U.S. Tax Treaties with India: Personal Services Income

Paying for certain personal services performed in the United States is exempt from US income tax if you are in the United States for a limited period of time, if you are a resident of the countries listed by the U.S. and if you meet the other conditions. India is in that list as well.

If the residents meet the following conditions, the income that residents of India get for performing personal services as independent contractors or self-employed in the United States is excluded from the U.S. income tax:

  • During the tax year, residents of India in the United States for the purpose of performing the services no longer than 89 days.
  • Residents who do not have an available fixed base that can be used regularly in the U.S. to run services.
  • **If the residents have a fixed base available to them, income is attributable to that fixed base.

Residents of India who are performing services and receiving income as employees (dependent personal services) in the United States are excluded from the U.S. income tax if they meet the requirements below:

  • They are in the United States for no longer than 183 days in any 12-month period.
  • The income is paid by, or on behalf of, an employer who is not a resident of the United States.
  • The income does not originate from a permanent establishment or a fixed base owned by the employer in the United States.

These exemptions are not applicable to:

  • Pay received by a resident of India for services performed as an employee aboard a ship or aircraft  operated in international traffic by a U.S. enterprise.
  • Management fees and similar payments received by an Indian citizen as a member of the board of directors of a company that is a U.S. resident.
  • If residents of India perform activities as entertainers (such as theater, musicians, television artists, radio) or athletes are receiving net income more than $1,500 during the tax year in the United States. Additionally, if their activities and visits to United States are wholly or substantially supported by the public funds of the Indian government or local authorities, their income is exempt from the U.S. tax.

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