Do expatriates or foreign nationals working in India need to pay tax?

Updated: Monday, July 7, 2014, 11:16 [IST]

If you are a foreign national working on a deputation in India, you are liable to pay tax in India, under the head ‘Salaries', if the salary you so received is for rendering service in India as provided in Section 9(1)(ii) of the Income Tax Act.

Now interestingly, from assessment year 2000-2001, foreign nationals are also liable to pay tax on the leave period which they would proceed to, while working in India. Thus, while calculating income for the purpose of tax, the Income Tax Act does not take into consideration the residential status of the expatriate employee, and what is important is that the amount received by him as salary for services rendered in India shall be liable to tax in India being income accruing or arising in India.

Another important point to note is that it does not matter where the remuneration is received. In fact, the foreign expatriate could have even received it in the country where he holds a passport.

However, it's important to note that any remuneration received would be exempt from tax, if the stay of the foreign national working in India is less than 90 days. Another important point worth noting is that remuneration received by a foreign expatriate as an official of an embassy or high commission or consulate or trade representative of a foreign state is exempt, if the same understanding exists for Indians working in Indian embassies or other specified places abroad.

The remuneration received by a foreign national from employment on a foreign ship is exempt if the stay of the employee is less than 90 days.

Training stipends received from foreign government is also exempt.

GoodReturns.in