1. The Residency Tightrope
Since Saudi Arabia levies no income tax, your only risk is becoming a "Resident" of India. If you spend too many days in India, your KSA salary could theoretically become taxable in India.
2. The "Deemed Resident" Trap
Section 6(1A) - The "Stateless" Tax Rule
Because you pay no tax in KSA, Indian tax law (Section 6(1A)) may classify you as a "Deemed Resident" if your Indian Income exceeds ₹15 Lakhs.
Triggers
- • You are an Indian Citizen.
- • Your Indian Income > ₹15 Lakhs.
- • You are not "liable to tax" in KSA.
Consequence (RNOR)
You become RNOR (Resident but Not Ordinarily Resident).
Safe: KSA Salary remains tax-free in India.
Risk: Income from a business controlled from India becomes taxable in India.
3. End of Service Benefit (Gratuity)
The "Golden Handshake." In KSA, you accrue a benefit based on tenure (Article 84 of Labor Law). It is received as a tax-free lump sum in KSA.
The Calculation Rule
- First 5 Years: Half a month's wage per year.
- After 5 Years: Full month's wage per year.
Tax Treatment in India
If you receive this while you are a Non-Resident (NRI), it is generally considered a capital receipt abroad and not taxable in India.
Warning: Receiving it *after* returning to India and becoming a Resident might trigger tax.
Hypothetical Accumulation (Base Salary: SAR 20,000)
4. Income Stream Matrix
KSA Salary
👷KSA: 0% Tax.
India: Exempt (if NRI status maintained).
NRE Interest
🏦KSA: 0% Tax (No personal tax on foreign income).
India: Tax-Free (Section 10(4)).
NRO / Rent
🏠KSA: 0% Tax.
India: Taxable at slab rates / TDS 30%.
A Note on Indirect Taxes (Cost of Living)
While there is no income tax, the KSA government levies: