Home >Money >Personal Finance >Income earned via overseas firm is subject to tax in India
Photo: iStock
Photo: iStock

Income earned via overseas firm is subject to tax in India

  • Salary paid in India for work performed in India shall be taxable in India
  • Also, the global income of a resident of India is taxable in India

I have just started working with a Dubai-based company to handle its market in India. I live in India and work for this company. As it doesn’t have any office in India, my contract will be from Dubai, and the company will be sending my salary into my Indian bank account. I am confused about my taxes as I will be based in India. If the Dubai company provides me a salary slip, will it be valid for filing taxes in India? Or will I have to pay tax both in Dubai and India?

—Namit Krishna

From the facts you have provided, it appears that you are a resident in India for tax purposes. You can test your residential status in the following manner. You must meet any of the following conditions and both the additional conditions:

Conditions: a) you are in India for 182 days or more in a financial year (FY); or b) you are in India for 60 days or more in an FY and 365 days or more in the four FYs immediately preceding the relevant FY.

Additional conditions: you are a resident in India in two of the 10 FYs immediately preceding the relevant FY; and you are in India in the seven years immediately preceding the relevant FY for 729 days or more.

According to the income-tax rules in India, salary paid in India for work performed in India shall be taxable in India. Also, the global income of a resident of India is taxable in India. Therefore, you will be required to file an income tax return and report this income in India.

As per local tax laws in Dubai, your salary income earned may not be subject to tax.

In case you are subjected to tax in both the countries, you can seek relief from Double Taxation Avoidance Agreement or DTAA. You can maintain the salary slips provided to you and use them to report your salary income in India.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com

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