An Indian citizen who relocated to India during COVID after spending approximately 10 years in the US faces tax obligations on their US-based salary despite receiving payments in a foreign account. According to tax expert Harshal Bhuta from P. R. Bhuta Chartered Accountants, the individual will be regarded as resident and ordinarily resident (ROR) in India for 2026–27 since their employment commenced in July 2026. This status is determined by their physical presence in India during the COVID period and their continued residence since then.
Under the Income Tax Act, 2025, which came into effect from April 1, 2026, individuals who qualify as ROR in India are liable to pay tax on their global income. As reported by Mint, this includes all income regardless of where it is earned, received, or credited, including income that accrues or arises outside India. In the case of this Indian citizen working remotely for a US IT company, their salary will form part of their global income and be taxable in India, even though it is proposed to be credited to their US bank account.
Under the India-USA Double Taxation Avoidance Treaty (DTAA), the right to tax this income rests with India, according to tax expert Harshal Bhuta. As ROR, the individual must disclose their foreign assets in Schedule FA of their Indian income tax return and also disclose the foreign salary under Schedule FA. This disclosure requirement applies to all foreign income and assets held by Indian residents, regardless of where they are located.
From India's foreign-exchange law perspective, since the individual is resident in India, the salary received in their US bank account must be realized and repatriated to India within 180 days from the date of receipt. As reported by Mint, receiving salary outside India alone does not allow continued holding of funds in the foreign bank account beyond the permitted period. Additionally, the individual's presence in India as an employee of a US company may give rise to permanent establishment exposure for their US employer in India, which is a separate international tax matter requiring evaluation by their employer.
