Working Remotely for a Foreign Company from India in 2026: Tax on Foreign Pay, Advance Tax, Employee or Contractor, GST, FEMA and RSUs

Working remotely from India for a foreign company means your pay is taxed here, through advance tax instead of TDS, with FEMA rules on receiving it.

Dhruv, 29, lives in Junagadh and works full time for a software company in the Netherlands, paid about Rs 4 lakh a month into his Indian bank account. No tax is deducted, his contract calls him an independent contractor, and the company has also granted him shares of its US-listed parent. He assumed that income from a foreign company is taxed abroad, and has not filed a return since he took the job.

Remote jobs with foreign companies have become common among young professionals in Gujarat. The money is good, but the tax rules depend on how the job is structured. Here is how it works in 2026.

Our team handles returns, advance tax, GST and FEMA paperwork for people working for foreign companies. Call or WhatsApp +91 82005 28355, or see the details at the end of this guide.

Why India taxes it

• Residents: a resident of India is taxed on worldwide income.
• Work done here: pay for work done while living in India is Indian income, whoever pays it and wherever it is paid from.
• Tax treaties: pay for work done in India is generally taxed in India, not in the employer's country. If tax was withheld abroad, ask for it to be refunded there or check whether credit is allowed. See DTAA basics.

Employee or contractor

• Employee: taxed as salary at slab rates, with the standard deduction.
• Through an Indian payroll partner: if a local employer of record hires you, it deducts TDS and PF like any Indian employer.
• Contractor: taxed as professional income. For IT, engineering and other specified professions, half of gross receipts up to Rs 75 lakh can be declared as profit under the presumptive scheme. See presumptive taxation.
• Read the contract: the label in the contract, how you are paid and who controls your work decide the treatment.

Paying the tax

• Advance tax: pay in instalments by 15 June, 15 September, 15 December and 15 March, or interest applies. See advance tax due dates.
• Return: file every year, with the right form for salary or professional income.
• Missed years: belated, revised and updated returns can still fix past years, at a cost.

GST for contractors

• Registration: needed once turnover crosses Rs 20 lakh a year.
• Export of services: services to a foreign client, paid in foreign exchange, can be billed without GST under a letter of undertaking. See billing foreign clients.
• Employees: salary under a real employment contract is outside GST.

FEMA and banking

• Bring it to India: pay for work done from India must come into your Indian bank account.
• Bank advice: keep the bank's inward remittance advice for each payment, as proof of the source.
• Money abroad: keeping or investing money abroad must fit within the Liberalised Remittance Scheme.

Shares and RSUs from the employer

• At vesting: RSUs are taxed when they vest, on their value then.
• On sale: the later rise in value is a capital gain.
• Reporting: foreign shares and broker accounts go in Schedule FA every year. See investing in US stocks from India.

Back to Dhruv. His contract, payment terms and day-to-day control are reviewed, and he is treated as a contractor providing IT services. His receipts of about Rs 48 lakh a year fall within the presumptive limit, so half is declared as profit, and he pays advance tax each quarter. He registers for GST, files a letter of undertaking, and bills the Dutch company without GST as an export. His RSUs are taxed as they vest and shown in Schedule FA, and the years he missed are fixed through belated and updated returns.

How we help

• Reviewing your contract for employee or contractor treatment
• Income tax returns and advance tax for foreign pay
• GST registration, letters of undertaking and export invoices
• RSU, ESOP and foreign share reporting
• Fixing missed years through belated and updated returns
• FEMA documentation for inward remittances

Gadhia Associate has been in practice since 2007 and has handled work for over 7,000 clients, with a 5.0 Google rating from more than 100 reviews. Professionals from Junagadh, Rajkot, Ahmedabad, Jamnagar and Vadodara work with our Junagadh office, where same-day appointments are available, and most of this work is handled online.

Working for a foreign company from India? Get your tax, GST and filings set up the right way. Call or WhatsApp +91 82005 28355, or message us on WhatsApp. The first consultation is free.

Frequently asked questions

Is salary from a foreign company taxable in India?

Yes, for a resident working from India. The work is done here, so the pay is Indian income.

Who pays the tax if the foreign company does not deduct TDS?

You do, through advance tax in four instalments, and then in your return.

Am I an employee or a contractor of a foreign company?

It depends on your contract, how you are paid and who controls your work. The tax treatment differs for each.

Do I need GST registration as a remote contractor?

Yes, once turnover crosses Rs 20 lakh, though exports to the foreign client can be billed without GST.

Can I keep my foreign pay in a bank account abroad?

Pay for work done from India must come to your Indian account; money kept abroad must fit within LRS.

How are RSUs from a foreign employer taxed?

At vesting on their value, and on sale as capital gains, with the shares shown in Schedule FA.

Position as of 5 November 2026, under the Income-tax Act, 2025, GST law and FEMA. Contracts and employer arrangements vary, so take advice on your own case.