Foreign allowance


(Querist)
14 August 2019
Please clarify the tax treatment of foreign allowance and the basic pay paid by the GOI to the employees on temporary deputation to the foreign country, both paid out side India in US dollars directly by Cash.


CA R SEETHARAMAN (Expert)


Click to Talk 14 August 2019
Foreign allowance received is exempt under Section 10(7) of the Income tax Act (i.e., any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India). With regard to the basic pay, please note that the same will be taxable in India as it is deemed to accrue in India as per Section 9(1)(iii) of the Act (i.e., income chargeable under the head ‚ÄúSalaries‚ÄĚ payable by the Government to a citizen of India for service outside India).

aao apgenco (Querist)
14 August 2019
Sir
The issue is that the Basic pay is also paid out side India in foreign currency. Kindly clarify on the treatment of Basic pay paid out side India.

CA R SEETHARAMAN (Expert)


Click to Talk 14 August 2019
For Government servents special treatment it's taxable in India even it's paid outside India in foreign currency.


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