Tax Exemption
This query is : Resolved
19 June 2009
I am an Indian Citizen and presently working as MIS Expert(Consultant) in Asian Development Bank. I am posted in India. I want to know whether my salary is exempted from income tax or not. If yes than under which section and Act.
22 June 2009
As per the provisions of Indian income tax act every indian citizen if resident in India is liable to pay income tax in India
on all his income ie, Indian as well as foreign income both.
on all his income ie, Indian as well as foreign income both.
24 June 2009
I am in know of an Expert retained by the World Bank who is a resident Indian based in India with salary income from the World Bank who has not been paying income tax over the years. Is his income exempted from income tax ? If yes, similarly, income by a resident Indian based in India with income from the multilateral agency like African Development Bank, Asian Development Bank or other similar UN bodies being engaged full time is taxable or exempted under the provision of the income tax act.
26 July 2025
Great question! The taxability of salary income received by Indian residents working for international organizations like the World Bank, Asian Development Bank (ADB), or similar multilateral agencies can be a bit nuanced. Here’s a detailed explanation:
---
### 1. **General Rule for Indian Residents:**
* As per the **Income Tax Act, 1961**, any income earned by a resident Indian, whether from India or abroad, is taxable in India.
* So, if you are a resident in India for tax purposes, your salary income is generally taxable here.
---
### 2. **Special Exemptions for Salaries from Multilateral Agencies:**
* Some international organizations, especially those established by treaties or international agreements, may grant tax exemptions to their employees based on agreements with the Indian Government.
* **Example:** Employees of the **World Bank, IMF, Asian Development Bank (ADB), African Development Bank**, etc., often have certain exemptions under the respective **Multilateral Agreement** signed with India.
---
### 3. **Specifics About Exemption:**
* **Income from Multilateral Agencies:**
Under certain agreements, **salaries paid by these organizations to their officials may be exempt from income tax** in India.
* These exemptions are usually based on India’s obligations under international treaties or agreements.
---
### 4. **Key Points to Verify:**
* Whether the organization you work for has an **explicit tax exemption agreement** with the Indian government.
* If yes, **your salary income from that organization will be exempt** under that agreement.
* Such exemptions are usually governed outside the Income Tax Act (through treaties and agreements), but they may be referenced under Section 10(6)(vi) or other relevant provisions.
* You must **obtain a certificate of exemption or relevant documentation** from your employer (the multilateral agency).
---
### 5. **In Case of No Exemption Agreement:**
* If your employer (even if a multilateral agency) does not have such an agreement or exemption, your salary will be taxable in India.
* You must declare it in your income tax return and pay tax accordingly.
---
### 6. **Practical Example:**
* Many Indian employees working full-time in India for the **World Bank** or **ADB** have been historically exempted from Indian income tax on salaries received from these organizations based on India’s treaty obligations.
* However, each case depends on the **exact terms of employment and the specific treaty provisions**.
---
### **Summary:**
| Situation | Tax Treatment on Salary |
| ---------------------------------------------------------------------- | ------------------------------------------ |
| Indian resident, employer is multilateral agency with exemption treaty | Salary exempt from Indian income tax |
| Indian resident, no such treaty or agreement | Salary taxable in India under normal rules |
---
### **What should you do?**
* Check with your employer (Asian Development Bank) about the tax exemption certificate or any treaty-based exemption.
* Consult the **official multilateral agreements** or HR/legal department of ADB.
* If exempt, retain proof to submit with your tax filings.
* If not exempt, include salary income in your tax return and pay taxes accordingly.
---
If you want, I can help you draft a letter/request to your employer or guide you through checking relevant treaties. Would you like that?
---
### 1. **General Rule for Indian Residents:**
* As per the **Income Tax Act, 1961**, any income earned by a resident Indian, whether from India or abroad, is taxable in India.
* So, if you are a resident in India for tax purposes, your salary income is generally taxable here.
---
### 2. **Special Exemptions for Salaries from Multilateral Agencies:**
* Some international organizations, especially those established by treaties or international agreements, may grant tax exemptions to their employees based on agreements with the Indian Government.
* **Example:** Employees of the **World Bank, IMF, Asian Development Bank (ADB), African Development Bank**, etc., often have certain exemptions under the respective **Multilateral Agreement** signed with India.
---
### 3. **Specifics About Exemption:**
* **Income from Multilateral Agencies:**
Under certain agreements, **salaries paid by these organizations to their officials may be exempt from income tax** in India.
* These exemptions are usually based on India’s obligations under international treaties or agreements.
---
### 4. **Key Points to Verify:**
* Whether the organization you work for has an **explicit tax exemption agreement** with the Indian government.
* If yes, **your salary income from that organization will be exempt** under that agreement.
* Such exemptions are usually governed outside the Income Tax Act (through treaties and agreements), but they may be referenced under Section 10(6)(vi) or other relevant provisions.
* You must **obtain a certificate of exemption or relevant documentation** from your employer (the multilateral agency).
---
### 5. **In Case of No Exemption Agreement:**
* If your employer (even if a multilateral agency) does not have such an agreement or exemption, your salary will be taxable in India.
* You must declare it in your income tax return and pay tax accordingly.
---
### 6. **Practical Example:**
* Many Indian employees working full-time in India for the **World Bank** or **ADB** have been historically exempted from Indian income tax on salaries received from these organizations based on India’s treaty obligations.
* However, each case depends on the **exact terms of employment and the specific treaty provisions**.
---
### **Summary:**
| Situation | Tax Treatment on Salary |
| ---------------------------------------------------------------------- | ------------------------------------------ |
| Indian resident, employer is multilateral agency with exemption treaty | Salary exempt from Indian income tax |
| Indian resident, no such treaty or agreement | Salary taxable in India under normal rules |
---
### **What should you do?**
* Check with your employer (Asian Development Bank) about the tax exemption certificate or any treaty-based exemption.
* Consult the **official multilateral agreements** or HR/legal department of ADB.
* If exempt, retain proof to submit with your tax filings.
* If not exempt, include salary income in your tax return and pay taxes accordingly.
---
If you want, I can help you draft a letter/request to your employer or guide you through checking relevant treaties. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- GST payable under RCM
- Applicablity on tds
- Unable to generate and save json file for updated return
- GSTR9- ITC
- Regarding TDS not deducted on rent
- Which SAC code should be selected??
- Audit of F and O T/O
- LTCG offset against property buy
- Tax audit & Switching from Presumptive taxation
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
