The ruling reinforces the settled legal position that foreign salary earned and received outside India by a non-resident is not taxable merely because it is remitted to an Indian NRE account
On 9 February 2026, the Income Tax Appellate Tribunal (ITAT) Ahmedabad delivered a significant ruling for non-resident Indians (NRIs). The Tribunal held that salary earned overseas and deposited in a Non-Resident External (NRE) bank account in India does not amount to income “received in India” under Section 5(2)(a) of the Income-tax Act, 1961, and is therefore not taxable in India.
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The case involved Patel, a non-resident employed with a Seychelles-based company. For the assessment year 2019–20, he earned Rs 44.24 lakh for services rendered entirely outside India
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The salary was credited to his NRE account in India
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The Income Tax Department treated this as income received in India and sought to tax it. It also made related additions on alleged unexplained foreign currency investments and bank credits
However, the ITAT drew a clear distinction between “receipt of income” and the subsequent remittance or application of income. The Tribunal observed that salary is considered received at the place where the employee first gains control over it — in this case, outside India where the services were performed. Depositing the money into an NRE account in India was merely the use of income already received abroad, not a fresh receipt in India.
The Bench relied on earlier judicial precedents, including the decision in the case of Arvind Singh Chauhan, and reiterated that income cannot be taxed twice simply because it is transferred to India later. Since the salary was not taxable, the related additions were also deleted.
