NRE Account Credit: Is Your Foreign Salary Taxable?

A tax tribunal ruled that salary earned abroad by an NRI does not become taxable in India just because it lands in an NRE account. Many NRIs wrongly pay tax on this. Here is what you need to know.

Here's what happened: ITAT Ahmedabad cancelled a ₹12 lakh tax demand on an NRI whose foreign salary was credited to an NRE account.. The tribunal confirmed: income earned and sourced outside India by a non-resident is not taxable under Indian law.. Merely having TDS deducted via an Indian TAN or routing salary through an NRE account does NOT create Indian taxability..

What you should do: Check your residency status (NRI/RNOR/Resident) every financial year — it changes based on days spent in India.. File a revised ITR if you previously declared foreign salary as Indian income and paid tax on it incorrectly.. Avoid mixing resident and NRE account funds — keep NRE accounts exclusively for foreign-earned money to maintain clean tax records..

NRE account interest is also fully tax-free in India for NRIs — but the moment you return and become a Resident, that exemption stops immediately.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.