Salary And Any Income Earned By Seafarers Are Taxable

Salary Income Is Taxable

According to Section 5(2), a non-total resident’s income for any financial year comprises all profits generated from any source that –

During such a financial year, it is received or believed to be received in India or arises in India.

accrues or arises in India during such fiscal year, or is believed to accrue or arise in India during such fiscal year.

Explanation 1:

Income accruing or arising outside India is not regarded to be received in India within the meaning of this section simply because it is taken into account in an Indian balance sheet.

Explanation 2:

For the avoidance of doubt, money that has been included in a person’s total income on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not be included in his total income on the basis that it is received or deemed to be received in India.

The Central Board of Direct Taxes has issued a clarification (CBDT)

Salary accrued to a non-resident seafarer for services rendered outside India on a foreign ship shall not be included in the total income merely because the said salary has been credited to an NRE account maintained with an Indian bank, according to CBDT Circular No. 13/2017 issued on April 11, 2017.

The CBDT also emphasizes that section 5(2)(a) states that only non-resident income received or deemed to be received in India is subject to taxation in India. To put it another way, the salary credit to an NRE bank account is just a remittance to an Indian bank account, hence section 5(2)(a) does not apply.

This circular clearly states that if the following conditions are met, the wage received will not be included in the individual’s total income:

• Non-Resident seafarer
• Service rendered outside India
• Foreign Ship
• Credited to NRE Bank account

However, because the aforesaid circular is silent in this regard, if you receive a salary from an Indian flagship or the sum is credited to an NRO bank account, it is highly recommended to have the income credited only to your NRE bank account to protect yourself from any future appeals or prosecutions.

In India, what is the taxability of pay income?

My non-resident status has expired, yet my pay is still being credited to my NRO bank account. Is it expected to be taxed in India?

In India, the salary will not be taxable. To avoid any legal issues, it is strongly advised that you deposit your salary only into your

NRE bank account.

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