Taxation - Incentives, Rebates and Allowances - Relief for Foreign Nationals

Foreigners are entitled to certain special concessions as follows.

Remuneration received by a foreigner as an employee of a foreign enterprise for services rendered in India is not subject to Indian income tax provided :
- The foreign enterprise is not engaged in any trade or business in India;
- The foreigner is not present in India for more than 90 days in that year; and
- The remuneration is not liable to be deducted in computing the employer's taxable income in India.
Note: In a treaty situation, the 183-day rule applies.
A foreigner (including a nonresident Indian) who was not resident in India in any of the four financial years immediately preceding the year of arrival in India is entitled to a special tax concession, if :
- The foreigner has specialized knowledge and experience in construction or manufacturing operations, mining, generation of electricity or any other form of power, agriculture, animal husbandry, dairy farming, deep-sea fishing, shipbuilding, grading and evaluation of diamonds for diamond export or import trade, cookery, information technology (including computer architecture systems, platforms and associated technology), a software development process and tools, or such other fields as the central government may specify; and
  
  The individual is employed in any business in India in a capacity in which specialized knowledge and experience are used.
Note: During the first 48 months commencing from the date of arrival in India, the remuneration will not be subject to any further tax in such a foreigner's hands if the employer bears the tax on the remuneration.
A visiting foreign professor who teaches in any university or educational institution in India land whose contact of service is approved by the central government is exempt from tax on remuneration received during the first 36 months from the date of arrival in India, provided the teacher was not resident in India in any of the four financial years immediately preceding the year of arrival in India. If the foreigner continues in employment in India thereafter, the remuneration of the following 24 months is taxable; however, if the tax is paid by the university or education institution, there is no further tax liability.
Salary received by a nonresident foreigner in connection with employment on a foreign ship is exempt from tax if the employee's stay in India during a year does not exceed 90 days.
Special exemptions under specified circumstances are available for the following :
- Amounts receivable from a foreign government or a foreign body by a foreigner for undertaking research in India under an approved scheme;
- Remuneration received by employees of a foreign government during training with the Indian government or in an Indian government undertaking (applicable to individuals assigned to India under cooperative technical assistance programs in accordance with agreements between the Indian government and a foreign government); and
- Remuneration received by nonresident expatriates in connection with the filming of motion pictures by nonresident producers.

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Keywords:

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