Rohit (name changed) moved to Dubai in 2022 and kept his job. Same Bengaluru employer, same team, same laptop, new time zone. His salary kept landing in the same Indian savings account he had used since 2014. Nobody at his company flagged it. Nobody at his bank flagged it. Three years later he asked me a question I now hear almost every month: “I am an NRI, so my Indian salary is tax free now, correct?”
Not quite. And the answer has very little to do with his visa, and almost everything to do with two things nobody had asked him about: where he was physically sitting when he did the work, and which bank account the money touched first.
⚡ Quick Answer
Yes, an NRI can legally work remotely for an Indian company or bill Indian clients. There is no FEMA or visa bar on it. What decides your Indian tax is where the services are performed and where the money is first received, not who signs your payslip. If you work entirely from outside India, salary for that work is generally not taxable in India, but crediting it straight into an Indian bank account can pull it back into the Indian net. Salary TDS runs under Section 192, freelance and consulting fees under Section 195 at 20% plus surcharge and cess unless a treaty rate applies. Also watch the 120-day and deemed-residency rules if your Indian income crosses Rs 15 lakh.
Must Read – Income tax for NRIs
Yes, You Can Work Remotely. That Was Never the Hard Part.
Let us clear the legal question first, because it worries people far more than it should. An NRI, an OCI holder, or an Indian passport holder living abroad may work remotely for an Indian employer or serve Indian clients. Nothing in FEMA stops it. Your Indian company can keep you on its payroll while you live in Sharjah, Singapore or Lisbon.
The hard part is what follows the money. Once rupees move from an Indian payer to you, three separate systems wake up: income tax, withholding tax, and sometimes GST. Each one asks a slightly different question, and they do not all give the same answer. That is where careful people get caught.
Your Residential Status Sets the Boundary
Everything starts with a day count. Not your passport, not your visa, not your Emirates ID. Days.
| Your situation in that tax year | Status | What India can tax |
|---|---|---|
| Under 182 days in India, and the 60-day test not triggered | Non-resident (NRI) | Only income accruing or received in India |
| Indian income above Rs 15 lakh and 120 to 181 days in India, with 365+ days across the previous four years | RNOR | Indian income taxed, most foreign income stays out |
| Indian citizen, Indian income above Rs 15 lakh, not liable to tax anywhere else by reason of residence or domicile | Deemed resident, treated as RNOR | Indian income taxed even with zero days in India |
| 182 days or more in India | Resident | Worldwide income, plus foreign asset reporting |
One update worth knowing. The Income-tax Act, 2025 replaced the 1961 Act with effect from 1 April 2026 and introduced the single “tax year” in place of previous year and assessment year. The residency framework itself was carried over intact. The 182-day test, the 60-day plus 365-day test, the 120-day threshold for higher-income visitors and the deemed-residency rule all survived, in renumbered sections. Income for FY 2025-26 is still governed by the old Act. If you knew these rules last year, you still know them.
⚠ The Gulf Trap in the Deemed-Residency Rule
The deemed-residency provision was written with zero-tax jurisdictions in mind. If you are an Indian citizen in the UAE, Saudi Arabia, Kuwait, Qatar or Bahrain, you pay no personal income tax there, so you are not “liable to tax” in your country of residence. Cross Rs 15 lakh of Indian income and India can treat you as a deemed resident, even in a year you never landed here. The relief is that you land in RNOR, not full resident, so your overseas earnings stay outside the Indian net. But the filing obligation is real.
If You Are on an Indian Company Payroll
Salary is taxed where the work is done. That is the whole principle. Salary is deemed to accrue in India when the services are rendered in India, so if you sit in Dubai and do the work in Dubai, that salary does not accrue in India, whatever your employment contract says and whoever your employer is.
Two practical points your HR team may not have thought through. First, TDS on salary runs under Section 192, not Section 195, regardless of your residential status. Your employer estimates your taxable Indian salary for the year and deducts at slab rates. You get Form 16, not Form 16A. Second, if your employer concludes that no part of your salary is taxable in India, that position needs to be documented and defensible. A tax residency certificate, a record of your days outside India, and a contract that says where the work is performed are worth more than an email exchange.
Read more – RNOR Status
The Question I Ask First: Where Does the Money Land?
Before I look at anyone’s contract, I ask which account the salary hits first. This is where the argument actually happens. Alongside the accrual test, Indian law also taxes a non-resident on income received in India. Tribunals have gone both ways on foreign-earned salary credited straight to an Indian account. Several rulings have held that money merely credited to an Indian bank account, for work performed abroad, is not taxable here. Others have held the opposite, because the first receipt happened in India. That split is not a technicality. On a Rs 60 lakh package, the difference between the two readings is roughly Rs 15 to 18 lakh of tax, on the same salary, for the same work.
You do not have to win that argument. You can avoid it. Receive the salary in your overseas account first, then remit what you need to India. A five-minute change to a payroll instruction removes a dispute that takes five years to settle.
Working for an Indian employer while living abroad?
We help NRIs structure salary routing, residency day counts and treaty claims before the tax year closes, not after a notice arrives.
If You Freelance or Consult for Indian Clients
Different section, different rate, different paperwork. Fees for professional or technical services paid to a non-resident fall under Section 195, which covers sums other than salary. The standard rate is 20% plus applicable surcharge and cess, and there is no minimum threshold. A one-off Rs 40,000 invoice attracts it just as a Rs 40 lakh retainer does.
Your Indian client must hold a TAN, deduct before crediting your account, file Form 27Q quarterly, and issue you Form 16A. Before the money leaves India, the payer files Form 15CA and usually obtains Form 15CB from a chartered accountant.
Now the part most freelancers miss. That 20% is a default, not a destiny. Under most treaties, income from independent professional services is taxable only in your country of residence, unless you keep a fixed base regularly available in India or your presence here crosses the threshold the treaty specifies. To claim it you need a tax residency certificate from your country of residence and an electronically filed Form 10F, refiled every year. A UAE certificate needs 183 days of physical presence there. Miss the paperwork and your client will deduct at the full rate, and you will spend the next year chasing a refund from a jurisdiction you no longer live in.
The GST Question Almost Everyone Gets Backwards
This is the single most common error I see repeated in articles on this subject, so read it slowly.
The Rs 20 lakh and Rs 40 lakh registration thresholds apply to suppliers located in India. You are not one. When you sit in Dubai or Singapore and provide a service to an Indian business, that is an import of services from India’s point of view. Your Indian client pays IGST on it under reverse charge and usually claims it back as input credit. You do not register, you do not charge GST, you do not file returns.
There is one real exception. If you supply digital services directly to Indian consumers who are not registered under GST, an online course, an app subscription, a paid newsletter, you fall under the OIDAR regime. Then the obligation flips to you as the overseas supplier, under a simplified registration with monthly returns. A consultant billing three Indian companies is not in that category. Someone selling a subscription product to 4,000 Indian individuals is.
Why Careful, Well-Advised People Still Get This Wrong
Rohit is a product manager. He reads terms and conditions. He is not careless with money. So why did three years pass?
Because of status quo bias, the pull toward whatever is already running. When your life changes, your systems do not change with it unless someone deliberately changes them. Rohit’s visa changed. His address changed. His children’s school changed. His salary account, his payroll instruction and his employment contract did not, because nothing was broken and no form demanded it. His payslip looked identical to the one he received when he lived in Whitefield. Identical payslip, entirely different tax law.
In practice, the moment of exposure is almost never the moment of the mistake. It is a bank query, a scrutiny notice, or a mortgage application in the new country, three or four years later, when reconstructing the day count is difficult and the TDS window has long closed. The mistake was silent, and silence is what makes it expensive.
PAN, Filing and What to Keep on Record
If you hold a PAN, file a return even in a year when nothing is payable. It keeps your record continuous, explains your TDS credits, and closes the door on someone else filing against your PAN. A dormant PAN attached to Indian-source income is exactly the profile that draws routine queries.
Keep four things every year, in one folder: a day-count log with entry and exit stamps, your tax residency certificate and the Form 10F acknowledgement, Form 16 or Form 27Q credits reconciled against your Form 26AS and AIS, and the contract clause that states where services are performed. If a question ever comes, those four documents answer it in an afternoon rather than a season. Also check whether advance tax applies, because Indian tax liability of Rs 10,000 or more in a year triggers it, and interest runs quietly until you do.
Read also – NRI TDS explained and tax saving strategies for NRIs.
Frequently Asked Questions
Can an Indian company legally keep me on its payroll after I move abroad?
Yes. There is no legal bar. What changes is the tax and withholding treatment, not your right to hold the job. Your employer’s payroll system, however, needs to be told, because it will otherwise keep deducting as though you never left.
My salary comes from an Indian company but I never enter India. Is it taxable here?
Salary for services performed entirely outside India generally does not accrue in India. The risk sits in where you receive it. Money credited first to an Indian account has been litigated both ways, so receiving it abroad first is the cleaner route.
Should my Indian salary go to an NRE or an NRO account?
Indian-source salary is credited to an NRO account, not NRE. NRE accounts are for funds remitted from abroad. Routing Indian salary into an NRE account is a FEMA problem, not just an inconvenience.
Do I need GST registration if I bill Indian clients from abroad?
For services to Indian businesses, no. Your client accounts for it under reverse charge. Only supplies of digital services directly to unregistered Indian consumers bring you into the OIDAR net.
Does the Income-tax Act, 2025 change any of this for me?
The section numbers changed and “tax year” replaced previous year and assessment year from 1 April 2026. The residency tests and the taxing principles carried over unchanged. The substance of your position is the same.
I have been getting it wrong for three years. What now?
Reconstruct the day counts first, then check whether each year was actually taxable. Many people who assume they owe tax discover they do not, and the ones who do owe are usually better off filing updated returns voluntarily than waiting for a notice.
Not sure which of these actually applies to you?
Most remote-work tax problems take one conversation to diagnose and years to unwind. Let us look at your situation before the tax year closes.
You changed your country, your address and your currency. The one thing you did not change was the account your salary lands in.
Tax notices do not arrive when the mistake is made. They arrive when it is expensive.
💬 Your Turn
If you work remotely for an Indian employer or client, which account does your money land in first, and did anyone tell you it mattered? Share what you were advised, or not advised, below.
