Direct answer: FEMA 10(R) regulation 5(E)(8) provides specific overseas foreign-currency account routes for defined foreign-company deputees and foreign citizens employed by Indian companies, subject to applicable Indian taxes. It is not a general permission for every Indian resident employee to send every type of Indian income to an overseas account. Match citizenship, residence, employer, deputation and payment flow before reconciling the salary amount.
Checked on 23 October 2026 against the actual Foreign Currency Accounts Regulations, regulation 5(E)(8)(i) and (ii) and Part I paragraph 4.5 of RBI’s Deposits and Accounts Master Direction, updated 2 September 2026. The regulation’s explanation includes an LLP within “company” for this sub-regulation. This guide addresses the account and salary-payment permission, not a determination of an employee’s income-tax residence, final tax liability or treaty exemption.
Distinguish direct overseas salary receipt from remitting Indian salary
| Route | Specified population | Payment control |
|---|---|---|
| Regulation 5(E)(8)(i) | Covered foreign-company employee on the specified deputation to its Indian office, branch, subsidiary, JV or group company | Overseas account receipt of salary for the covered Indian services, subject to applicable Indian taxes |
| Regulation 5(E)(8)(ii) | Foreign citizen resident in India employed by an Indian-incorporated company | Remit covered rupee salary received in India to the overseas account, subject to applicable Indian taxes |
| Different factual arrangement | For example, an ordinary Indian citizen employed locally by an Indian company | Establish another applicable permission rather than assuming either route |
For the deputation limb, read the actual appointment and assignment terms. The text covers a foreign citizen resident in India employed by a foreign company, or an Indian citizen employed by a foreign company outside India, in either case deputed to the specified Indian presence of that foreign company. An Indian citizen’s foreign bank account or a group-brand email address is not evidence of foreign employment and qualifying deputation.
For the Indian-employer limb, foreign citizenship and Indian residence are material conditions. Do not extend it automatically to every Indian citizen on the same payroll. Conversely, do not insist that an eligible foreign citizen on the local Indian-company route must always show a foreign-company deputation: the two limbs address different facts. Recheck the conclusion when citizenship, residence, employer or assignment changes.
Keep FEMA eligibility and Indian tax compliance separate
Both salary limbs expressly preserve payment of taxes as applicable in India. Overseas credit does not by itself exempt Indian services from tax. Confirm the complete payroll and tax treatment through the applicable tax framework, including any properly supported treaty or other relief, and keep the deduction/payment evidence with the bank file. Do not infer that tax is zero because payroll was processed abroad.
The examples use stipulated tax amounts that are assumed to have been correctly determined and discharged through a separate payroll computation. They do not apply a tax slab, treaty rate, cess, surcharge or gross-up formula. Conversion rates and fees are hypothetical banking inputs, not current market quotes or statutory tax-conversion rates. This prevents a salary-transfer illustration from being mistaken for a tax calculation.
Reconcile gross salary, taxes, retained money and bank charges
Create one bridge for each period: documented gross cash salary, taxes and other properly identified payroll deductions, amount actually available or payable, any amount retained in India, bank charges and foreign credit. Avoid treating the foreign bank’s net credit as the gross salary or recording charges as an unexplained short payment. The reference to whole salary does not require a taxpayer to disregard tax obligations or remit money already spent or retained locally.
Separate salary from consulting receipts, rent, dividends, sale proceeds and other income. These may have their own permissible remittance or account routes, but the salary limb does not establish them merely because one person earned everything. For a bonus or arrear, verify that it is genuinely covered salary for the relevant employment and services; do not assume every employer-labelled transfer is within the route.
Use the correct permission file at the bank
Retain citizenship and residence evidence, foreign or Indian appointment records, the deputation and Indian group connection where relevant, salary statements, tax records and the proposed transfer/receipt details. Give the authorised dealer a clear explanation of the applicable limb. Another route, such as LRS where applicable, has its own eligibility and conditions and should not be mixed into this specific salary permission without analysis.
This sub-regulation is not a general authorisation for every subsequent investment, loan or transfer made from the overseas account. Identify any separate restrictions on the proposed use. Where the underlying employment facts cease to fit, obtain the correct basis for later account use and receipts rather than continuing the original classification indefinitely.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Foreign-company deputee: net-pay bridge
Assume a covered deputee’s monthly gross cash salary is ₹6,00,000 and correctly determined Indian tax of ₹1,50,000 is withheld and discharged, with no other deduction. Available net salary is ₹4,50,000. At an assumed banking rate of ₹90 per USD and no fee, the corresponding foreign credit is USD 5,000. The example does not compute the tax itself.
Illustrative example 2: Foreign citizen on an Indian payroll
An eligible foreign citizen resident in India has ₹5,00,000 gross monthly cash salary, with ₹1,00,000 of correctly determined tax paid. From the ₹4,00,000 net receipt, the employee keeps ₹40,000 in India. The ₹3,60,000 transfer budget includes an assumed ₹1,000 bank charge. Conversion principal is ₹3,59,000; at ₹83.50 per USD the illustrative credit is USD 4,299.40, rounded to two decimals.
Illustrative example 3: A local employment change requires a new conclusion
An Indian citizen qualifies under the foreign-company deputation route for October–December, receiving covered net salary of USD 4,000 monthly: USD 12,000. From January the person becomes an ordinary local employee of an Indian company, with no qualifying foreign employment/deputation; the next three months also total USD 12,000. The six-month amount is USD 24,000, but the first route is established for only USD 12,000. The later amount needs a separate valid permission; foreign-account continuity does not establish it.
Illustrative example 4: Other income must not be added to salary automatically
An eligible employee has ₹4,00,000 of covered salary available after correctly handled taxes, plus ₹75,000 of rent and ₹25,000 of dividends. Total funds are ₹5,00,000, but ₹1,00,000 is non-salary income. The salary-account permission supports the covered ₹4,00,000 salary flow, not an automatic ₹5,00,000 remittance under the same limb.
Illustrative example 5: The bank credit is not the gross salary
Covered gross cash salary is USD 5,000. Assume a separately validated and discharged tax deduction equivalent to USD 1,000, giving USD 4,000 net payable. Bank credit is USD 3,975 and a supported transfer fee is USD 25. The bridge is 5,000 − 1,000 − 25 = 3,975; reporting gross salary as USD 3,975 would understate the stipulated gross by USD 1,025.
Illustrative example 6: Reconcile a documented salary bonus separately
For a covered period, monthly net salary after correctly handled taxes is USD 4,000 for three months. A separately documented, eligible net salary bonus is USD 2,000. Covered net payments total USD 14,000. Supported transfer charges are USD 50 and aggregate bank credits USD 13,950. The balance reconciles without inventing an additional USD 50 of salary or ignoring the bonus’s eligibility evidence.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify citizenship and FEMA residence facts | Current identity and residence assessment |
| 2 | Determine the actual employer and employment location | Appointment and employment records |
| 3 | Test the applicable regulation 5(E)(8) limb | Direct-receipt or Indian-salary-remittance memo |
| 4 | Verify deputation and group connection where required | Assignment letter and Indian presence relationship |
| 5 | Identify salary period and genuinely covered components | Payroll, bonus and arrear support |
| 6 | Confirm applicable Indian taxes are addressed | Separate tax computation and payment/deduction evidence |
| 7 | Separate non-salary receipts | Rent, dividend, consulting and other-income schedule |
| 8 | Reconcile net salary available and local retention | Gross-to-net and retained-funds bridge |
| 9 | Match transfer principal, rates, fees and bank credits | Bank advice and currency reconciliation |
| 10 | Reassess changed facts and later account uses | Employment-change review and separate-permission file |
Sixteen practitioner FAQs
1. Is this a permission for every Indian resident salary earner?
No. Regulation 5(E)(8) defines specific populations and payment flows. Establish the relevant limb or another valid route.
2. Can an Indian citizen qualify under the deputation limb?
Yes, where the actual foreign-company employment outside India and specified deputation conditions are met. Citizenship alone neither proves nor defeats that route.
3. Does a foreign citizen on an Indian payroll need a foreign deputation?
The Indian-employer limb has its own conditions and is distinct from the deputation limb. Verify foreign citizenship, Indian residence, employment and covered salary.
4. Does the company reference include an LLP?
The regulation’s explanation includes an LLP for this sub-regulation. Apply that inclusion to the actual employment arrangement.
5. Is offshore salary receipt automatically tax free in India?
No. The permission expressly preserves payment of applicable Indian taxes. Establish the tax position separately.
6. Do the worked examples calculate income tax?
No. Their tax inputs are expressly stipulated as correctly determined and discharged elsewhere. The examples reconcile the resulting payment flows.
7. Are the example exchange rates current quotations?
No. They are hypothetical banking rates used only for arithmetic, distinct from any statutory tax-conversion requirement.
8. Must the employee remit the full possible amount?
The permission to remit covered salary should not be mistaken for a requirement to remit money retained for local expenditure. Reconcile actual available funds and transfers.
9. Can rent and dividends be included as salary?
No. Classify them separately and establish their own permissible route instead of automatically adding them to the salary flow.
10. Can every bonus use the same permission?
Verify that the bonus is genuinely covered salary for the relevant employment and services. Keep its documentation and tax treatment separately traceable.
11. Why retain bank-charge details?
A net foreign credit may be lower than net salary because of supported charges. Keeping those items visible avoids confusing fees with missing salary or tax.
12. Does a group-company name prove qualifying deputation?
No. Read actual employment and assignment terms and establish the relevant foreign-company/Indian-presence connection.
13. What changes when foreign deputation ends?
Reassess eligibility for subsequent account use and salary receipts. Do not extend the earlier conclusion automatically to ordinary local employment.
14. Should this permission be described as LRS?
Identify the actual legal route. LRS and this specific salary permission have different conditions; do not combine them without analysis.
15. Does the account permission authorise every investment abroad?
No. The proposed use of funds may require its own legal assessment. An eligible salary receipt does not settle every later transaction.
16. What should the AD-bank file explain?
It should connect identity and residence, employment/deputation, covered salary, Indian tax evidence and the exact bank payment or receipt, including fees and currency amounts.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assurePractice or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Prove the relevant employee and payment route first. Then retain a complete payroll-to-bank bridge and revisit the permission whenever employment or other material facts change.