Form W-8BEN income taxable in India/US

Question

I have been living and working in US until middle of last year. I have since been in India but still working for my US employer from India. My employer decided to pay my salary in India after I submit a form W-8BEN.

Is this payment taxable in the States since I am staying outside of States? Should I declare this income to IRS in case if I go back to the States later this year?

If my US employer wires my US salary to my NRE account is that taxable in India? I ask this question because when I remit money from States to India I never pay income tax in India. So if my employer wires my salary how does the Indian tax man identify if it is a taxable income and not just the regular remittance.

Answer 1

My employer decided to pay my salary in India after I submit a form W-8BEN.

This means that the wages / salary is deemed accrued for work from India. Hence your employer need not withhold and pay taxes on this wage in US.

Is this payment taxable in the States since I am staying outside of States? Should I declare this income to IRS in case if I go back to the States later this year?

No tax is due as the work is done outside on US. If you go back this would be similar to as you had gone first. Depending on your "tax residency status" you would have to declare all assets.

If my US employer wires my US salary to my NRE account is that taxable in India?

This is still taxable in India. It is advised that you have the funds transferred into a regular savings account. Please note you have to pay taxes in advance as per prescribed due dates in Sept, Dec, March.

how does the Indian tax man identify if it is a taxable income and not just the regular remittance.

This question is off topic here. Whether income taxes finds out about this is irrelevant. By law one is required to pay taxes on income earned in India.