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The following remuneration received by an Individual, not being a citizen of India, are exempt from income-tax: -
Salary Exempt: Remuneration received as an official, by whatever name called, of an embassy, high commission, legation, commission, consulate or the trade representation of a foreign State or as a member of the staff of any of these officials, for service in such capacity.
However, the remuneration received by a trade commissioner or other official representative in India of the Government of Foreign State (not holding office as such in an honorary capacity) or member of the staff of such officials shall be exempt, only if similar person of the Government resident for similar purposes in the country concerned enjoys a similar exemption in that country.
Further, the members of the staff are subjects of the country represented and are not engaged in any business or profession or employment in India otherwise than as members of such staff.
Remuneration received as an employee of a foreign enterprise for services rendered by him during his stay in India, subject to the following conditions: -
the foreign enterprise is not engaged in any trade or business in India;
his stay in India does not exceed in the aggregate a period of 90 days in such previous year; and
such remuneration is not liable to be deducted from the income of the employer chargeable under this Act.
Any income chargeable under the head "Salaries" received by or due to any such Individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship, where his total stay in India does not exceed in the aggregate a period of 90 days in the previous year.
Remuneration received by him as an employee of the Government of foreign State during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by: -
any company in which the entire paid-up share capital is held by the Central Government, or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments; or
any company which is a subsidiary of such a company; or
any corporation established by or under a Central, State or Provincial Act, or
any society registered under the Societies Registration Act, 1860, or under any other corresponding law for the time being in force and wholly financed by the Central Government, or any State Government or State Governments, or partly by the Central Government and partly by one or more State Governments.
Salaries, allowances and other emoluments paid by the United Nations to its officials are exempt under section 2 of the United Nations (Privileges and Immunities) Act, 1947.
Similarly any pension covered by that section is also exempt from income-tax - Circular No.293 dated 10.02.1981.
The income chargeable under the head "Salaries" shall be computed after making the following deductions: -
Tax on Employment
A deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less.
Under section 16(iii), deduction is allowed in respect of any sum paid on account of tax on employment within the meaning of article 276(2) of the Constitution of India leviable by or under any law.