Understanding Residency & Total Global Income
- Under the Income-tax Act, 2025, effective April 1, 2026, India replaced the concepts of “previous year” and “assessment year” with “Tax Year”, aligning the basis of charge more intuitively.(incometax.gov.in)
- Indian tax residents are taxed on their worldwide income. Non-residents are taxed only on income accruing or deemed to accrue in India. Digital nomads should monitor the days of stay: under Indian law, staying 120 days or more in a tax year (30 days if total income above ₹15 lakh) may trigger tax residency. Use DTAA (Double Taxation Avoidance Agreements) to avoid being taxed twice.
Practical Planning Tips for Digital Nomads (India-Related)
| Scenario | Key Considerations | Action Points |
|---|---|---|
| Working for Indian clients while abroad | Income still sourced in India → taxable if you are a resident | Maintain clear travel records; claim DTAA relief if your country has treaty with India |
| Working for foreign clients from India | Payment likely received outside India; still taxable | Use proper invoicing; consider whether foreign income qualifies for exemption under treaty or under new Act |
| Relocating abroad during a tax year spanning April–March | The new Tax Year system means split year issues | Assess pro rata liability; consider choosing non-resident status once criteria met |
DTAA Utilisation & Foreign Credits
- India has DTAAs with many countries. Always check whether foreign taxes paid can be claimed as tax credit to avoid double taxation.
- For example, if you pay income tax abroad, you may credit that against your Indian tax liability on the same income taxed in India under DTAA terms.
Compliance: ITR, TDS, Reporting of Foreign Assets
- After April 1, 2026, ITRs must be filed using Income-tax Act, 2025 forms. Previous Act (1961) applies only for tax years before that.(incometax.gov.in)
- Foreign assets and income must be declared (Annual Information Statement, AIS, CRS/FATCA disclosures now more prominent) to avoid penalties. Advisory firms note increasing scrutiny from tax authorities for non-compliance. (See KPMG/Deloitte summaries on India digital nomad and global wealth rules.)
- Maintain TDS (Tax Deducted at Source) compliance for payments from or to IFSC units, lease payments etc., noting new notifications such as exemptions for IFSC units.(incometax.gov.in)
Case Example
An Indian content creator lives in Thailand for 200 days in the tax year 2026-27. She earns US$50,000 from clients in US and ₹5,00,000 from Indian clients.
She is a resident under Indian law (200 days > 120). All income globally taxed in India. She claims DTAA relief for US taxes paid. She must file ITR-2 under Act 2025, report foreign income/assets, and ensure correct TDS withholding by Indian clients (or pay self-assessment tax).
Actionable Checklist for 2026 & Beyond
- Track days of stay in India and abroad meticulously.
- If planning more foreign income, check treaty benefits; consult tax counsel to assess residency status.
- From April 1, 2026, make sure ITRs and other compliance align with new Income-tax Act, 2025 and Rules 2026.
- Keep records of foreign tax payments to claim credits.
- Stay updated on India’s policy shifts—notifications like Notification No. 80/2026 and Notification No. 75/2026 are shaping TDS and exemption rules relevant for cross-border payments.(incometax.gov.in)