sec 10(7)
This query is : Resolved
11 January 2011
a person is a resident. He is a public sector employee. The govt has sent him on deputation for training abroad. he gets salary from that foreign company.
my query is can he claim exemption u/s 10(7) which says
Salary payable by the Govt to an Indian citizen/national for services rendered outside India:
The following conditions have to be satisfied before such income is deened to accrue or arise in India:
1) Income should be chargeable under the Head "Salaries".
2) The payer should be Govt Of India
3) The recipeint should be an Indian citizen-whether resident of non-resident.
4) the services should be rendered outside India
Salary in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Govt to the above Indian citizens for their rendering services outside India are exempt under section 10(7).
In my calculation i have taken exemption for perquisites and allowances under sec 10(7). Am I right. email:samruta1feb90@gmail.com
thanks in advance.
my query is can he claim exemption u/s 10(7) which says
Salary payable by the Govt to an Indian citizen/national for services rendered outside India:
The following conditions have to be satisfied before such income is deened to accrue or arise in India:
1) Income should be chargeable under the Head "Salaries".
2) The payer should be Govt Of India
3) The recipeint should be an Indian citizen-whether resident of non-resident.
4) the services should be rendered outside India
Salary in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Govt to the above Indian citizens for their rendering services outside India are exempt under section 10(7).
In my calculation i have taken exemption for perquisites and allowances under sec 10(7). Am I right. email:samruta1feb90@gmail.com
thanks in advance.
11 January 2011
IF The following conditions are satisfied before such income is deened to accrue or arise in India:
1) Income should be chargeable under the Head "Salaries".
2) The payer should be Govt Of India
3) The recipeint should be an Indian citizen-whether resident of non-resident.
4) the services should be rendered outside India
Then the Salary in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Govt to the above Indian citizens for their rendering services outside India are exempt under section 10(7).
So Salary is taxable and Perquistes and Allowances are Exempt.
Regards
Ankit
1) Income should be chargeable under the Head "Salaries".
2) The payer should be Govt Of India
3) The recipeint should be an Indian citizen-whether resident of non-resident.
4) the services should be rendered outside India
Then the Salary in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Govt to the above Indian citizens for their rendering services outside India are exempt under section 10(7).
So Salary is taxable and Perquistes and Allowances are Exempt.
Regards
Ankit
12 January 2011
Sir.Are you sure.The client is asking for clear proof. Becoz he he gets salary from that foreign company not from Govt which a prerequisite condition.
Pls reply.
Pls reply.
12 January 2011
Dear Amruta ,
As Replied above the payer must be the Govt. of India and Not any Other , Law is Clear on that !
As Replied above the payer must be the Govt. of India and Not any Other , Law is Clear on that !
18 January 2011
he is working in a public sector company wherein the Govt holds 81% holding. The answer will remain the same or change. Nw can he claim the exemption?
23 July 2025
Under **Section 10(7)** of the Income Tax Act, the conditions for claiming an exemption on salary, allowances, and perquisites are very specific. Let me break this down clearly for you.
### **Section 10(7) - Exemption on Salary and Allowances for Indian Citizens Working Abroad**
#### **Conditions for Exemption**:
1. **Income Should Be Chargeable Under the Head "Salaries"**:
* The income must be treated as **salary** under the provisions of the Income Tax Act.
2. **The Payer Should Be the Government of India**:
* The salary should be paid by the **Government of India** (or the Government of India institution/agency). If the salary is paid by any other entity, including public sector companies or foreign companies, this condition is not fulfilled.
3. **The Recipient Should Be an Indian Citizen**:
* The recipient must be an **Indian citizen**, whether a **resident** or a **non-resident**.
4. **The Services Should Be Rendered Outside India**:
* The services should be performed **outside India** for this exemption to apply.
---
### **Answer to Your Query**:
In your case, the employee is working for a **foreign company** (not directly the Government of India). Even though the employee is working on deputation, the **salary is paid by the foreign company**. Since **Section 10(7)** specifically mentions that the **payer must be the Government of India**, **the exemption will not apply** to salary paid by the foreign company.
The fact that the employee is in a **public sector company** with **81% government holding** is **irrelevant** for the purpose of Section 10(7). The crucial point is that the salary is **not paid directly by the Government of India**, which is a mandatory condition for claiming this exemption.
---
### **Conclusion**:
* **Salary paid by the foreign company** **cannot** be exempt under **Section 10(7)**.
* The exemption under **Section 10(7)** only applies when the **Government of India** is the employer, not a **foreign company** or even a **public sector company** (despite the government holding).
* The employee will **not** be able to claim the exemption under **Section 10(7)** for salary received from the foreign company.
If your client is still unsure or needs further clarity, I recommend consulting with a tax professional who can provide more personalized guidance based on specific facts.
Let me know if you need further details!
### **Section 10(7) - Exemption on Salary and Allowances for Indian Citizens Working Abroad**
#### **Conditions for Exemption**:
1. **Income Should Be Chargeable Under the Head "Salaries"**:
* The income must be treated as **salary** under the provisions of the Income Tax Act.
2. **The Payer Should Be the Government of India**:
* The salary should be paid by the **Government of India** (or the Government of India institution/agency). If the salary is paid by any other entity, including public sector companies or foreign companies, this condition is not fulfilled.
3. **The Recipient Should Be an Indian Citizen**:
* The recipient must be an **Indian citizen**, whether a **resident** or a **non-resident**.
4. **The Services Should Be Rendered Outside India**:
* The services should be performed **outside India** for this exemption to apply.
---
### **Answer to Your Query**:
In your case, the employee is working for a **foreign company** (not directly the Government of India). Even though the employee is working on deputation, the **salary is paid by the foreign company**. Since **Section 10(7)** specifically mentions that the **payer must be the Government of India**, **the exemption will not apply** to salary paid by the foreign company.
The fact that the employee is in a **public sector company** with **81% government holding** is **irrelevant** for the purpose of Section 10(7). The crucial point is that the salary is **not paid directly by the Government of India**, which is a mandatory condition for claiming this exemption.
---
### **Conclusion**:
* **Salary paid by the foreign company** **cannot** be exempt under **Section 10(7)**.
* The exemption under **Section 10(7)** only applies when the **Government of India** is the employer, not a **foreign company** or even a **public sector company** (despite the government holding).
* The employee will **not** be able to claim the exemption under **Section 10(7)** for salary received from the foreign company.
If your client is still unsure or needs further clarity, I recommend consulting with a tax professional who can provide more personalized guidance based on specific facts.
Let me know if you need further details!
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