Taxability of salary paid abroad.
This query is : Resolved
11 March 2015
whether salary paid to indian citizen posted abroad by an indian company is taxable, if the same is paid outside India in foreign currency
12 March 2015
Under the income tax provisions taxability does not depend upon mere citizenship status as per the normal citizenship norms. It depends on whether the person is a resident and ordinarily resident, resident but not ordinarily resident and non resident. In case he belongs to first category salary paid to him outside India will be chargeable to tax.
12 March 2015
The employee stay in India is less than 182 days during the previous year concerned, so as per section 6 of the IT Act, he is a non resident, since in case of Indian citizen going abroad for employment only 1st condition is considered for determining the residential status.
So, now will the salary be taxable in India ?
So, now will the salary be taxable in India ?
26 July 2025
Great question! Let me clarify the taxability of salary paid abroad to an Indian citizen posted overseas by an Indian company:
---
### Key Points:
1. **Residential Status Determines Taxability, Not Citizenship Alone**
* Tax liability in India depends primarily on your **residential status** as per **Section 6 of the Income Tax Act**, not just your citizenship.
* Residential status can be:
* **Resident and Ordinarily Resident (ROR)**
* **Resident but Not Ordinarily Resident (RNOR)**
* **Non-Resident Indian (NRI)**
---
2. **Salary Paid Abroad to an Indian Citizen Working Outside India**
* If the individual qualifies as a **Non-Resident Indian (NRI)** (i.e., stays less than 182 days in India during the financial year), then:
* **Salary earned abroad and paid outside India is NOT taxable in India.**
* Income earned or received **outside India** by an NRI for services rendered outside India is outside Indian tax jurisdiction.
* If the individual is a **Resident Indian**:
* **Global income (including salary earned and received abroad) is taxable in India.**
---
3. **For Indian Citizens Going Abroad for Employment**
* The primary condition for NRI status for Indian citizens working abroad is the **number of days physically present in India (less than 182 days)**.
* If this condition is met, the person is NRI for that financial year.
---
### So, your example:
* If the Indian citizen stays **less than 182 days in India** during the year (i.e., NRI status),
* And the salary is **paid outside India in foreign currency** for services rendered abroad,
* **Then salary will NOT be taxable in India.**
---
### Summary Table:
| Residential Status | Salary Earned Abroad & Paid Abroad | Taxable in India? |
| ------------------------------------ | ---------------------------------- | --------------------------------------------------------- |
| Resident & Ordinarily Resident | Yes | Yes |
| Resident but Not Ordinarily Resident | Yes | Yes |
| Non-Resident (NRI) | Yes | No (if earned and paid abroad for services outside India) |
---
If you want, I can help you with the exact residential status calculation or advise on how to file your return accordingly. Need that?
---
### Key Points:
1. **Residential Status Determines Taxability, Not Citizenship Alone**
* Tax liability in India depends primarily on your **residential status** as per **Section 6 of the Income Tax Act**, not just your citizenship.
* Residential status can be:
* **Resident and Ordinarily Resident (ROR)**
* **Resident but Not Ordinarily Resident (RNOR)**
* **Non-Resident Indian (NRI)**
---
2. **Salary Paid Abroad to an Indian Citizen Working Outside India**
* If the individual qualifies as a **Non-Resident Indian (NRI)** (i.e., stays less than 182 days in India during the financial year), then:
* **Salary earned abroad and paid outside India is NOT taxable in India.**
* Income earned or received **outside India** by an NRI for services rendered outside India is outside Indian tax jurisdiction.
* If the individual is a **Resident Indian**:
* **Global income (including salary earned and received abroad) is taxable in India.**
---
3. **For Indian Citizens Going Abroad for Employment**
* The primary condition for NRI status for Indian citizens working abroad is the **number of days physically present in India (less than 182 days)**.
* If this condition is met, the person is NRI for that financial year.
---
### So, your example:
* If the Indian citizen stays **less than 182 days in India** during the year (i.e., NRI status),
* And the salary is **paid outside India in foreign currency** for services rendered abroad,
* **Then salary will NOT be taxable in India.**
---
### Summary Table:
| Residential Status | Salary Earned Abroad & Paid Abroad | Taxable in India? |
| ------------------------------------ | ---------------------------------- | --------------------------------------------------------- |
| Resident & Ordinarily Resident | Yes | Yes |
| Resident but Not Ordinarily Resident | Yes | Yes |
| Non-Resident (NRI) | Yes | No (if earned and paid abroad for services outside India) |
---
If you want, I can help you with the exact residential status calculation or advise on how to file your return accordingly. Need that?
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