Is foreign income taxable if I keep it abroad?

Some freelancers assume that money left in a foreign bank account, a US dollar platform balance or a client's escrow is not "income in India" and so escapes Indian tax. For a resident of India that is not how the law works. A video editor in Jaipur with a Wise balance, or a consultant in Hyderabad keeping fees in a Singapore account, pays Indian tax on those fees just as if they had been converted.¹

What does section 5 say?

Section 5(1) of the Income-tax Act, 2025 includes in a resident's total income all income that is received in India, that accrues or arises in India, or that "accrues or arises to such person outside India in that year".¹ Income earned abroad is therefore taxable in the year it is earned, whether or not you bring the money home.

For a non-resident, section 5(2) taxes only income received or accruing in India.¹ Whether you are resident depends on days in India under section 6(2): 182 days or more in the tax year, or 60 days in the year plus 365 days in the four preceding years, with exceptions.²

When does keeping money abroad matter for tax?

It matters in three ways:

1. Not ordinarily resident (NOR) individuals. A NOR is taxed on foreign-accruing income only when it comes from a business controlled in or a profession set up in India.¹² A freelancer running a practice from India usually meets that test anyway.
2. Exchange rate. Business income not received in India by the last day of the tax year is converted at the State Bank of India TT buying rate on that day, 31 March 2027 for tax year 2026-27.⁵ See which exchange rate applies.
3. Return filing. A resident (other than NOR) who holds any asset outside India, or has signing authority in an account outside India, must file a return regardless of income.³ See which ITR form freelancers file.

Is there a FEMA limit too?

Yes, and it is separate from income tax. Under the FEMA (Export and Import of Goods and Services) Regulations, 2026, as amended on 22 September 2026, the realisation period for services is nine months from the invoice date, or twelve months for rupee invoices.⁴ Keeping export proceeds abroad beyond what the rules allow is a foreign exchange question; see the export realisation period.

Whether a particular platform balance counts as an "asset located outside India" depends on how the account is structured, so confirm with a chartered accountant (CA) before filing. The wider picture is in income tax on foreign income.