Remuneration to Persons who are not Citizens of India [Section 10(6)]

Exempted Incomes-Section 10(6)

Section 10(6) of the Income Tax Act, 1961 provides an exemption from income tax for certain income received by an individual who is not a citizen of India.

Conditions:

However, there are certain conditions that need to be fulfilled for this exemption to apply.

  • Firstly, the individual must not be a citizen of India.
  • Secondly, the remuneration must be received for services rendered in connection with a project in India.
  • Thirdly, the individual must be a non-resident in India.
  • Lastly, the remuneration should not be deductible in computing the income of any other person under the provisions of the Income Tax Act.

It is important to note that the exemption under Section 10(6) applies only to the remuneration received by the non-citizen and not to any other income earned by them in India. Any other income, such as interest, dividends, or capital gains, will be subject to tax as per the applicable provisions of the Income Tax Act.

Types of Incomes Exempt under Section 10(6)

The following are the different types of income that are exempt under Section 10(6):

  • Remuneration received by an individual who is not a citizen of India as an official or member of the staff of the embassy or high commission or legation or consulate or commission or the trade representation of the foreign state.
  • Remuneration received by an individual who is not a citizen of India as a trade commissioner or other official representative in India of the Government of the foreign state.
  • Remuneration received by an individual who is not a citizen of India as a professor or teacher at a university or other educational institution in India.
  • Remuneration received by an individual who is not a citizen of India as an employee of a foreign enterprise which is engaged in a project in India which is connected with the security of India.
  • Remuneration received by an individual who is not a citizen of India as an employee of a foreign enterprise which is engaged in a project in India which is approved by the Central Government.
See also  Leave Encashment [Section 10(10AA)]

The exemption under Section 10(6) is available only to individuals who are not citizens of India. It is also important to note that the exemption is not available for all types of income received by non-residents. Only the specific types of income listed above are exempt from income tax under Section 10(6).

Examples:

Here are some examples of cases where the exemption under Section 10(6) will be available:

  1. A diplomat who is a citizen of the United States and is stationed in India will be exempt from income tax on the remuneration that he receives from the US government.
  2. A professor from the United Kingdom who is teaching at a university in India will be exempt from income tax on the remuneration that he receives from the university.
  3. An engineer from France who is working on a project in India that is connected with the security of India will be exempt from income tax on the remuneration that he receives from the French company that he is employed by.

The exemption under Section 10(6) is a valuable benefit for non-residents who are working or teaching in India. It helps to reduce their tax burden and encourages them to come to India and work or teach.

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