The Background

Our client, a Navy professional working outside India, was an NRI for the relevant year. He received his foreign salary in his Indian bank account while serving on a foreign vessel.

The tax department, however, treated this salary as taxable in India just because it was credited to an Indian account. This led to an unnecessary dispute and demand.

How HSJ & Associates Fought the Case

Representing the client, CA. Harshit Jain argued that:

• Under Section 15 of the Income Tax Act, salary is taxable only where services are performed.

• Section 9 makes it clear that salary is considered “earned in India” only if services are actually rendered in India.

• Judicial precedents like Pramod Kumar Sapra vs ITO and DIT vs Prahlad Vijendra Rao have already established that mere receipt of foreign salary in India does not make it taxable.

• CBDT’s 2017 Circular clarified that seafarers’ salary for services rendered outside India is not taxable merely because it is deposited in an NRE/NRO account.

The Judgment

The appellate authority ruled in favor of our client, holding that:

• Since the employment and services were outside India, the salary is not taxable in India.

• Simply crediting the salary into an Indian bank account does not change its taxability.

• The addition made by the Assessing Officer was fully deleted.

Why This is a Landmark for NRIs & Navy Officers

This case sets an important precedent for:
✅ Navy officers and seafarers working on foreign ships.
✅ NRIs receiving salary in Indian accounts.
✅ Professionals worried about NRI taxation in India.

It establishes that residential status and place of service determine taxation – not the location of the bank account.

Key Takeaway for NRIs

If you are an NRI and you earn your salary abroad, it will not be taxed in India even if your employer transfers it to your Indian bank account.

This judgment provides much-needed relief and clarity for thousands of Indians working overseas.

About HSJ & Associates

This success was achieved by CA. Harshit Jain, Partner at HSJ & Associates, Udaipur – a leading Chartered Accountant firm specializing in NRI taxation, international tax matters, and offshore accounting services.

HSJ & Associates has helped 2000+ clients across India and globally in matters of taxation, compliance, and legal representation.

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