Tax Planning Checklist for Indians Earning Global Salaries

A global salary sounds simple until it meets Indian tax. You might work from Bengaluru for a company in New York, or you have just moved back after years abroad, or a foreign employer pays you into an overseas account. In each case, the same questions appear: is this taxed in India, how much, and what must I report?

Get it wrong and the mistakes are expensive, from double taxation you could have avoided to a flat penalty for a foreign asset you forgot to declare. This checklist walks through it in order, starting with the one thing that decides everything else: your residential status.

Start here: your residential status decides everything

Before any planning, settle one question: what is your residential status for this financial year? It changes whether your foreign salary is taxable in India at all.

You are a resident if you spend 182 days or more in India during the financial year, or 60 days or more in the year and 365 days or more across the previous four years. Otherwise you are a non-resident (NRI).

Residents split further:

• Resident and Ordinarily Resident (ROR): taxed on your global income. Your foreign salary is taxable in India, with treaty relief for tax paid abroad.
• Resident but Not Ordinarily Resident (RNOR): a transition status for returning Indians. You are taxed only on Indian income and foreign income from a business or profession controlled from India, so a pure foreign salary is generally not taxed here. You qualify if you were a non-resident in 9 of the last 10 years, or in India for 729 days or less in the past 7 years.
• Non-Resident (NRI): taxed only on India-sourced income. Salary for services performed abroad is generally not taxable in India.

One trap to know: under the deemed resident rule, an Indian citizen with Indian-sourced income above Rs 15 lakh who is not liable to tax in any other country is treated as a resident, specifically as RNOR. Because the day counts and conditions are fiddly, this is the first thing to confirm, ideally with a CA, every year.

Where your global salary is actually taxed

Here is the point that catches most people who live in India and work remotely for a foreign employer.

Salary is taxed based on where the work is done, not where it is paid. Under Section 9(1)(ii) of the Income Tax Act, salary for services rendered in India is taxable in India, whatever country pays it and whichever account it lands in. So if you sit in India and work for a company abroad, that salary is Indian taxable income, full stop, and you are almost certainly an ROR taxed on your global income anyway.

Receiving the money in a foreign bank account does not change this. What decides taxability is your residential status and where you performed the work, not the location of the account.

The one common exception in your favour is the returning NRI in the RNOR window. If you have just moved back after years abroad, your foreign income can stay outside the Indian net for the RNOR period. That window is valuable and time-limited, so plan around it deliberately.

Checklist 1: report and pay correctly

If you are a resident with a global salary, work through these.

• Report the full salary in your return. Declare it as salary income, and use the foreign-income schedules where your foreign earnings and any foreign tax are captured.
• Claim Foreign Tax Credit if tax was withheld abroad. File Form 67 on the income tax portal before or along with your return, and claim relief under the relevant Double Taxation Avoidance Agreement (DTAA). This stops you being taxed twice on the same salary. Our guide to foreign tax and the India-US DTAA explains the mechanics, and they carry over to other treaties.
• Pay your own advance tax if no Indian tax is deducted. A foreign employer usually does not deduct Indian tax at source. If your total tax for the year will exceed Rs 10,000, you must pay advance tax yourself in installments, or interest builds under Sections 234B and 234C. Our advance tax guide has the dates.
• File the right ITR form. Foreign income and foreign assets rule out the simple ITR-1. You will usually file ITR-2, or ITR-3 if you also have business income. Our guide on which ITR form to file helps you choose.

Checklist 2: the foreign-asset disclosure you cannot skip

This is the most expensive item to get wrong, and the most commonly missed.

If you are a resident (ROR), you must disclose your foreign assets in Schedule FA of your return. That covers foreign bank accounts, foreign shares including RSUs and ESOPs from a foreign employer, foreign retirement accounts, property, and any account where you have signing authority.

• Declare every foreign asset, even if it produced no income this year, and even if the money is small. Disclosure is about holding the asset, not just earning from it.
• Take the penalties seriously. Under the Black Money Act, omitting a foreign asset can attract a flat penalty of Rs 10 lakh, and undisclosed foreign income can be taxed at 30% with a penalty of up to 300%. This is not a rounding-error risk.
• Note the RNOR relief. Schedule FA is not required from a non-resident or an RNOR. So a returning NRI in the RNOR window has breathing room, but the year you become ROR, disclosure begins.

If you hold RSUs from a US employer or a foreign bank account from your years abroad, this is the item to double-check with a professional before you file.

Checklist 3: plan to keep more

Once the reporting is right, a few choices reduce what you actually pay.

• Choose your tax regime every year. The new regime is the default, with a Rs 75,000 standard deduction but few exemptions. The old regime allows HRA, Section 80C, 80D, and the extra NPS deduction, which can win if you have meaningful rent and investments. Compare both each year rather than assuming. Our guide to income tax in India explains the two.
• Use old-regime deductions where they fit. Under the old regime, the National Pension System (NPS) gives an extra Rs 50,000 deduction under Section 80CCD(1B), on top of the Rs 1.5 lakh under 80C, and health insurance is deductible under 80D. Our guide to building your own safety net covers these. If a foreign employer pays you directly with no Indian salary structure, you cannot restructure components like HRA, but you can still claim these deductions in your return.
• Plan ESOP and RSU taxation early. Shares from a foreign employer are taxed twice over their life: as a perquisite added to your salary when they vest or you exercise, and as capital gains when you sell. The catch is cash flow, since the first tax can fall due at vesting before you have sold anything. Decide your exercise and sale timing with that in mind, and remember these shares also go in Schedule FA.

Keep these documents, and mind the returning-NRI window

Good records turn a stressful filing into a quick one. Keep, for each year:

• Your employment contract and monthly payslips.
• Proof of foreign tax paid, such as a Form 1042-S or the foreign equivalent of Form 16.
• Your Tax Residency Certificate and Form 10F, if claiming treaty benefits.
• Foreign and Indian bank statements, and your Form 67 acknowledgment.
• Passport and visa pages that establish your day count for residency.

If you are moving back to India, plan around the RNOR window before you land. During it, your foreign salary and income can stay outside Indian tax, which is the best time to organise foreign accounts and repatriation. Once you become ROR, global income and Schedule FA disclosure both begin, so the transition year deserves real attention.

Conclusion

Tax planning for a global salary is less about clever tricks and more about getting the order right. Fix your residential status first, because it decides whether your foreign salary is taxable in India at all. If you are a resident, report the salary, claim your Foreign Tax Credit so you are not taxed twice, pay your own advance tax, and disclose every foreign asset in Schedule FA.

Then, and only then, optimise: pick the right regime, use the deductions that genuinely fit, and plan your ESOPs before they vest. Because cross-border rules are unforgiving and change often, treat a good chartered accountant as part of the plan, not an optional extra.