An exemption under section 10(8A) and section 10(8B) of the Income Tax Act are interconnected. Section 10(8A) provides exemption towards remuneration / fee and other income received by the ‘consultant’. Whereas, section 10(8B) provides exemption towards remuneration / fee and other income received by the employee of the consultant.
Exemption available, and conditions to be satisfied, under both the sections are explained thoroughly in the present article.
Section 10(8A) of the Income Tax Act exempts the income of a consultant–
Following two exemptions are available under section 10(8A)–
1. Any remuneration / fee received by the ‘consultant’ (directly or indirectly) from the international organization. The said international organization must be deriving its fund under the technical assistance grant agreement between the organization and the foreign Government; and
2. Any other income accruing or arising to the ‘consultant’ outside India, and such income is not deemed to accrue or arise in India. The consultant should be paying either any income tax or social security tax on such income to the foreign Government.
As per the explanation to section 10(8A), the term consultant means-
The following categories of person who is engaged by the international organization for rendering technical service in India, in connection with any technical assistance project or programme-
- Any individual who is not a citizen of India; or
- Any individual, who is a citizen of India, but is not ordinarily resident in India; or
- Any person who is a non-resident.
Conditions to be fulfilled for claiming exemption under section 10(8A)–
In order to avail exemption available under section 10(8A) of the Income Tax Act, the following listed conditions need to be satisfied-
1. The remuneration or fee is paid to the consultant for rendering technical service in India.
2. The technical service rendered by the consultant should be in connection with the technical assistance project or programme.
3. The remuneration or fee (directly or indirectly) should have been paid out of the fund made available to an international organization, as per the agreement entered between the international organization and the foreign Government.
4. The technical assistance is provided in accordance with the agreement entered between the Central Government and the international organization.
5. The agreement relating to the appointment of the consultant should be approved by the prescribed authority.
Section 10(8B) of the Income Tax Act exempts the income of employees of a consultant-
Following two exemptions are available under section 10(8B)–
1. Any remuneration / fee received by the individual [who is assigned duty in India under the technical assistance project or programme]. The said remuneration should have been received by the Individual (directly or indirectly) from the consultant referred under section 10(8A); and
2. Any other income accruing or arising to the individual outside India, and such income is not deemed to accrue or arise in India. The individual should be paying either any income tax or social security tax to the foreign Government on such income.
Conditions to be fulfilled for claiming exemption under section 10(8B)–
1. The individual should be-
- An employee of the consultant referred under section 10(8A); and
- He should not be a citizen of India. However, in case he is a citizen of India, he should not be ordinarily resident in India.
2. The remuneration / fee should have been received in connection with the technical assistance programme referred under section 10(8A).
3. The contract of service of the individual should be approved by the competent authority prior to the commencement of the service.
Table – Articles on Section 10 Exemptions
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