Taxation of Foreign Nationals
Who is Foreign National?
Any person who is not a citizen of India, is a foreign national.
Foreign National of Indian Origin
Any person of Indian origin who has settled abroad and granted citizenship of foreign
country, also known as NRIs'. A person is said to be of Indian origin if he, or
either of his parents or any of his grandparents, was born in undivided India.
Incomes Liable to Tax
The taxability of income of a person depends primarily upon his 'residential
status' If a foreign citizen is resident in India, all incomes received, accrued
or arisen to him in India or abroad shall be subject to tax in India. If a
foreign citizen is not resident in India, only incomes that are received, accrued or arisen to him in India, shall be taxable.
Incomes Exempt from Tax
(1) Remuneration of officials of embassies, high commission, etc.
(2) Remuneration received from a foreign enterprise for services rendered in
India, provided his stay in India does not exceed 90 days during a previous
year. [Sec.10(6)(vi)] (3)
(3) Remuneration of an employee on a foreign ship where his :t9' stay in India
does not exceed 90 days in a previous year. [Sec.10(6)(viii)
(4) Remuneration of employees of a Foreign Government, on training in certain
establishments in India. [Sec. 10(6)(xi)]
(5) Income of a Consultant under a Technical Assistance Grant Agreement. [Sec.1
For other exemptions, please refer to Chapter 'Incomes Exempt from Tax'.
Tax Liability of Foreign Nationals
Foreign nationals resident in India are liable to pay tax on the taxable income
as in case of other resident assessees.
Foreign nationals who are non-residents are liable to pay tax as under:
(i) at special rates on income from dividends (not subjected to additional
income-tax u/s 115-o), interest and capital gain from units of mutual funds/UTI,
bonds, Global Depository Receipts and shares, royalty or fees for technical
services. [Sec.115A and 115A]
(ii) at special rate of 10% in respect of gross receipts 0 sportsman for his
participation in India in a game or sports from advertisement or contribution of
articles, and income sports association. [Sec.115 BBA]
(iii) at normal rates on other incomes.
Besides, if they have investment income or long-term capital gains from any
foreign exchange asset they shall be eligible to a the special provisions of