Income Tax Exemption under Section 10(6)(vi) for Foreign Employees in India
Section 10(6)(vi) of the Income-tax Act, 1961 provides a conditional exemption for remuneration received by a non-Indian citizen employed by a foreign enterprise for services performed during a short stay in India. The exemption is subject to three cumulative statutory tests.
Meaning and scope of Section 10(6)(vi)
Under the 1961 Act, this clause addresses remuneration received by an individual who is not a citizen of India as an employee of a foreign enterprise, for services rendered during the individual's stay in India. It is a specific exemption for qualifying remuneration, not a blanket exemption for every foreign employee, every short business visit, or every payment from overseas.
Eligibility and conditions for exemption
- Foreign employer must not carry on trade or business in India. The foreign enterprise must not be engaged in any trade or business in India.
- Stay must not exceed 90 days. The employee's stay in India must not exceed 90 days in the relevant previous year under the 1961 Act. The test concerns stay in India, not simply the number of working days.
- Remuneration must not be deducted from the employer's Indian taxable income. The remuneration must not be deductible in computing the income of the employer chargeable under the 1961 Act.
All three conditions must be satisfied. A failure of even one condition can prevent the exemption from applying.
Who is eligible and how much is exempt?
| Item | Rule under Section 10(6)(vi), 1961 Act |
|---|---|
| Eligible assessee | An individual who is not a citizen of India. |
| Qualifying income | Remuneration for services rendered in India as an employee of a foreign enterprise. |
| Maximum stay | Not more than 90 days in the relevant previous year. |
| Foreign enterprise | Must not be engaged in trade or business in India. |
| Deduction condition | Remuneration must not be deductible in computing the employer's taxable income in India. |
| Amount exempt | The full qualifying remuneration, provided every statutory condition is met. |
Example: Short assignment in India
A non-Indian citizen employed by a foreign enterprise visits India for 65 days to perform employment duties. Assume the foreign enterprise does not conduct trade or business in India and the salary is not deductible in calculating its income chargeable to Indian tax. Subject to verification of all facts and the applicable tax year, the remuneration for the services rendered during the visit may qualify for exemption under Section 10(6)(vi) of the 1961 Act.
If the employee stays 95 days during the relevant previous year, the 90-day condition is not met and the exemption under this clause is unavailable, even if the other conditions are satisfied.
How is the 90-day limit assessed?
The statutory wording refers to the employee's stay in India during the previous year. Maintain passport entry and exit records, travel itineraries and other reliable evidence of physical presence. Do not assume that a treaty's 183-day employment rule replaces the domestic 90-day threshold: treaty relief and this statutory exemption are separate analyses.
Interaction with tax treaties and Indian salary taxation
Salary attributable to employment exercised in India can be taxable in India under the applicable domestic rules unless an exemption or treaty relief applies. A Double Taxation Avoidance Agreement (DTAA) may contain a separate short-stay employment article with its own conditions, including employer-residence and permanent-establishment considerations. Treaty eligibility depends on the specific agreement, residence status and supporting documents.
For assignments not covered by the historical Section 10(6)(vi) exemption, consider the relevant provisions of the Income-tax Act applicable to the tax year and any available DTAA relief. A foreign payroll or payment outside India does not by itself establish exemption.
Documents to retain
- Passport, visa and travel records establishing dates of stay in India.
- Employment agreement and confirmation of the foreign enterprise as employer.
- Salary statements identifying remuneration attributable to services in India.
- Evidence that the foreign enterprise was not engaged in trade or business in India.
- Records supporting the condition that the remuneration was not deducted from income chargeable to tax in India.
- Where treaty relief is claimed, applicable tax residency and treaty documentation.
Frequently asked questions
Is remuneration fully exempt if the employee stays for fewer than 90 days?
Not automatically. The foreign enterprise must also meet the no-trade-or-business condition, and the remuneration must satisfy the non-deduction condition. Citizenship and the nature of the employment must also fit the provision.
Does the exemption apply to Indian citizens employed abroad?
No. Section 10(6)(vi) of the 1961 Act specifically concerns an individual who is not a citizen of India.
Does a DTAA provide the same 90-day exemption?
Not necessarily. Treaty employment articles may use different day limits and conditions. The applicable treaty must be examined independently.
Official legal and tax resources
- Income Tax Department, Government of India - legislation, guidance and tax resources.
- Income Tax e-Filing Portal - returns, forms and taxpayer services.
- India Code - official central legislation, including the Income-tax Acts.
- Income Tax Department: Double Taxation Avoidance Agreements - treaty reference materials.
Last reviewed: 10 October 2026. This article explains the historical Section 10(6)(vi) framework and flags the change of governing income-tax legislation from 1 April 2026. Verify the applicable law for the particular tax year and obtain professional advice for individual assignments.