Indian income tax | Foreign government personnel | Section 10(8)

Section 10(8): Tax Exemption for Foreign Government Technical Assistance Personnel

Section 10(8) of the Income-tax Act, 1961 concerns specified remuneration and foreign-source income of an individual assigned duties in India under a cooperative technical assistance programme or project agreed between the Central Government and a foreign State.

Key point: Working in India for a foreign government does not, by itself, qualify a person for this exemption. The programme agreement, source of remuneration and conditions applicable to other foreign income must be checked.

Meaning and scope of Section 10(8)

Under the historical provision, an individual's remuneration received directly or indirectly from the government of a foreign State for duties assigned in India may be exempt where those duties are connected with a cooperative technical assistance programme or project in accordance with an agreement entered into by the Central Government and the government of that foreign State, and that agreement provides for the exemption.

The provision also addresses other income accruing or arising outside India to the qualifying individual, subject to the specific foreign tax or social-security-tax condition. These are separate categories and should not be combined without testing the relevant requirements.

Eligibility and exempt income at a glance

Relevant provision	Section 10(8), Income-tax Act, 1961, for tax years to which that Act applies.
Eligible person	An individual satisfying the statutory conditions; the clause does not itself impose a general Indian-citizenship exclusion.
Eligible assignment	Duties assigned in India under a qualifying cooperative technical assistance programme or project between the Central Government and a foreign State.
Remuneration	Remuneration received directly or indirectly from the foreign State government for the qualifying assignment, where the agreement provides for exemption.
Other foreign income	Income accruing or arising outside India, if it is subject to income tax or social security tax in the foreign State or States concerned.
Amount exempt	The qualifying remuneration and other qualifying foreign-source income, without a fixed rupee ceiling in this clause.

Statutory conditions for exemption

Agreement between governments: The Central Government and the government of a foreign State must have entered into an agreement for a cooperative technical assistance programme or project.
Duties in India: The individual's duties must be assigned in India in connection with that programme or project.
Foreign-government remuneration: The remuneration must be received directly or indirectly from the government of the foreign State.
Express exemption in agreement: The terms of the government-to-government agreement must provide for the exemption of such remuneration.
Additional condition for other income: Other income accruing or arising outside India must be subject to income tax or social security tax in the foreign State or States concerned. The foreign-tax condition applies to this separate category of income, not as a substitute for the remuneration conditions.

Important definitions and distinctions

Cooperative technical assistance programme

A programme or project carried out under a government-to-government arrangement for technical cooperation. A private consulting engagement, even when it supports a public project, does not automatically satisfy this requirement.

Remuneration received directly or indirectly

Payment for the individual's qualifying assigned duties may be made directly by the foreign government or through an intermediary on its behalf. Payroll documents and the government agreement should establish the actual source and purpose of the payment.

Income accruing or arising outside India

Income whose source and accrual are outside India. The exemption for such other income depends on its being subject to income tax or social security tax in the relevant foreign State or States. It is not a general exemption for all foreign receipts.

Illustrative example

An engineer is deputed to India by a foreign government under a technical assistance agreement with India's Central Government. The agreement expressly exempts the engineer's remuneration, which the foreign government pays. If the remaining statutory conditions are met, that remuneration may qualify under Section 10(8). Separately, interest arising outside India must be tested against the clause's foreign income-tax or social-security-tax requirement before any exemption is claimed for that interest.

What the exemption does not automatically cover

Remuneration from a private employer without the qualifying government-to-government programme and agreement terms.
Payments for unrelated services or work outside the assigned programme.
Indian-source investment or business income merely because the recipient is part of a technical assistance mission.
Foreign-source income that does not meet the statutory foreign tax or social-security-tax condition.

Current-law applicability from April 2026

The Income-tax Act, 2025 applies from 1 April 2026. Section 10(8) is the citation under the Income-tax Act, 1961. For tax years governed by the 2025 Act, consult the corresponding operative provision and relevant transitional rules rather than assuming the older section numbering continues unchanged. For earlier years, use the statutory wording applicable to the relevant year.

Tax residence, applicable double taxation avoidance agreements, payroll withholding and return-disclosure requirements may also require separate consideration. The exemption should be supported by documents rather than inferred from the person's nationality or job title.

Documents to retain

Copy or certified extract of the Central Government and foreign State technical assistance agreement, including its exemption terms.
Deputation or assignment letter describing the individual's duties in India.
Payroll statements and proof of payment by or on behalf of the foreign government.
Evidence of the nature, source and foreign taxation or social-security-tax treatment of other income claimed as exempt.
Records of the relevant tax year, Indian presence and any required income-tax filings.

Official legislation and tax resources

Updated 10 October 2026. This article explains the historical Section 10(8) rule; consult the legislation in force for the relevant tax year and the actual bilateral programme agreement.