Bengaluru tribunal orders a fresh review of a tax dispute involving overseas employment income credited in US dollars to a non-resident Indian account
The Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) has set aside a tax assessment involving an Indian national who worked in South Korea and received his salary in US dollars in a Non-Resident External (NRE) account in India. The tribunal has directed the tax authorities to reconsider the case using the evidence submitted by the taxpayer.
The case concerns an employee from Karnataka who worked at a shipyard in South Korea between September 2014 and June 2016, supervising the construction of a vessel. His employment arrangement was linked to a project involving Samsung Heavy Industries and Ocean Rig UDW Inc. His salary was fixed in US dollars and transferred directly to his Indian NRE account.
The Income Tax Department questioned the treatment of the payments after examining his bank account. The assessing officer included the overseas salary in his taxable income, citing the taxpayer’s failure to provide foreign tax returns, a Tax Residency Certificate (TRC) and evidence of tax paid abroad. The authorities also raised concerns about the disclosure of the income in his Indian tax return.
-
The taxpayer challenged the assessment, but the Dispute Resolution Panel upheld the department’s position
-
He subsequently appealed to the ITAT in Bengaluru
In its ruling on 23 September 2026, the tribunal noted that the taxpayer’s passport entries and bank statements supported his claim that he was a non-resident during the relevant assessment period. It held that the absence of foreign tax documents could not, by itself, justify rejecting his claim when other evidence was available.
The tribunal set aside the assessment and remitted the matter to the assessing officer for fresh adjudication. It directed the officer to examine the passport records and NRE account statements while reconsidering the tax treatment of the salary.
The ruling does not conclude the reassessment proceedings or amount to a blanket exemption for all overseas earnings deposited in India. The tax treatment of foreign income depends on the applicable law and the taxpayer’s residential status and circumstances.
For Indians working abroad, the case highlights the importance of maintaining clear employment, travel and banking records when responding to tax queries in India.
