Cross-Border Remote Work FAQs India

Assume that a foreign national employee of a foreign company wishes to work remotely for a period of time in your country performing services exclusively for the foreign company and not interacting with the local market in your country.

Work authorisation

A. Is work authorisation required? If so, please provide a brief description of the type of visa, procedure, processing time, etc.

The concept of digital nomad visa is currently not recognised in India. If a foreign national already has an existing and valid Indian business visa, then they may work remotely for the foreign company from India. The foreign national holding a business visa enjoys a multiple entry facility for as long as the visa is granted, however, each visit must be limited to a maximum period of 6 (six) months. Please note that business activities are prohibited while a foreign national is on a tourist visa.

Risk of 'permanent establishment'

B. Is there risk of 'permanent establishment' consequences for the foreign company by virtue of the remote worker’s activities?  If so, what are the main factors determining the exposure.

Yes, the foreign national’s remote working activities in India could potentially lead to a Permanent Establishment (“PE”) risk for the foreign company in India depending on work the foreign national is undertaking for the foreign company in India. Typically, the PE risk is significantly higher (a) if the foreign national is involved in taking key managerial decisions for the foreign company during his stay in India; (b) the foreign national is rendering services to the Indian clients of the foreign company from India. Furthermore, it would be necessary to examine any tax treaty that India may have entered into with the foreign country, where the company is situated.

Local social security and other payroll requirements

C. At what point and under what circumstances would the remote worker become subject to local social security and other payroll requirements?  Can such requirements be fulfilled by a foreign company, and if so by what mechanisms?

Social security contributions in India arise only for those foreign nationals working in establishments in India to which the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”) are applicable, unless specifically exempted. Since the foreign national in this situation will be working remotely from India, exclusively for a foreign company, EPF and other such statutory deductions under Indian law, will not apply to the foreign national in question.

Local employment law requirements

D. At what point and under what circumstances does the remote worker become subject to local employment law requirements such as is wage-hour, local holidays, annual leave, maternity leave, disability leave, protection against unfair dismissal, etc.

The foreign national would not be subject to Indian employment law requirements, since he is not employed by an Indian entity and has privity of contract with a foreign company that would not be subject to local employment laws. It is likely that the foreign national will remain subject to the employment law requirements of the employer’s home country.

Remote foreign worker

E. Are there special requirements governing remote work in your country which would cover the remote foreign worker?

Currently, there are no special requirement provisions governing remote foreign workers in India.

Income tax

F. What is the employee’s exposure to local income tax, and under what circumstances is the foreign employer required to arrange for withholding of income tax?

In India, an individual’s tax liability would depend on their tax residency during a fiscal year. The tax residency of an individual is dependent on the duration of stay of the individual in India, irrespective of the purpose of such stay. There are 3 (three) recognised categories for tax residency under the taxation legislation in India, based on duration of stay:

• Resident Ordinarily Resident (ROR);
• Resident but not Ordinarily Resident (RNOR); and
• Non-Resident (NR).

The tax residency of an individual determines the scope of income liable to be taxed in India. If the foreign national is staying in India for more than 182 (one hundred eighty-two) days, the foreign national may be required to pay taxes in India.

Claim for workplace injury

G. Would the remote worker be entitled to bring a claim for workplace injury in your country?

The remote worker will not be entitled to claim compensation for workplace or occupation-related injuries under Indian employment laws, as such laws do not apply to them. However, if the laws of the country in which the employee is based permit such claims, or if the foreign company’s internal policies provide for such compensation, the remote worker may seek relief under those laws or policies.

National healthcare system or insurance

H. Would the remote worker be covered under the local national healthcare system or insurance?

Currently, India does not have a national healthcare system that would provide protection to foreign workers, working remotely in India for a foreign employer. However, the foreign national may be covered by the extant laws (i.e. laws that are still in use, often despite being very old) of the country in which the foreign company is situated, or by the foreign company’s insurance policies.

Data privacy and security

I. Is a foreign employer subject to data privacy and security requirements regarding protection of employee personal information for a foreign employee working remotely in your country?

Assuming that the sensitive personal data or information for the foreign company has already been collected, received and stored in the foreign country, then no additional compliance requirements would be imposed on the foreign employer, under India’s extant data privacy laws.

Further, under the Digital Personal Data Protection Act, 2023, which is yet to be enacted and is expected to replace existing Indian data privacy laws, the foreign company would similarly be subject to limited compliance requirements, assuming the digital personal data is processed in the foreign country and that the processing of the personal data is not in connection with any activity related to offering of goods or services to individuals within the territory of India.

Foreign remote worker

J. Has there been any litigation or specific law or regulation regarding the foreign remote worker in your country?

Thus far, there has not been any significant litigation, legislation or directives specifically concerning foreign remote workers in India.

Citizenship

K. Would any of the above answers change if the remote worker (a) is a citizen of your country, or (b) engages in activity interacting with the local market?

(a) If the remote worker is a citizen of India or an OCI card holder, he would not need a visa to enter India.

(b) If the remote worker’s activities lead him to interact with the local market, and depending on the nature of the interactions, it is quite possible that tax liabilities could be imposed on the foreign company/employer. If personal information or sensitive personal data is collected from third parties by the foreign national, then this will likely attract provisions of extant data privacy laws in India, as well.