Global income and Indian taxes – two words that don’t usually go together for NRIs. But come tax season, income reporting is one of the most confusing topics. If you’re an NRI earning abroad but still have ties to India – like property, investments, or family – you’ve probably wondered:
Do I need to report my global income in India?
Is foreign salary taxable in India?
What if I already pay tax abroad—will India tax me again?
Let’s break it all down, minus the jargon. By the end of this blog, you’ll know exactly when your global income needs to be reported in India – and when it doesn’t.
Step 1: Know Your Tax Residential Status
Your tax liability in India doesn’t depend on your citizenship. It depends on your residential status—which is calculated each financial year (April to March).
You’re considered a Non-Resident Indian (NRI) if:
- You spent less than 182 days in India during the year,
or - You were in India for less than 120 days in the year and less than 365 days in the past 4 years.
This matters because:
- If you’re a Resident and Ordinarily Resident (ROR): India taxes your global income.
- If you’re Resident but Not Ordinarily Resident (RNOR): India taxes only your Indian income and some foreign income.
- If you’re an NRI: India taxes only your Indian income. Foreign income is generally not taxed.
What Counts as Global Income?
Here’s a quick idea of what qualifies as global income:
- Salary earned abroad
- Business income from another country
- Income from property or investments located outside India
- Dividends, interest, or pension from foreign sources
- Capital gains from foreign stocks or property sales
Whether you need to report this income in India depends on where the income is earned and where it’s received.
When You Don’t Need to Report Global Income
If you’re an NRI and your foreign income is:
- Earned outside India
- Received in a foreign bank account
Then you don’t need income reporting in your Indian income tax return.
Example:
You live in Canada, earn a salary there, and it gets credited to your Canadian bank account.
No reporting or tax required in India.
When You Must Report Global Income
Even as an NRI, there are certain cases where you foreign income reporting in India is a must:
- If the income is received directly in India
For example, if your US company credits your salary to your Indian bank account, it becomes taxable in India. - If the income is from a business controlled from India
Let’s say you live in Dubai but run a business from India that earns money overseas. That income will be taxed in India. - If you want to claim relief for foreign tax paid
Even if the income isn’t taxable, you might want to declare it to claim credit under DTAA.
What Is DTAA and Why It Matters
India has signed Double Taxation Avoidance Agreements (DTAA) with over 85 countries. If you’re paying tax abroad, DTAA helps make sure you don’t pay tax again on the same income in India.
Under DTAA, you can either:
- Claim tax credit in India for tax already paid abroad, or
- Get exemption from paying tax in India on certain types of foreign income
To claim this, you must file Form 67—and it has to be filed before your ITR.
What Is Form 67 and How to File It
Form 67 is used to declare foreign income and tax paid abroad when you’re claiming relief under DTAA. It needs to be submitted before filing your income tax return.
You’ll need:
- Tax deduction certificates from the foreign country
- Tax residency certificate (TRC) from the foreign government
- Details of income earned and tax paid
Without Form 67, even if you qualify for DTAA, your claim for relief will be rejected.
Do NRIs Need to File a Tax Return in India?
Yes, if:
- You have any taxable income in India (like rent, interest, capital gains)
- You want to claim a refund for TDS deducted in India
- You want to claim DTAA relief
If you have only foreign income and no Indian income, filing is not mandatory—but still recommended for transparency.
Which ITR Form Should You Use?
- ITR-2: If you have capital gains, rental income, or foreign income/assets.
- ITR-3: If you have business/professional income (including foreign-controlled business).
As an NRI, you can’t use ITR-1, even if your income is simple.
What Are Schedule FSI, TR, and FA?
When filing your ITR, you may need to fill out:
- Schedule FSI (Foreign Source Income): For reporting income earned abroad
- Schedule TR (Tax Relief): To declare the relief you’re claiming under DTAA
- Schedule FA (Foreign Assets): If you’re a resident with foreign holdings, or an RNOR with Indian income credited abroad
Note: NRIs usually don’t need to fill Schedule FA unless their status changes.
What Happens If You Don’t Report?
If you fail reporting foreign income or assets when required, penalties can be steep:
- ₹10 lakh fine for non-reporting of foreign assets
- 30% tax on undisclosed foreign income or assets
- Possibility of prosecution under the Black Money Act
Smart Filing Tips for NRIs
- Confirm your residential status every year—it affects your tax liability.
- Keep separate bank accounts for Indian and foreign income.
- Convert foreign income using RBI’s TTBR exchange rate when filing.
- Always keep documents like foreign tax returns, TRC, and bank statements.
- If in doubt, consult a qualified CA with NRI experience.
Real-Life Scenario
Arjun lives in Singapore.
He earns a salary there and sends some money to his parents in India. His salary is credited to his Singapore bank account.
Does he need to report it in India?
No, unless he brings the income directly into his Indian bank account.
Now say Arjun has an apartment in Mumbai that he rents out.
He must report and pay tax on the Indian rental income—even though he lives abroad.
Final Thoughts
Being an NRI comes with financial freedom—but also tax responsibilities. The good news is, most global income isn’t taxable in India if earned and received abroad. But filing the right forms, declaring when needed, and using DTAA benefits can help you avoid double taxation and penalties.
Stay compliant, file smart, and always keep your records in order. And if the paperwork feels overwhelming – there are experts who can handle it for you.
Need help with NRI tax filing or DTAA claims?
Get in touch with professionals who specialize in cross-border taxation. One smart move today can save you a lot of stress tomorrow.
FAQs
1. Is my foreign salary taxable in India if I’m an NRI?
No—unless it’s received in India or connected to a business controlled from India.
2. What if I paid tax abroad? Do I have to pay again in India?
Not if you file Form 67 and claim relief under DTAA.
3. Do I have to file ITR in India if I only have foreign income?
Not mandatory—but advisable if you remit funds or want to claim refunds/reliefs.
4. What happens if I don’t file Form 67?
You lose your foreign tax credit, and your income could be taxed twice.
5. Do I need to report my overseas property?
Only if you’re a resident or RNOR. NRIs don’t need to income reporting unless it is credited in India.
