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South Korea

Does South Korea tax your Indian income in your first five years there?

You moved to Korea for a tech or research job and want to know whether Korea now taxes your Indian FDs, mutual funds and rent on top of the Indian tax.

You have moved to Korea for work, usually engineering, IT or research, and you are past 183 days, so Korea treats you as a tax resident. You still hold Indian FDs, mutual funds, a let-out flat and some shares, and the fear is that Korea now taxes all of that Indian income on top of the tax India already deducts. Our own earlier note said Korea has no foreigner exemption and taxes worldwide income from day one. That was wrong. Korea has a foreign-resident shelter for your first years there, and used well it keeps most of your Indian income outside the Korean net while you plan.
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Last reviewed: 5 August 20267 min readReviewed by Preetesh Maloo, CA

The short answer

For your first five years in Korea, as a foreign national resident for 5 years or less within the last 10, Korea taxes your foreign income, including your Indian FD interest, dividends, rent and capital gains, only where that income is paid by a Korean payer or brought into Korea. Keep the money in your Indian accounts and live on your Korean salary, and the Indian income stays outside Korean tax. India still taxes it, but at treaty rates you claim back: interest at 10 percent under Article 11 and dividends at 15 percent under Article 10, with a Tax Residency Certificate and Form 10F, now Form 41. Once you cross five of the last ten years you become taxable in Korea on worldwide income whether or not you remit, so the years inside the window are the time to realise Indian gains and plan drawdowns.

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Related situations

Does South Korea tax your Indian income in your first five years?

Not unless you bring it into Korea. Korea sorts foreign residents by how long they have lived there. If you are not a Korean national and you have had a home or residence in Korea for five years or less within the last ten, Korea taxes your Korean income in full, but your foreign income, your Indian FD interest, dividends, rent and capital gains, only to the extent it is paid by a Korean payer or remitted to Korea. This is the rule in Article 3 of Korea's Income Tax Act, and it is close to Japan's non-permanent-resident shelter.

So the practical answer for most Indians in their early Korean years is simple. Leave your Indian income in your Indian accounts, live on your Korean salary, and that Indian income is outside the Korean net. It is only the slice you actually move into Korea that Korea can tax. This is the opposite of what our older Korea note said, and it is worth getting right, because the difference is whole years of Indian income kept out of a 6 to 45 percent Korean bracket.

After five years, Korea taxes your Indian income worldwide

Once you have had a home or residence in Korea for more than five of the last ten years, the shelter ends. From that point Korea taxes you on worldwide income, so your Indian interest, dividends, rent and gains are taxable in Korea whether or not you bring the money in. Korea's national rates run from 6 to 45 percent, and a local income tax adds another 10 percent on top of the national tax, so the combined bite is meaningful.

That five-year line is the planning point. While you are still inside the window, realising Indian capital gains and drawing down Indian income is far cheaper, because Korea only reaches what you remit. After the window, the same gain is fully in the Korean base. If you know roughly when you will cross five years, sequence the big Indian sales and any repatriation before it, not after.

The India side: treaty rate now, Korean credit later

India taxes your Indian income regardless of where you live, so this half is always in play. When an Indian payer credits you interest, dividends or rent, or a fund house redeems your units, tax is deducted under Section 195, which becomes Section 393(2) from FY 2026-27. You bring it down to the treaty rate with a Tax Residency Certificate from Korea's tax office and Form 10F, which becomes Form 41 from FY 2026-27: interest to 10 percent under Article 11, dividends to 15 percent under Article 10. Anything over-deducted comes back through your Indian return.

Where Korea does tax an item, once you remit it or once you are past five years, the India-Korea treaty lets Korea credit the Indian tax you already paid under Article 23, so you are not taxed twice on the same rupee. The one gap is NRE interest: India exempts it, so there is no Indian tax to credit, and if Korea taxes it, on remittance or after five years, it is taxed in Korea in full. That is worth remembering when you choose which Indian income to bring into Korea. For the parallel Japanese version of this shelter, see our page on selling Indian mutual funds before five years in Japan.

A worked example: Ravi's Seoul years

Ravi, 34, is a data engineer at a Seoul tech firm, three years into his posting, so a foreign resident well inside the five-year window. He holds a ₹40 lakh NRO fixed deposit paying 7 percent, about ₹2.8 lakh of interest a year, plus Indian mutual funds sitting on a gain.

He keeps the FD interest and any redemption in his Indian accounts and lives on his Korean salary. Because he does not remit that Indian income into Korea, Korea does not tax it this year. On the Indian side, he files his TRC and Form 10F so the bank cuts 10 percent, about ₹28,000, instead of the 30 percent default of ₹84,000, and he recovers the rest through his return. If Ravi instead waited until his sixth year, past the window, Korea would tax that same ₹2.8 lakh of interest on a worldwide basis at his Korean marginal rate plus the 10 percent local surtax, giving Korea a credit only for the ₹28,000 of Indian tax. Selling his funds and drawing his Indian income inside the window, while keeping it in India, is what keeps the Korean tax at zero for now.

What's involved

What the CA actually does

  1. 1

    Confirm your window and what Korea can reach

    We work out from your arrival dates whether you are still inside the five-of-ten-years shelter and how long it lasts, so you know the deadline to realise Indian gains and draw income cheaply.

  2. 2

    Set the treaty rate on your Indian income

    We file your Tax Residency Certificate and Form 10F, now Form 41, so Indian interest is deducted at 10 percent and dividends at 15 percent, and we recover anything over-deducted through your return.

  3. 3

    Time sales and any repatriation

    We sequence Indian mutual fund and property sales, and any money you move into Korea, so a remittance does not needlessly pull Indian income into the Korean base.

  4. 4

    Hand your Korean adviser clean figures

    We give you the Indian income, tax paid and dates in the form your Korean tax agent needs, so the credit under Article 23 lines up and nothing is taxed twice.

What to have ready

Documents you'll typically need

  • Your Korea arrival dates and years of presence there
  • NRO and NRE interest certificates, dividend and rent statements
  • Mutual fund and share purchase and sale statements
  • Records of any money remitted into Korea
  • PAN, passport and your Korean tax residency certificate

References on this page

  • Korea Income Tax Act Article 3: a foreign national resident in Korea for 5 years or less within the last 10 is taxed on foreign-source income only where it is paid by a Korean payer or remitted to Korea
  • Korea taxes a resident once physical presence reaches 183 days in the tax year (the calendar year)
  • India-Korea revised DTAA (in force 12 Sep 2016, effective in India from FY 2017-18), Article 11: interest taxed at 10 percent
  • India-Korea DTAA Article 10: dividends taxed at 15 percent
  • India-Korea DTAA Article 23: Korea gives a credit for Indian tax paid, so the same income is not taxed twice
  • Section 195 (Section 393(2) from FY 2026-27): Indian TDS on payments to a non-resident; claimed at the treaty rate with a TRC and Form 10F (Form 41 from FY 2026-27)

Frequently asked questions

Common questions

Yes, but only on what you actually remit. A partial transfer into Korea pulls in just that portion of your Indian income and nothing more, so the rest, left untouched across the border, is beyond Korea's reach for now. India still taxes all of it, at the treaty rates you reclaim.

For a foreign resident in the first five years, yes, that is wrong, and our older note said it too. Korea's Income Tax Act gives a foreign national resident five years or less of the last ten a remittance basis on foreign income. The worldwide rule applies to Korean nationals and to foreigners once they cross five of the last ten years in Korea.

Not while you are inside the five-year window, as long as you do not remit it to Korea. Only Indian income paid by a Korean payer or brought into Korea falls into the Korean base during those years. On the Indian side the interest is still taxable, and the treaty forms bring that rate right down.

You lose the remittance shelter, so keeping Indian money in India no longer keeps it out of Korean tax. The treaty credit under Article 23 stops the same income being taxed twice, but Korea now holds the full amount in its base. That is why the cheap time to realise Indian gains and draw income is before you cross five of the last ten years.

It depends on the income type. Property gains follow the normal Indian rules, and interest and dividends drop to their treaty rates once your Tax Residency Certificate and Form 10F, now Form 41, are in. Indian share and mutual fund gains often shift to Korea entirely under the treaty, which we cover on our [Korea share and fund gains page](/situations/south-korea-indian-shares-mutual-funds-tax). Without those forms the bank withholds 30 percent on interest, so filing them is the whole difference.

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.

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.

Treaty rate on Indian interest

Right now: Domestic rate 30% plus surcharge and cess on NRO interest; most treaties cap it at 10-15% under Article 11

Where it works differently

The account is NRE or FCNR
Interest is exempt entirely while you are a FEMA non-resident. There is no rate to reduce.
s.10(4)(ii) and s.10(15)(iv)(fa).
The bank refuses the treaty rate without a PAN
Rule 37BC and the Serum Institute / Danisco line say s.206AA cannot override a treaty rate.
See the case register.
The exact rate matters
Per treaty. Do not quote a single figure across countries.

Commonly got wrong

  • All NRO interest is taxed at 30%. That is the domestic default. With a TRC most treaties bring it to 10-15%.30% plus surcharge and cess by default. With a TRC and Form 10F, your treaty's Article 11 rate applies, commonly 10-15%.

Related

If this matched your situation, these go further

Are your Indian share and mutual fund gains taxable in India if you live in Korea?Selling Indian mutual funds while you live in Japan: the 5-year and remittance trapsDoes China tax your Indian income in your first six years there?Do you pay Thai tax on money you bring in from India?Do you pay Brazilian tax on your Indian income?DTAA TDS recoveryForm 10F filing serviceNRI ITR filing (we file for you)DTAA rate lookupMF redemption TDS calculator

Living in South Korea with Indian income?

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