Exemption towards perquisites or allowances paid by the Government to its employees serving outside India
Section 10(7) of the Income Tax Act exempts any perquisites / allowances which are paid or allowed, outside India, by the Government to its employees for providing services outside India.
The current article explains the exemption provisions of section 10(7) and also covers the necessary conditions to be satisfied for claiming exemption under section 10(7).
Exemption available under section 10(7) of the Income Tax Act
Provisions of section 10(7) provide exemption towards any perquisites or allowances either paid or allowed, as such, outside India. The said perquisites or allowances should have been paid, to a citizen of India, by the Government towards rendering services outside India.
Mandatory conditions to be satisfied for availing exemption under section 10(7) of the Income Tax Act
All the following conditions need to be satisfied in order to claim an exemption under section 10(7)–
1. Income should be in the form of perquisites or allowances being chargeable under the head ‘Salaries’.
2. The payer of the income should be the Government.
3. The recipient of the income should be an Indian citizen.
4. The service should have been rendered outside India.
If all the above conditions are satisfied, the perquisite / allowances paid outside India by the Government to an Indian citizen would be exempt under section 10(7).
Table – Articles on Section 10 Exemptions
Author Bio
I was on deputation to MHPA hydro project bhutan from Indian public sector company since jan 2017 and drawing complete salary from MHPA bhutan beung credited in bhutan bank account. In oct 2019 i got repatriated. My question is whether my entire salary including basic and allowances shall be exempted under section 10(7) for FY 2019-20 or only allowances