The Situs of Salary

In this case, the Tribunal examined whether salary earned by a non-resident employee working abroad becomes taxable in India simply because it is credited to his NRE account in India. The tax authorities treated the bank credit in India as receipt of income in India. However, the Tribunal clarified that the relevant test is where the income is first received or accrued. Since the services were rendered abroad and the employee had control over the income outside India, the salary was considered received outside India. The transfer to the NRE account was only a subsequent remittance and therefore not taxable in India.