South Korea taxes long-term residents on worldwide income. For your first five years, Indian income is taxed only if you bring it in.
TL;DR
South Korea taxes residents on worldwide income, but a foreign national resident five years or less of the last ten is taxed on Indian income only where it is paid in Korea or remitted there (Income Tax Act Article 3). Past five years, the full Korean rate hits your Indian rental, NRO interest and dividends.
By Vipul Sharma, Founder
Reviewed by Preetesh Maloo, Chartered Accountant, NRI Tax Partner
The five-year rule, then worldwide income
South Korea taxes a resident, anyone with 183+ days of physical presence in a calendar year, but the timing depends on how long you have been there. The Indian-side counterpart for your Indian residency is Section 6 of the Income-tax Act.
Korea does have a foreigner shelter, much like Japan's. Under Article 3 of Korea's Income Tax Act, a foreign national who has had a home or residence in Korea for five years or less within the last ten is taxed on foreign income only where it is paid by a Korean payer or remitted to Korea. So in your early Korean years, Indian income kept in your Indian accounts stays outside the Korean net, and the planning is to realise Indian gains and draw income inside that window. We cover that window in detail in our South Korea five-year foreign-income guide.
Once you cross five of the last ten years, the shelter ends and every dollar of worldwide income is on your Korean return, which is when Korea becomes one of the heavier cross-border burdens in Asia for Indian-source-heavy portfolios. The sections below assume you are past that five-year window.
Who's caught once past the window:
Indian software engineers on Korean L-2 or D-7 visas, in Korea 183+ days.
Indian researchers in Korean universities.
Indian-Korean spouses (Korean by marriage but Indian-source income).
Indian retirees who relocate to Korea.
Korean residents pay tax on:
Korean salary (full).
Indian salary (full, if employed in Korea but paid into Indian account).
Indian rental, NRO interest, Indian dividends, capital gains (full).
Korean equity, deposits, etc. (full).
Korea's tax slab + the local tax surcharge
National income tax brackets (2025):
Up to KRW 14M: 6%.
KRW 14M to 50M: 15%.
KRW 50M to 88M: 24%.
KRW 88M to 150M: 35%.
KRW 150M to 300M: 38%.
KRW 300M to 500M: 40%.
KRW 500M to 1 billion: 42%.
Above KRW 1 billion: 45%.
Local income tax: 10% surcharge on the national tax (so an effective additional 4.5% at the top slab). National pension and health contributions add another 5 to 8%.
For an Indian-Korean software engineer earning KRW 120 million salary plus ₹3 lakh NRO interest:
Total Korean income (after FX): roughly KRW 124 million.
Korean tax (35% slab + local 10% surcharge): roughly KRW 35 million (~₹21 lakh).
Indian-side TDS on the NRO interest: 10% via Form 10F (~₹30,000).
Foreign tax credit on the Indian ₹30,000.
Net effective: Korean rate on the salary, Korean rate on the NRO interest minus the Indian credit.
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India-side: Article 11 still applies
The India-Korea DTAA caps interest at 10% under Article 11 and dividends at 15% under Article 10. The Korean residency status doesn't change these.
For an Indian-Korean with ₹40 lakh NRO FD at 7%: default Indian TDS 30%, treaty 10%. Annual recovery via Form 10F: ₹56,000.
The critical interaction: the recovered Indian-side amount becomes Korean-taxable as part of worldwide income. If Korean marginal rate is 35% (KRW 100M+ slab), the same NRO interest pays:
India: 10% TDS.
Korea: 35% on the gross interest, less 10% Indian credit under Article 23.
Net Korean tax: 25%.
Total cross-border: 35% (Indian 10% withholding + Korean 25% additional).
Unless you can shelter the income from Korean residency, the structural cost is the Korean marginal rate. One thing that does not apply while you live in Korea is Schedule FA. That yearly foreign-asset disclosure is only for a Resident and Ordinarily Resident, so as an NRI you do not file it, and it would start only if you move back to India and your RNOR years end.
The math on a typical Indian-Korean engineer
A Seoul-based Indian software engineer:
Korean salary: KRW 120 million (~₹74 lakh).
Indian NRO interest: ₹3 lakh.
Indian rental income: ₹5 lakh.
Indian dividends: ₹1.5 lakh.
Korean tax (worldwide, post-Form-67 credits):
Income: KRW 120M + (₹3+5+1.5)L converted = KRW ~125 million.
Korean tax at applicable slabs + 10% local surcharge: ~KRW 36 million (~₹23 lakh).
Foreign tax credit on Indian ₹85,000 already withheld at source.
Net Korean tax: ~₹22.15 lakh.
India-side filing:
NRO interest at 10%: ₹30,000.
Rental at slab: ~₹40,000.
Dividends at 15% (under Article 10): ~₹15,000.
Total Indian: ~₹85,000.
Total cross-border: ~₹23 lakh on combined ₹83.5 lakh income, effective rate ~27.5%.
For the same engineer in Japan (non-permanent resident in years 1-5): effective rate ~24%. The Japan structural exemption saves ~₹3 lakh per year compared to Korea on similar income.
What we actually do for Indian-Korean residents
We handle the Indian side. Korean-side income tax filings need a Korean accountant or registered tax agent. We coordinate with theirs.
Indian-side scope: Form 10F / Form 41 refile, NTS Korea TRC liaison, NRO interest recovery via the 10% Article 11 rate, dividend recovery via the 15% Article 10 rate, Schedule FA setup for the year you move back to India and become resident, Section 119(2)(b) condonation for past years.
Pricing is success-fee based on recovered Indian TDS (no recovery, no fee). Annual filing and Form 10F / Form 41 renewal are both small flat fees, quoted on the call.
If you've been Korean-resident for 1+ years and you haven't lined up the Indian-side recovery + Korean foreign-tax-credit math, book free CA appointment. The Korean side mostly forecloses optimisation, but the Indian recovery still saves ₹50,000-1 lakh per year on a typical NRO portfolio.
Frequently asked questions
Q: I'm in Korea 175 days/year on a business visa. Tax resident?
A: No, generally. The 183-day rule is the basic test. Below 183 days, you're a Korean non-resident; only Korean-source income is taxable.
Q: My Indian rental never gets remitted to Korea. Korean-tax-free?
A: It depends how long you have been in Korea. In your first five years, as a foreign national resident five years or less of the last ten, Korea taxes your Indian rental only if it is paid in or remitted to Korea (Income Tax Act Article 3), so rental kept in India stays out of the Korean net. Once you are past five of the last ten years, Korea taxes it worldwide in the year it is earned, wherever the money sits.
Q: I have an Indian PF/EPF balance of ₹15 lakh. Korean tax during accumulation?
A: Provident fund accumulations are typically tax-deferred under the India-Korea DTAA. When the PF is finally withdrawn, the lump-sum may be Korean-taxable. Get a written treaty memo before drawing the EPF while Korean-resident.
Q: Can I keep money in Singapore as a Korean resident to avoid Korean tax?
A: No. Worldwide-income means worldwide. The location of the funds doesn't change the Korean liability. Singapore would also report the account to Korean NTS via CRS.
Q: I'm leaving Korea in 6 months for the UK. Korean exit tax?
A: There's no general Korean exit tax for individuals (unlike Germany's Wegzugsteuer). You file your final Korean return for the residency period and stop being Korean-resident on departure date. Book free CA appointment for the timing math.
Country guides mentioned
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The exceptions that change the answer
Where the general rule stops applying to you
Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.
EPF withdrawal exemption: continuous service
Right now: 5 years of continuous service
Where it works differently
- Service is under 5 years
- Four components are taxed separately: employer contribution and its interest as salary, employee contribution previously claimed under 80C reversed, and interest on employee contribution as other sources.
- Rule 8 of Part A of the Fourth Schedule.
- Employment ended for reasons beyond the employee's control
- The 5-year condition is relaxed.
- Proviso to Rule 8.
- The account is inoperative
- Interest continues to accrue and is taxable once the member leaves service.
- Settled position; a live issue for NRIs with dormant accounts.
Commonly got wrong
- EPF withdrawal is always tax-free. Only after 5 years of continuous service.An EPF withdrawal is tax-free only after five years of continuous service. Below five years, four separate components become taxable in different heads.
EPF interest that becomes taxable on high contributions
Right now: Interest on employee contributions above Rs 2,50,000 a year is taxable (Rs 5,00,000 where the employer makes no contribution)
Where it works differently
- The member is an NRI with a dormant account
- Interest continues to accrue, and an account becomes inoperative after 36 months without contribution, at which point the interest is taxable in India.
- EPF Scheme rules plus settled tax treatment.
- The member has left India
- Indian tax on that interest still applies as India-sourced income, and the residence country may tax it too.
- s.9 read with the relevant treaty.
Commonly got wrong
- All EPF interest is tax-free. Interest on employee contributions above Rs 2.5 lakh a year has been taxable since FY 2021-22.Interest is tax-free up to Rs 2.5 lakh of employee contribution a year (Rs 5 lakh where the employer does not contribute). Above that it is taxable.
TDS on NRO account interest
Right now: 30% plus surcharge and cess
Where it works differently
- A valid TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
- The treaty rate applies, commonly 10-15% under Article 11.
- s.90(2) gives the more beneficial of treaty or Act.
- No PAN is furnished
- s.206AA imposes at least 20%, but Rule 37BC allows escape by furnishing name, address, TIN and TRC. Courts have also held s.206AA cannot override a treaty rate.
- Rule 37BC + settled case law.
- Claiming the treaty rate at source
- The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.
- That exemption requires TDS at not less than the s.115A rate.
- The account is NRE or FCNR instead
- Interest is exempt and no TDS applies, while the holder is a FEMA non-resident.
- s.10(4)(ii) and s.10(15)(iv)(fa).
Commonly got wrong
- NRO interest TDS is 30%. Incomplete. Surcharge and 4% cess sit on top, so the effective rate is higher.30% plus surcharge and cess, around 31.2% at the base level.
- You can file Form 15G/15H to stop NRO TDS. Those are resident-only declarations. An NRI filing one makes a false declaration.Use Form 13 (Form 128 from 1 April 2026), or claim the treaty rate with a TRC.
Treaty rate on Indian dividends
Right now: Domestic rate 20% plus surcharge and cess; most treaties cap it at 10-15% under Article 10
Where it works differently
- A TRC and Form 10F are furnished to the registrar or company
- The treaty rate applies at source. Without them the full 20% plus surcharge and cess is deducted and you recover it by filing.
- s.90(4) and (5).
- The exact rate matters
- It is per treaty, not a single number. Check the country entry. Some treaties are 10%, some 15%, and Italy's dividend article can be WORSE than the domestic rate.
- Never quote one figure across countries.
- Claiming the treaty rate
- The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.
- That relief needs TDS at not less than the s.115A rate.
Commonly got wrong
- The DTAA rate on dividends is 10%. It varies by treaty. Quoting one number across countries is wrong, and at least one treaty is worse than domestic law.Check your country's Article 10 rate, commonly 10% or 15%, against 20% plus surcharge and cess under domestic law.