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I work for a multinational IT company, based out in India. At the beginning of 2014 I came to Europe for office work for a short term duration. But then the stay got extended and I happened to stay there for the entire Financial year of 2014-15.

As compensation, I always got the Indian salary (for which TDS has been deducted as usual) and in Europe I got per day allowance to compensate the living cost differences.

My question is, if I save a chunk of money from my per day allowance and I bring/remit those to India, should I have to give tax for that? I didn't have any Foreign account during this time. The per day amount in Euro has been deposited in a Forex card of an Indian bank.

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per day allowance

From a tax point of view "Per Day Allowance" is meant to be spent. Generally its shown as expenses by the company against bills. In case the travel is of longer duration, its allowed to provide a fixed amount to ease the paper work.

So if you are saving "Per Day Allowance", you have to report this as additional income in your tax returns in India and pay tax accordingly.

Further read

  • In some countries (and the US in particular), employers are allowed to give a per diem allowance for meals/hotel stays/taxicabs etc instead of demanding a receipt for everything and then re-imbursing the actual cost. (The business travel reimbursement plan needs to be in writing etc. and can include actual hotel costs, for example, but subject to limits, e.g. no more than $X per day in Cities A, B, ... H, and $Y anywhere else (with X > Y usually). Unless the per diem allowance is grossly inflated, a traveler who spends less than the allowance does not need to declare the excess as income. – Dilip Sarwate Jun 10 '15 at 13:50

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