Archive · 23 Jul 2026
ITAT rules foreign salary in NRE account not taxable for NRIs
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has ruled that foreign salary earned by a non-resident Indian (NRI) and credited to a Non-Resident External (NRE) account is not taxable in India.
The case involved Pralay Pradyotkanti Ghosh, who received ₹45.66 lakh as salary from Oceaneering International GmbH for work done outside India.
The tax department initially accepted his claim but later tried to reopen the case, arguing that the salary could be taxable because tax was deducted using an Indian TAN.
The ITAT, however, upheld the original assessment, stating that foreign income is not taxable in India just because it is remitted to an NRE account or because tax was deducted using an Indian TAN.
The tribunal also noted that the Assessing Officer had conducted proper verification of the taxpayer's documents.
The ITAT ruled that foreign salary in an NRE account is not taxable in India.
Pralay Pradyotkanti Ghosh received ₹45.66 lakh as salary from Oceaneering International GmbH for work done outside India.
The tax department initially accepted Ghosh's claim but later tried to reopen the case under Section 263 of the Income-tax Act.
The ITAT upheld the original assessment, stating that foreign income is not taxable in India just because it is remitted to an NRE account or because tax was deducted using an Indian TAN.
The tribunal noted that the Assessing Officer had conducted proper verification of the taxpayer's documents, including employment contract, passport, travel records, bank statements, Form 26AS, and proof of residential status.
- Who
- Pralay Pradyotkanti Ghosh, a non-resident Indian (NRI)
- What
- Income Tax Appellate Tribunal (ITAT) ruled that foreign salary in NRE account is not taxable in India
- When
- Assessment Year 2016-17
- Where
- Ahmedabad, India
- Why
- The taxpayer argued that the income was earned outside India and thus not taxable in India as a non-resident.
Tax Department's View
Taxpayer's View
Taxability of Foreign Income
Tax Department's View
The Principal Commissioner of Income Tax (PCIT) argued that the salary could be treated as taxable income in India because tax was deducted using an Indian TAN.
Taxpayer's View
The taxpayer, Pralay Pradyotkanti Ghosh, claimed that the income was earned outside India and thus not taxable in India as a non-resident.
Verification of Documents
Tax Department's View
The PCIT contended that the Assessing Officer (AO) failed to adequately verify the employment agreement, work location, passport records, and other supporting documents.
Taxpayer's View
The taxpayer provided documents including the employment contract, passport, travel records, bank statements, Form 26AS, and proof of residential status, which the AO verified.
- Taxpayer
- Pralay Pradyotkanti Ghosh
- Assessment Year
- 2016-17
- Taxable Income Declared
- ₹1.16 lakh
- Exempted Salary Income
- ₹45.66 lakh
- Employer
- Oceaneering International GmbH
- Section of Income-tax Act Invoked
- Section 263
- Tribunal's Decision
- Set aside revision proceedings, upheld AO's assessment