Indian NRIs Abroad Face Tax Uncertainty on Accommodation Allowances

Companies pay living allowance to their employees when they send them abroad for office work. For this, the employees have to stay abroad for a few days or for a long time. A decision of the Income Tax Appellate Tribunal has raised the question of whether income tax will be levied on the accommodation allowance spent on it in India. The Delhi Division of the Income Tax Appellate Tribunal has given this decision in the case of a non-resident Indian residing in Austria.

The NRI person involved in this case was being paid salary and accommodation allowance by the company in India. The arbitrator ruled that he need not pay income tax on the accommodation allowance. The decision is the same for those living in India; But a question has arisen whether it will also apply to a person doing office work abroad.

What do the experts say?
Chetan Chandak, director of tax consultancy firm Taxbirbal, said that if you are a resident Indian, you will have to pay tax in India on the income earned abroad. If you have already paid tax on foreign income in that country, you can claim tax credit for it. If you are a resident but non-ordinarily resident citizen, the foreign income will not be taxable in India. Wages are where work is done.