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Rishabh   05 August 2021

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?

Rishabh Sharma


 2 Replies

BHAVYA SOM GARG   07 August 2021

Greetings of the day. Hope you are doing well.

Well, you are correctly informed that you are a ‘tax-resident’ for the purposes of computation of tax liability on the basis of your stay of more than 182 days in India. Since you are a tax resident for FY 2021-2021, your income is liable to be taxed upon. Your salary, whatever has been earned or accrued (expected to be earned), shall come under the tax computation.

Now the question arises that whether your income would be taxed twice in both the countries. Here I wish to tell you that the Government of India has a Double Taxation Avoidance Agreement (DTAA) with the Government of the United Kingdom wherein it has been agreed upon to that the income would be taxed only in one country. Since, as per the information provided by you, your income is not taxed in the United Kingdom, it can be taxed in India.

Rishabh   09 August 2021

Many thanks for your advice.

As I stated, I work for an International Organisation and there is a treaty between UK Government and my Organisation based on which we are not required to UK income tax.

But I pay an internal tax to my Organisation which is almost the same rate as UK income tax.

The problem is, India is not a member country of my Organisation and India doesn't provide any such tax exemption.

Indirectly, I have paid a huge amount of salary in internal tax, is there any way to get it considered for double taxation avoidance?

Best regards,

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