Tax paid by the Government or Indian concern on certain income of a foreign company – Section 10(6A), 10(6B), 10(6BB) and 10(6C)

Provisions of section 10(6A), section 10(6B), section 10(6BB) and section 10(6C) of the Income Tax Act provides various exemption towards tax paid by the Government / Indian concern on certain types of income of a foreign company. Following table explains the gist of all the sections –

Section Exemption
Section 10(6A) Exemption towards tax paid by the Government or an Indian concern on behalf of the foreign company in respect of income by way of royalty or fees for technical services.
Section 10(6B) Exemption towards tax paid by the Government or an Indian concern on behalf of the non-resident or a foreign company in respect of any income other than salary or royalty or fees for technical services.
Section 10(6BB) Exemption towards tax paid by the Indian company on behalf of the foreign company or foreign enterprise in respect of income by way of lease of aircraft or aircraft engine.
Section 10(6C) Exemption towards any income derived by a foreign company in respect of income by way of fees for technical services or royalty.

The present article completely covers the provisions attached with the exemption sections referred above.

Exemption available under section 10(6A) of the Income Tax Act

  • Tax paid by the Government or the Indian concern to the Central Government on behalf of the foreign company, in respect of income derived by way of royalty / fees for technical services, will be exempt from tax in the hands of the foreign company.
  • The agreement should have been entered between 1st April 1976 and 31st May 2002.
  • The agreement should be in accordance with the industrial policy of the Indian Government or the agreement should be approved by the Central Government.

Exemption available under section 10(6B) of the Income Tax Act

  • Tax paid by the Government or the Indian concern to the Central Government on behalf of the foreign company or a non-resident (not being company).
  • The tax should be paid in respect of any income (other than salary or fees for technical services or royalty), will be exempt from tax in the hands of the foreign company or a non-resident.
  • The agreement should be entered by the Central Government with the Foreign Government or an international organization.
  • The agreement should have been entered before 1st June 2002.

Exemption available under section 10(6BB) of the Income Tax Act

Eligible exemption-

Tax paid by the Indian company on income received by the foreign government or the foreign enterprise on leasing an aircraft or an aircraft engine.

It should be noted that the term ‘foreign enterprise’ means a person who is a non-resident.

Conditions to be satisfied for claiming exemption-

    • Income is derived in the form of consideration for acquiring an aircraft or an aircraft engine on lease. The income should be derived by the foreign government or the foreign enterprise from an Indian Company.
    • The income doesn’t include payment for providing spares; facilities or services in connection with the operation of leased aircraft.
    • The Indian Company should be engaged in the business of operation of aircraft.
    • The agreement should be entered between 1st April 1997 to 31st March 1999 or after 31st March 2007. The agreement should be approved by the Central Government.

Exemption available under section 10(6C) of the Income Tax Act

  • Section 10(6C) provides exemption towards any income derived, by way of fees for technical services or royalty, by a foreign company.
  • The above referred income should be derived in pursuance of an agreement entered with the Government for providing services in India or outside India in projects connected with the security of India.
  • The foreign company, receiving the income, should be notified by the Central Government.

Table – Articles on Section 10 Exemptions

Sr. No. Particulars
1 Section 10(1)– Exemption to Agricultural Income
2 Section 10(2) Exemption to amount received by co-parcener from HUF
3 Section 10(2A) Exemption towards share of income from firm/LLP
4 Exemptions towards interest to non-residents | Section 10(4) & 10(4B)
5 Exemption on Tax paid by Govt or Indian concern on certain income of a foreign company
6 Section 10(7) Perquisites/allowances exemption to Govt employees serving outside India
7 Exemption- Section 10(8A) & section 10(8B) of Income Tax Act
8 Exemption towards commuted value of pension Section 10(10A)
9 Exemption towards retrenchment compensation received by workman Section 10(10B)
10 Section 10(10BC) Exemption towards compensation received on account of any disaster
11 Section 10(10C) Exemption of amount received on voluntary retirement
12 Exemption towards tax paid by employer on non-monetary perquisites: Section 10(10CC)
13 Section 10(10D) Exemption towards amount received under a Life Insurance Policy
14 Exemption for amount received from Statutory & Recognized PF
15 Exemption for payment from approved superannuation fund Section 10(13)
16 Income Tax Exemption on prescribed allowances/ benefits | Section 10(14)
17 Section 10(15) Exemption- Interest on Bonds, Debentures, Securities
18 Scholarship exemption | Section 10(16) | Income Tax Act 1961
19 Exemption towards income for administration of Charitable or Religious Institution
20 Section 10(32) Exemption | Income of minor clubbed with parent
21 Exemption for dividend income received from Indian Company | Section 10(34)
22 Section 10(34A) Exemption towards income received by a shareholder on buy back of shares
23 Section 10(35) Exemption towards income received from units
24 Section 10(37) Exemption towards Capital Gain arising on Compulsory Acquisition of Urban Agricultural Land

 

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