Tax in India for foreign employees
How India taxes you depends mostly on how many days you spend there. A few rules decide whether India taxes only your Indian salary or everything you earn.
The new Income-tax Act
India's Income-tax Act, 2025 replaced the Income-tax Act of 1961 from 1 April 2026. Section numbers and some terminology have changed, but the core concepts below, residence, sources of income and treaty relief, continue. Check current provisions with a tax adviser.
Residence
Your residential status is set for each Indian financial year (April to March), mainly by the number of days you spend in India. As a broad rule, spending 182 days or more in India in a financial year makes you resident. There are additional tests and an intermediate status ("not ordinarily resident") that often applies to people in their first years in India.
- Resident and ordinarily resident: taxed on worldwide income
- Not ordinarily resident: taxed mainly on Indian income
- Non-resident: taxed on Indian income only
Salary for work in India
Salary for work done in India is taxable in India, regardless of where it is paid. Employers in India deduct tax at source from salary.
Short visits
A short-stay exemption can apply to foreign nationals who work in India for a short period (not more than 90 days in a year) for a foreign employer that does not carry on business in India, provided the cost is not charged to an Indian entity. Tax treaties may give similar relief, often with a 183-day test.
Double taxation agreements
India has tax treaties with all major EU countries. They decide which country taxes which income and how to give credit for tax paid in the other country.
Social security: EPF for international workers
Foreign nationals working for an Indian establishment covered by provident fund rules are generally treated as "international workers" and contribute to the Employees' Provident Fund on their salary. If you come from a country that has a social security agreement with India and you hold a certificate of coverage from your home system, you may be exempt.
Where to start
- Get a PAN soon after arrival
- Keep records of your days in India
- Ask your employer about tax equalisation if you are on an assignment
- File returns in both countries where required, claiming treaty relief
