Tax Implication on Salary earned out side India by Resident Indian as well as Interest earned on Fixed deposits - NRE

[PRIYAM KHAMBHATA]

Respected Sir

My client is employee of US based Company since long. He is doing Job in India (Work from Home) and earned Salary in USD, which is credited in US Bank Account. Subsequently, he has transferred the funds from US Bank account to NRE Bank Account operate in India for family maintenance. Further, he has also parked surplus funds in Fixed deposits - NRE and earned Interest on NRE Fixed deposit.

My Query is Whether, my client is to claim Exemption towards salary income earned in US dollar in US Bank Account, and also to claim Exemption towards interest income earned on fixed deposits (NRE) .

Please Guide me.

If possible share any circular or any case laws in favor or against for my knowledge.

 

AI Summary

Foreign salary taxation turns on where services are rendered; NRE deposit interest remains exempt only while non-resident status continues.
Salary received in a foreign bank account remains taxable in India where services are rendered from India, since place of payment, currency, and later transfer to an NRE account do not affect accrual. Interest on NRE fixed deposits is exempt only while the assessee qualifies as a person resident outside India under FEMA; once resident status is acquired, the exemption ceases and the interest becomes taxable. Routing funds through an NRE account does not alter the taxability of the underlying income.