What are the clause of income tax / nri
This query is : Resolved
05 July 2014
MY FRIEND IS RECENTLY JOINED RELIANCE POWER HE HAS GIVEN AN ASSIGNMENT IN SOUTH AFRICA THEY WERE PAYING SALARY IN INDIAN RS 2.00 LAKH IN INDIA AND $ 150 PER DAY IN SA AND MY FRIEND WILL COME INDIA EVERY 3 MTHS FOR 15 DAYS COMPANY IS SAYING THEY WILL NOT DEDUCT TDS ON THIS INCOME AS THEY WILL MAKE HIS STATUS NRI & HIS INCOME WILL BE TAX FREE.AS I AM NOT AGREE WITH THIS IS THEIR ANY KIND OF TAX PLANING POSSIBLE & WHAT COMPANY IS SAYING IS CORRECT. THEY ON POWER PROJECT IN SA
06 July 2014
1. If he has to complete total 181 days working in SA in a year to become NRI then any foreign exchage received in SA will be non-taxable.Otherwise all foreign exchange is taxable.
2.INR received in India is fully taxable.
3. Foreign Company Indian office cannot make NRI status unless U complete 181 days outside India.
4. If Home country of the Company in SA makes NRI certificate for you even if UR not there in SA more than 181 days , then donot use this cerificate FOR NRI status certificate which is wrong as per Indian Tax law.
5. U can make tax planning by staying more in SA or else where in Foreign to complete 181 days.
2.INR received in India is fully taxable.
3. Foreign Company Indian office cannot make NRI status unless U complete 181 days outside India.
4. If Home country of the Company in SA makes NRI certificate for you even if UR not there in SA more than 181 days , then donot use this cerificate FOR NRI status certificate which is wrong as per Indian Tax law.
5. U can make tax planning by staying more in SA or else where in Foreign to complete 181 days.
12 July 2014
but in above case company is Reliance Power having Project in SA and it is not deducting tax on amount paid in india even ,how it is possible and paying daily allowance of USD 150 in SA which is also not taxable ? what kind of tax planning they did ?
03 August 2025
This is an interesting situation involving an Indian resident employee working partly abroad, so let's break it down:
1. Residential Status for Taxation
Income Tax in India is primarily based on residential status.
If your friend stays in India for 182 days or more in a financial year, he will be considered a resident.
If he stays less than that, or meets other conditions for NRI status, he may be considered NRI (Non-Resident Indian).
2. Salary Income Taxability
Salary paid for services rendered in India is taxable in India, regardless of residential status.
Salary paid for services rendered outside India (in South Africa in this case) is taxable in India only if your friend is resident. If NRI, income earned abroad is exempt from Indian tax.
However, your friend needs to meet NRI criteria strictly to avoid Indian tax on the foreign income.
3. TDS (Tax Deducted at Source)
Employers are required to deduct TDS on salary paid in India to residents.
If your friend becomes NRI, and foreign income is paid outside India, TDS may not apply on foreign salary.
However, TDS on Indian salary may still be applicable unless proof of NRI status is provided.
4. Tax on Daily Allowance (USD 150/day)
If this allowance is for expenses during foreign stay, it may be exempt under section 10(14) if it's a perquisite or reimbursement.
But if it's a part of salary, it’s taxable income in India if he’s resident.
5. Tax Planning Possibilities
Company may have structured payments to distinguish Indian salary and foreign allowance.
Possibly considered your friend as NRI by keeping physical presence less than 182 days.
There might be DTAA (Double Taxation Avoidance Agreement) benefits with South Africa.
Proper documentation and residential status certificate would be required to justify non-deduction of TDS.
What you/your friend should do:
Confirm residential status for the financial year.
Maintain detailed records of days stayed in India and abroad.
Verify if the company has obtained Form 10F and NR status certificate.
Consult a tax advisor for DTAA applicability and filing of return if required.
If tax is due but not deducted, your friend is still liable to pay taxes and should file returns.
Summary:
The company cannot arbitrarily avoid TDS or tax deduction unless your friend qualifies as NRI and income abroad is truly foreign-sourced and exempt. Salary paid in India remains taxable if he is a resident.
1. Residential Status for Taxation
Income Tax in India is primarily based on residential status.
If your friend stays in India for 182 days or more in a financial year, he will be considered a resident.
If he stays less than that, or meets other conditions for NRI status, he may be considered NRI (Non-Resident Indian).
2. Salary Income Taxability
Salary paid for services rendered in India is taxable in India, regardless of residential status.
Salary paid for services rendered outside India (in South Africa in this case) is taxable in India only if your friend is resident. If NRI, income earned abroad is exempt from Indian tax.
However, your friend needs to meet NRI criteria strictly to avoid Indian tax on the foreign income.
3. TDS (Tax Deducted at Source)
Employers are required to deduct TDS on salary paid in India to residents.
If your friend becomes NRI, and foreign income is paid outside India, TDS may not apply on foreign salary.
However, TDS on Indian salary may still be applicable unless proof of NRI status is provided.
4. Tax on Daily Allowance (USD 150/day)
If this allowance is for expenses during foreign stay, it may be exempt under section 10(14) if it's a perquisite or reimbursement.
But if it's a part of salary, it’s taxable income in India if he’s resident.
5. Tax Planning Possibilities
Company may have structured payments to distinguish Indian salary and foreign allowance.
Possibly considered your friend as NRI by keeping physical presence less than 182 days.
There might be DTAA (Double Taxation Avoidance Agreement) benefits with South Africa.
Proper documentation and residential status certificate would be required to justify non-deduction of TDS.
What you/your friend should do:
Confirm residential status for the financial year.
Maintain detailed records of days stayed in India and abroad.
Verify if the company has obtained Form 10F and NR status certificate.
Consult a tax advisor for DTAA applicability and filing of return if required.
If tax is due but not deducted, your friend is still liable to pay taxes and should file returns.
Summary:
The company cannot arbitrarily avoid TDS or tax deduction unless your friend qualifies as NRI and income abroad is truly foreign-sourced and exempt. Salary paid in India remains taxable if he is a resident.
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