The tax on the salary of non-resident technicians under income tax in India depends on the following factors:

• The number of days the technician stays in India in a financial year.
• The source of income (whether the salary is paid by an Indian employer or a foreign employer).
• The nature of the services rendered by the technician.

Tax on salary of non-resident technicians paid by an Indian employer

If a non-resident technician is paid a salary by an Indian employer, the salary is taxable in India under the head “Salaries”. The tax rate will depend on the total taxable income of the technician, which includes all income earned in India, including the salary.

Tax on salary of non-resident technicians paid by a foreign employer

If a non-resident technician is paid a salary by a foreign employer, the salary is taxable in India only if the technician stays in India for more than 182 days in a financial year. If the technician stays in India for less than 182 days, the salary is not taxable in India.

Tax on salary of non-resident technicians rendering technical services

If a non-resident technician is rendering technical services in India, the income from such services is taxable in India under the head “Business or Profession”. The tax rate will depend on the total taxable income of the technician, which includes all income earned in India, including the income from technical services.

Exemptions

There are a few exemptions available to non-resident technicians, such as:

• Exemption for salary paid by a foreign government to its employees :Salary paid by a foreign government to its employees who are serving in India is exempt from tax in India.
• Exemption for salary paid by an international organization to its employees : Salary paid by an international organization to its employees who are serving in India is exempt from tax in India.
• Exemption for salary paid for services rendered outside India : Salary paid for services rendered outside India is exempt from tax in India

FAQ QUESTIONS

Is the salary of a non-resident technician taxable in India?

A: Yes, the salary of a non-resident technician is taxable in India if the services are rendered in India. This is also true if the salary is paid or payable in India.

Q: What is the tax rate on the salary of a non-resident technician?

A: The tax rate on the salary of a non-resident technician is 30%, unless there is a double taxation avoidance agreement (DTAA) in place between India and the country of residence of the technician. If there is a DTAA in place, the lower tax rate specified in the DTAA will apply.

Q: Who is responsible for deducting tax from the salary of a non-resident technician?

A: The employer of the non-resident technician is responsible for deducting tax from the salary. The employer must deduct tax at the prescribed rate and deposit it with the Government of India.

Q: Is a non-resident technician required to file an income tax return in India?

A: Yes, a non-resident technician is required to file an income tax return in India if their taxable income in India exceeds the basic exemption limit. The basic exemption limit for the financial year 2023-24 is Rs.3,00,000 for individuals below the age of 60 years.

Q: Are there any exemptions or deductions available to non-resident technicians?

A: Yes, there are a few exemptions and deductions available to non-resident technicians. For example, non-resident technicians are exempt from tax on their salary for any period during which they are not present in India. Additionally, non-resident technicians are entitled to the same deductions as resident taxpayers, such as the deduction for house rent allowance, transport allowance, and leave travel allowance.

CASE LAWS

• CIT v. Hindustan Brown Boveri Ltd. (1965) 58 ITR 150 (SC): The Supreme Court held that the salary paid to a non-resident technician by an Indian company for services rendered in India is taxable in India, even if the salary is paid outside India.
• CIT v. Larsen & Toubro Ltd. (1983) 141 ITR 419 (SC): The Supreme Court held that the salary paid to a non-resident technician by an Indian company for services rendered outside India is not taxable in India, unless the technician is employed in India for a period of more than 90 days in a financial year.
• CIT v. Schlumberger Overseas S.A. (1995) 215 ITR 262 (SC): The Supreme Court held that the salary paid to a non-resident technician by a foreign company for services rendered in India is taxable in India, if the services are rendered under a contract between the foreign company and an Indian company.
• CIT v. GE Technology International Inc. (2009) 316 ITR 327 (SC): The Supreme Court held that the salary paid to a non-resident technician by a foreign company for services rendered in India is not taxable in India, if the following conditions are satisfied:
  • The technician is not employed in India for a period of more than 90 days in a financial year.
  • The services are rendered under a contract between the foreign company and a non-resident client.
  • The salary is paid outside India.