Will foreign consulting income be taxed in India if not remitted?

I’m a OCI cardholder and graphic designer by occupation. I came to India in July 2025 for taking up several regional film projects as a consultant and I plan to stay through the financial year. I’m continuing to do consulting work right now even for outside India clients. Whatever fees that I earn from those clients, I take it in my foreign bank account. Would those fees become taxable in India even if I don’t remit them to my Indian bank account?

- Name withheld on request

At the outset, it is necessary to determine your residential status in India for the financial year 2025–26 under the provisions of the Income-tax Act, 1961 (ITA).

If your stay in India during the relevant financial year aggregates to 182 days or more, you would be regarded as a resident in India for tax purposes. However, in the absence of complete factual details—such as your India stay history in preceding years—it is not possible to conclusively determine whether you would qualify as a Resident and Ordinarily Resident (ROR) or a Resident but Not Ordinarily Resident (RNOR).

Where an individual qualifies as an ROR, the scope of total income is extremely wide. It includes income accruing or arising in India, income deemed to accrue or arise in India, as well as income accruing or arising outside India, irrespective of the place of receipt.

In contrast, where an individual qualifies as an RNOR, income accruing or arising outside India is excluded from the Indian tax net, except where such income is derived from a business that is controlled from India or from a profession that is set up in India.

Place of accrual

Under the ITA, income from the rendering of services is regarded as accruing at the place where such services are actually performed.

In your case, since the services have been rendered from India, the corresponding service income—even if paid by a foreign entity—would be considered as income accruing in India and would therefore be taxable in India. This tax treatment applies irrespective of the location where the income is ultimately received, whether in an overseas bank account or in an Indian bank account.

Importantly, this conclusion holds good regardless of whether you qualify as an ROR or an RNOR, as the determinative factor is the place of accrual of the income.

Disclosure requirements

Such foreign income is required to be disclosed in Schedule FSI of the Indian income tax return. Where the income has suffered tax in the foreign jurisdiction and you intend to claim foreign tax credit in India, the corresponding relief must be reported in Schedule TR.

Further, if you qualify as an ROR, you would also be required to disclose such foreign income and specified foreign assets in Schedule FA.

However, if you qualify as an RNOR, the disclosure requirements under Schedule FA would not apply.

Separately—and independently of the income-tax provisions—it is essential to evaluate your residential status under the Foreign Exchange Management Act, 1999 (FEMA).

Your FEMA residential status will determine whether you are permitted to retain foreign income outside India or whether there is an obligation to repatriate such income to India.

Harshal Bhuta is partner at P. R. Bhuta & Co., Chartered Accountants