Income tax on salary paid in foreign account

I have been working for an Organisation in the UK and living there for 3 years.
Came to India in March 2020 during Covid crisis but continued working for the same Organisation remotely.
Since then I have been working remotely from India and my salary was being credited in my foreign bank account.
Due to the status of my Organisation (it's a european research lab) we are exempt from the UK income tax and the Organisation cuts a portion of salary as internal tax for which UK tax authorities are not responsible for.
Since, I have been in India for more than 182 days in FY 2020-2021, I understand that I am a resident of India.
Am I eligible to pay income tax in India on my salary paid in my foreign bank account for FY 2020-2021?

Thanks,
Rishabh Sharma

Hi Rishabh,

Great question! Here's how income tax on your salary would work under Indian law, considering your situation:

Residential status:
Since you stayed in India for more than 182 days in FY 2020-21, you are considered a resident in India for that financial year under the Income Tax Act.
Taxability of global income:
As a resident, your global income is taxable in India, regardless of whether the salary is credited to your Indian or foreign bank account.
Salary credited to foreign account:
Where your salary is credited (India or abroad) does not affect the taxability. If you are resident in India, the entire salary earned, including salary paid abroad or credited to a foreign account, is taxable in India.
Tax exemption by UK:
You mentioned your organisation is exempt from UK tax and deducts an internal tax for which UK authorities are not responsible. This might mean the salary was not subjected to official UK tax deduction.
Double Taxation Avoidance Agreement (DTAA):
Since you earned the salary from a foreign source (UK organisation), if any foreign tax has been paid or deducted (including ‘internal tax’), you can claim relief under DTAA or credit for foreign tax paid while filing your Indian income tax return.
If no foreign tax paid:
If no actual foreign tax was paid to the UK government, the entire income will be taxable in India.

You are an Indian tax resident.
Your global salary income (including salary credited to foreign account) is taxable in India.
You must disclose the foreign salary income in your Indian Income Tax Return.
You can claim credit for any foreign tax actually paid.
If no foreign tax was paid, full tax liability arises in India.