Working in China, getting paid in India? Here's how to avoid Indian tax.

I am employed with a Chinese subsidiary of an Indian multinational company (MNC). I was deputed to China in July 2023 and have only visited India occasionally for 20–30 days in a year. Starting this year, I have asked the Indian parent company to credit part of my salary to my Indian bank account, since my family resides in India. I file my tax returns in China and have already paid taxes on my salary income there. Will the portion of my salary received in India be taxed again in India?

- Name withheld on request

Since your stay in India is likely to be less than 30 days in FY26, you will qualify as a non-resident under the Income Tax Act, 1961.

For non-residents, taxable income in India includes amounts that are received in India, deemed to be received in India, or that accrue or arise (or are deemed to accrue or arise) in India. Judicial precedents hold that the place where employment is exercised determines where salary income accrues. Since you render your services in China, the income accrues there, not in India. Nor can it be deemed to accrue in India, as no services are performed in India.

That said, because part of your salary is credited to your Indian bank account, such receipt technically becomes taxable in India, even if the employment is exercised abroad.

However, as a non-resident, you may claim relief under the India–China Double Taxation Avoidance Agreement (DTAA). Article 15 of the treaty provides that salary income of a Chinese tax resident is taxable only in China if the employment is exercised there. Therefore, provided you qualify as a tax resident of China under its domestic laws, the salary portion remitted to India should not be taxed again in India.

To claim this treaty benefit, you will need to obtain a tax residency certificate (TRC) from the Chinese tax authorities and submit it along with Form 10F in India.

Harshal Bhuta is a partner at P. R. Bhuta & Co.