Last reviewed: 24 September 2026. A recurring, and often unwelcome, surprise for NRIs: salary from a foreign employer, paid into a foreign bank account, for work an employee has always thought of as "done abroad," can still attract Indian tax if part of it was actually performed while the person was physically present in India. The trigger is not where you are paid or where your employer sits – it is where the services were rendered.
Why a short India visit can create a tax exposure
Section 9(1)(ii) of the Income-tax Act deems salary income to accrue or arise in India if it is earned for services rendered in India – this applies irrespective of the employee's residential status, where the employment contract is based, or where the salary is actually disbursed. In practice, this means an NRI who flies to India for two weeks of client meetings, training, or hybrid work while on a foreign employer's payroll has, strictly, made a proportionate part of that period's salary taxable in India – the days-in-India apportionment of salary becomes an Indian-source receipt.
This catches people off guard because the natural assumption is "I'm an NRI, my salary is foreign, it's not India's business." Residential status determines global taxability (whether your worldwide income is taxed in India); Section 9(1)(ii) operates independently and taxes India-sourced income – including salary for India-rendered services – even for a non-resident whose other foreign income is entirely outside India's tax net.
The one statutory exception: government employees
Section 9(1)(iii) reverses the logic specifically for salary paid by the Government of India to an Indian citizen for services rendered outside India – that salary remains taxable in India even though the services were performed abroad. This is a narrow carve-out for government employees and does not extend to private-sector NRIs; for everyone else, the general Section 9(1)(ii) place-of-service test governs.
DTAA Article 15: the 183-day escape route
Most of India's tax treaties (following the OECD/UN model's Dependent Personal Services article, typically Article 15) allow salary for employment exercised in India to remain taxable only in the employee's country of residence if all three conditions are met:
| Condition | What it requires |
|---|---|
| 183-day presence test | The employee is present in India for 183 days or less in the relevant 12-month period (the exact period definition varies by treaty) |
| Employer residence | The remuneration is paid by, or on behalf of, an employer who is not a resident of India |
| No India permanent establishment bearing the cost | The remuneration is not borne by a permanent establishment or fixed base that the employer has in India |
All three must hold together – meeting the 183-day test alone does not secure exemption if, for instance, an Indian group entity or branch office effectively bears the cost of that employee's time. Claiming this relief requires a Tax Residency Certificate and the treaty-specific declaration for the relevant financial year.
Worked example. An NRI employed by a US company visits India for 25 days on a work assignment, with salary paid entirely from the US and no Indian entity involved in bearing the cost. Under Section 9(1)(ii), the India-days' proportion of salary is technically India-source income; but since the 183-day test, foreign-employer-payment test, and no-India-PE test are all satisfied, DTAA Article 15 exempts that portion from Indian tax, subject to furnishing the TRC and treaty declaration. Contrast this with an employee seconded to an Indian subsidiary that reimburses the parent for the employee's salary – there, the "borne by an India PE" condition can fail, and the exemption may not apply even within 183 days.
Professional and consulting income: a different set of provisions
Independent professionals – consultants, freelancers, and NRI professionals invoicing Indian clients directly rather than drawing a salary – are assessed differently. Fees for professional or technical services paid by an Indian resident to a non-resident generally fall under Section 9(1)(vii) (fees for technical services) or the broader business-connection test under Section 9(1)(i), and the Indian payer is typically required to deduct TDS under Section 195 before remitting payment. Whether a treaty benefit (often a lower rate, or an exemption if there's no permanent establishment/fixed base in India) applies again depends on the specific DTAA's Fees for Technical Services or Independent Personal Services / Business Profits article, and on furnishing the TRC and Form 10F/41 to the Indian payer in advance.
What to actually track
- Log India entry and exit dates precisely for every financial year – the 183-day count (and residential-status day-count separately) depends on exact dates, not approximate recollection.
- Confirm, in writing if possible, which entity bears the cost of your salary during any India work period – this affects the "borne by an India PE" condition independently of the day count.
- For consulting income, ensure Indian clients have your TRC and treaty declaration before they process payment, so TDS under Section 195 is deducted at the correct treaty rate rather than the higher default rate.
- Where Indian tax is genuinely payable alongside foreign tax on the same income, claim Foreign Tax Credit under Section 90/91 via Form 67 rather than absorbing both taxes in full – this needs to be filed before the return, not as an afterthought.
This works alongside your broader NRI filing position – see our NRI tax hub on ITR filing, property, TDS and remittances and, if you also hold Indian investments, our note on how dividend and capital market income is taxed separately for NRIs.
Frequently asked questions
I am an NRI on a foreign payroll. Does a 10-day work trip to India really make part of my salary taxable here?
Technically, yes, under Section 9(1)(ii), the India-days' proportion of your salary is India-source income. Whether it is actually taxed depends on whether your DTAA's Article 15 conditions – the 183-day test, foreign-employer payment, and no India permanent establishment bearing the cost – are all satisfied.
Does the 183-day DTAA exemption apply automatically, or do I need to claim it?
It must be claimed, typically by furnishing a Tax Residency Certificate and the relevant treaty declaration. It is not applied automatically by an employer or by the tax department without that documentation.
My Indian subsidiary reimburses my US employer for my salary during my India visits. Does that affect the DTAA exemption?
It can. One condition for Article 15 relief is that the remuneration is not borne by a permanent establishment or fixed base the employer has in India. A reimbursement arrangement can cause this condition to fail even if you are in India under 183 days.
How is consulting income from Indian clients different from salary income for an NRI?
Consulting or professional fees are generally assessed under Section 9(1)(vii) (fees for technical services) or the business-connection provisions, not under the salary-specific Section 9(1)(ii), and Indian payers typically deduct TDS under Section 195 before remittance, subject to treaty rates where claimed.
Can I claim credit in my country of residence for tax paid in India on India-sourced salary?
Often yes, depending on your country of residence's own foreign tax credit rules and the applicable DTAA, but this needs to be verified with a tax advisor in that country as well – the Indian side only governs what India taxes and what relief it grants against Indian tax.
Do I need to file an Indian tax return if my only India-taxable amount is a small salary apportionment?
If any income is taxable in India, a return is generally required to report it, even if the amount is modest or the DTAA ultimately reduces the tax payable, subject to applicable exemption/filing thresholds for the relevant year.
We map your Section 9(1)(ii) exposure against your DTAA and handle the filing and treaty documentation.
Income Tax Filing NRI Lower TDS Certificate Talk to usThis article summarises the taxation of NRI salary and professional income under Indian domestic law and typical DTAA provisions as understood on the date of review. General information, not advice on your specific facts – confirm details against the current forms/portal and consult us or your tax advisor before acting. CA Somesh Chandak & Associates, FRN 158694W.