A Japanese employee working in India is taxed in India on income from work done there, and may also remain taxable in Japan depending on Japanese residency. Relief comes from the treaty's rules on employment income and tie-breaker, and from the foreign tax credit in Japan. Residency in India depends mainly on days of stay: 182 days in a tax year, or 60 days plus 365 days in the four preceding years.
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Key facts
| India: resident | In India 182 days or more in the tax year, or 60 days or more plus 365 days or more in the four preceding years (with exceptions) |
|---|---|
| India: tax year | 1 April to 31 March; the Income-tax Act, 2025 uses the term tax year |
| Japan: who is taxed on worldwide income | Residents of Japan, with special rules for non-permanent residents; confirm status with a Japanese adviser |
| Treaty tie-breaker | Permanent home, centre of vital interests, habitual abode, nationality, then agreement between authorities |
| Short-stay rule | Employment income can stay taxable only in Japan if the employee is in India for 183 days or fewer, the employer is not an Indian resident and the cost is not borne by an Indian permanent establishment |
| Not covered | Pension contributions: see the social security agreement |
Indian residency in brief
An individual is resident in India if present for 182 days or more in the tax year, or for 60 days or more in the tax year and 365 days or more in the four preceding years. A resident who has been non-resident in most past years may be a resident but not ordinarily resident, which narrows the income taxed in India. Residents are taxed in India on worldwide income; non-residents only on income received, accrued or arising in India.
Japanese tax residency in brief
Japan taxes residents on worldwide income, with different rules for permanent and non-permanent residents. An employee sent to India on assignment can remain a Japanese resident if Japan stays the centre of life, for example if the family remains there, or can become a non-resident if the assignment is long and the person's home moves. Japanese tax law has its own tests, so your Japanese adviser should confirm each person's status each year.
Where the treaty helps individuals
- Tie-breaker. If someone is a resident of both countries under domestic law, the treaty decides which country is the treaty residence.
- Short stays (employment). For a Japanese employee of a Japanese employer visiting India, the treaty can leave employment income taxable only in Japan if the employee is in India for 183 days or fewer in the relevant period, the employer is not an Indian resident, and an Indian permanent establishment does not bear the cost.
- Independent services. Professionals are taxed in India only if they have a regular fixed base or stay 183 days or more.
- Relief. Japan relieves double tax mainly through the foreign tax credit.
Secondments and who bears the cost
If the Japanese parent seconds an employee to the Indian subsidiary and the subsidiary bears the cost, the short-stay exemption can fail, because the cost is borne by an Indian resident employer. Most longer assignments are therefore taxable in India from the first day. Plan payroll and Withholding Tax on salary in India from the start of the assignment.
What an expat should do each year
- Keep a day-by-day travel log for India and Japan.
- Confirm Indian tax residency status at the end of the tax year.
- File the Indian return and pay or claim Indian tax, with employer Withholding Tax records.
- Report the Indian income in the Japanese return and claim the foreign tax credit, with a Japanese adviser.
- Check Japanese reporting for overseas assets where thresholds are met. See Japanese parent obligations.
What this means for a Japanese parent
- Tax equalization or hypothetical tax policies need both an Indian and a Japanese computation. Agree who runs them before the assignment starts.
- Employer Withholding Tax on salary in India is monthly, so the first month of an assignment already needs a plan.
Mistakes to avoid
- Counting only the days on the work permit, not the days in India.
- Assuming the short-stay exemption applies when the Indian subsidiary bears the cost.
- Not filing an Indian return because tax was deducted at source.
- Not checking Japanese residency status after the assignment starts.
How AU Corporate handles this
We handle expat payroll, Indian tax returns and residency analysis in India, and coordinate with your Japanese adviser on the credit.
Related services: HR and payroll · Taxation and regulatory services
Official sources
Rules on this page can be verified at the primary sources: the Income Tax Department and Japan's National Tax Agency.
Frequently asked questions
How is a Japanese employee working in India taxed?
India taxes income from work done in India. Japan may also tax the person if they remain a Japanese resident. Relief comes through the treaty and the foreign tax credit.
When does a foreign national become tax resident in India?
Generally with 182 days or more in India in the tax year, or 60 days or more in the year plus 365 days or more in the preceding four years, with exceptions.
What is the Indian tax year?
1 April to 31 March. The Income-tax Act, 2025 uses the term tax year.
Does the 183-day rule exempt a visiting employee?
It can, if the employee is in India for 183 days or fewer, the employer is not an Indian resident and the cost is not borne by an Indian permanent establishment.
Why does a secondment to the Indian subsidiary matter?
If the Indian subsidiary bears the cost of the employee, the short-stay exemption can be lost.
What is the treaty tie-breaker?
A set of tests that decide which country is the treaty residence when a person is resident in both.
Do expats need to file an Indian return?
Generally yes if resident or with Indian-source income above the filing limits, even if tax was withheld.
Who handles the Japanese return?
A Japanese tax adviser. AU Corporate handles Indian filings and coordinates with them.
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Read the guide →Sources
Last updated 20 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.