing ITR in India, only report income taxable in India. Remittances themselves are not taxable income.

No separate declaration is needed for remittances if you have no other Indian taxable income.

5. Use of Funds on Return to India
On becoming resident again, the funds in NRE accounts can be continued or converted as per resident status.

The principal and interest in NRE accounts are fully repatriable and can be freely used in India.

Inform your bank about the change in residential status to convert accounts accordingly.

Summary Table
Issue Solution / Info
Residential Status NRI (if stay abroad >182 days)
Taxability of SA Salary in India Not taxable in India
Indian Income Tax Return File for Indian income only
Bank Accounts Open NRE for foreign earnings remittance
Tax on Money Transferred Not taxable, treated as remittance
Documents to Keep SA tax returns, tax payment receipts
Using Funds after Return Convert NRE to resident accounts on return

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok