Remote Work for US Firm? No Tax Escape via US Bank Account

Even under the India-USA Double Taxation Avoidance Treaty, the right to tax this income rests with India, Bhuta said. An ROR must also disclose foreign assets and foreign salary in Schedule FA of the Indian income tax return.

Bhuta flagged a separate risk for the employer. The reader's presence in India as an employee of a U.S. company may create a permanent establishment exposure for the U.S. firm in India. That is a separate international tax issue the employer needs to evaluate, he said.

From India's foreign-exchange law perspective, the salary received in the U.S. bank account must be realized and repatriated to India within 180 days from the date of receipt. Receiving the salary outside India alone does not permit holding those funds overseas beyond the permitted period, Bhuta said. Failure to repatriate could trigger penalties under the Foreign Exchange Management Act.

The bottom line: routing the payment through a U.S. account does not change the tax treatment. The salary is taxable in India, must be disclosed, and must be brought back within the prescribed timeline.