Taxability on Income Earned in India Vs Income Earned Abroad
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April 9, 2018

Taxability of Income earned abroad Vs Income Earned in India

Taxability of an income depends on where the income was received or where it was earned /accrued, whether in India or abroad. Depending on this, income will be considered to have been earned in India which helps in determining its taxability. The below article helps us to understand the concept of income earned in India.

 

 

As per normal understanding, income earned in India is considered as Indian income and income earned outside India is considered as foreign income. However, understanding the classification of income as per Income Tax Act i.e. Indian income or foreign Income is important. For the purpose of taxation, income may be earned from salary, house property, business, capital gain or any other source. Classification of such sources of income into Indian or foreign income will be decided on the basis of place of earning/accrual of income and place of receipt of income. Following table will help us to understand when an income is considered to have been earned in India.

Sr No.Condition 1Condition 2Status of Income
1Received In IndiaEarn/accrued In IndiaIndian Income
2Received outside IndiaEarn/accrued In IndiaIndian Income
3Earn/accrued in IndiaReceived Outside IndiaIndian Income
4Received outside IndiaEarn/accrued outside IndiaForeign Income

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Except for income which is earned/accrued and received outside India all other income will be considered as Indian income. Also, remittance of foreign income in India will not be taxable if it was first received outside India.

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CA Madhuri Marne
CA Madhuri Marne
Madhuri is a tax expert at H&R Block (India) with over a decade of professional experience. Having co-authored a book on economics for the ICAI exam, she now enjoys writing about tax-related topics in a simple and easy manner. Outside of work, Madhuri is passionate about teaching students who are appearing for professional exams.