Australian Tax for Australians and Founders Living or Operating in India

Direct answer: an Australian living or operating in India needs a year-by-year analysis of Australian residence, Indian residence category, company control and place of effective management. For Indian tax years beginning on or after 1 April 2026, the Income Tax Act 2025 applies, while earlier years remain governed by the 1961 Act. CGT event I1, resident-but-not-ordinarily-resident status, permanent establishments, withholding and transfer pricing must be coordinated rather than handled as separate annual returns.

What changes for an Australian already living or operating in India

• Indian individual residence depends on statutory day-count tests and, for some Indian citizens or persons of Indian origin, modified or deemed-residence rules.

• Resident-but-not-ordinarily-resident status can materially affect the scope of Indian taxation and reporting.

• If Australian residence ceased, CGT event I1 may affect founder shares, options and other assets. If it did not cease when assumed, Australian worldwide-income positions may require review.

• An Indian company is Indian resident; a foreign company may also become Indian resident if its place of effective management is in India.

• Indian employees, contractors, offices, agents or management activity can create permanent-establishment, payroll, withholding and indirect-tax obligations.

• Development, service, licence, financing and distribution arrangements with Indian related parties require defensible transfer pricing and documentation.

Founder and company decision matrix

1. When did Australian residence cease, if at all?

Australian residence, CGT event I1 and continuing Australian-source income are determined independently of Indian residence. The review reconstructs family, homes, business duties, return pattern, expected duration and control of Australian entities from the actual departure date.

2. Which Indian residence category applies?

The answer may be non-resident, resident but not ordinarily resident, or resident and ordinarily resident. Day counts must be checked across the relevant years together with citizenship, Indian-origin and income facts where special rules may apply.

3. Could India become the place of effective management?

A foreign company can become Indian resident if key management and commercial decisions necessary for the business as a whole are in substance made in India. Founder control, board process, executive authority, budgeting and product decisions are therefore critical evidence.

4. Does earlier advice need review?

A client already in India may have had separate returns prepared without a coordinated Australian departure, Indian residence-category, company-control, treaty or transfer-pricing analysis. Extax can reconstruct the timeline and identify whether filings, governance or agreements need correction.

Worked scenario: the founder is already in Bengaluru

An Australian founder lives in Bengaluru and supervises an Indian development team. The Australian company owns the platform and contracts with customers, while an Indian subsidiary employs engineers and charges development services. The founder approves product strategy and major budgets from India. Local and Australian compliance has been completed, but the company-residence and IP model has not been reviewed together.

The founder’s Australian and Indian residence categories must be determined for each year. CGT event I1 may affect founder equity. The Australian company’s place of effective management and Indian permanent-establishment exposure require review, while the Indian subsidiary’s service model, development functions, IP contribution and pricing must reflect actual conduct.

Evidence to assemble

• Travel history, Indian citizenship or origin status, homes and family arrangements

• Australian assets, professional roles, return pattern and prior residence advice

• Founder shares, options, valuations and transactions since departure

• Australian and Indian returns, registrations and written advice already received

• Group chart, board minutes, delegations and signing authorities

• Employment, contractor, customer, IP, funding and intercompany agreements

Primary sources

• ATO — TR 2023/1: residency tests for individuals

• ATO — CGT event I1: ceasing Australian residence

• ATO — TR 2018/5: central management and control

• India Income Tax Department — non-resident and residence guidance

• Australian Treasury — Australia’s income-tax treaties

Frequently asked questions

Can Extax review my position after I have already moved to India?

Yes. The work can reconstruct Australian and Indian residence across prior years, review earlier filings and company decisions, and coordinate Indian advice where required.

Is Indian residence determined only by 182 or 183 days?

No. India has multiple statutory tests and special rules, including rules relevant to some Indian citizens and persons of Indian origin. The exact tax year and prior-day history must be tested.

Can managing the Australian company from India make it Indian resident?

Potentially. If key management and commercial decisions for the business as a whole are in substance made in India, place-of-effective-management issues can arise.

Review an existing or proposed India position

Extax can review an arrangement already operating from India or a proposed move, including Australian residence, Indian residence category, CGT event I1, place of effective management, permanent establishments, IP, transfer pricing, withholding and payroll.

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Published 28 July 2026. Technically updated 28 July 2026.

Extax leads or coordinates the Australian tax analysis. Indian legal, regulatory, GST and income-tax advice must be provided or confirmed by appropriately qualified Indian advisers. This page is general information only.