Remote Work from India: Tax Implications for Short Stays and NRI Gift Transfers
For non-residents, Indian taxation primarily applies to income that accrues or arises within the country. This principle becomes crucial in cross-border scenarios involving remote work and financial gifts. Here, we explore two common situations where Indian tax rules come into play, providing clarity for individuals navigating these complexities.
Tax Exemption for Remote Work During Short Visits
Consider a US citizen and resident holding an OCI card, employed by a US-based technology company. This individual typically visits India for two to three weeks annually but plans an extended stay of 15–20 days in February 2026 for a family function, during which remote work will continue. The key question is whether this triggers tax complications in India.
Given that the stay in India will be less than 60 days during the financial year, the individual is expected to maintain non-resident status for Indian tax purposes. Generally, salary income is taxable in India if services are rendered while physically present in the country. However, Indian tax law offers a specific exemption under certain conditions:
- The employer must not be engaged in any business in India.
- The individual's stay in India should not exceed 90 days during the relevant financial year.
- The remuneration should not be deductible from the employer's taxable income in India, if applicable.
In this scenario, since all conditions are met, the salary earned from the US employer for remote work performed during the February 2026 visit should be exempt from Indian tax. This exemption provides relief for short-term visitors who need to work remotely without facing additional tax burdens.
TCS Applicability on Gifts to NRIs
Another common cross-border situation involves gifting money to non-resident Indians. For instance, a 60-year-old resident Indian wishes to gift approximately ₹30 lakh to their daughter, an NRI, by crediting it to her NRO account to avoid foreign remittance hassles. The concern here is whether Tax Collected at Source applies.
Technically, such a gift transfer falls under the Liberalised Remittance Scheme, making TCS provisions applicable. Since the amount exceeds the prescribed threshold, authorized dealer banks are required to collect TCS at a rate of 20%. However, in practice, many banks may not enforce this collection for rupee-denominated gifts.
If TCS is collected, it is not a final tax cost. The amount can be claimed as a credit against tax liability or as a refund when filing the income-tax return for the relevant financial year, depending on the individual's overall tax position. This highlights the importance of understanding both the rules and current banking practices.
Expert analysis from Harshal Bhuta, Partner at P. R. Bhuta & Co. CAs, underscores that while Indian tax laws have specific provisions for these scenarios, compliance and practical implementation require careful navigation. Staying informed about exemptions and TCS rules can help individuals manage their finances effectively across borders.
