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Taxability Income earned in India Vs income earned abroad

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 1 Condition 2 Status of Income
1 Received In India Earn/accrued In India Indian Income
2 Received outside India Earn/accrued In India Indian Income
3 Earn/accrued in India Received Outside India Indian Income
4 Received outside India Earn/accrued outside India Foreign Income

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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