Taxability - employee of USAID

[Asked by Guest]

Greetings, What is the taxability of an employee of USAID working in India? My client says that it is exempt from tax. But there is no exemption provided in the Income Tax Act. I am also not able to find put any Act passed by Indian Parliament on this. {{there is a special Act for UN salaries - United Nations (Privileges and Immunities) Act, 1947}}. PLEASE GUIDE ME.

[Surender Gupta]

It is a technical issue and I think beyond the scope of general discussion forum. However, I believe that if you did not find any exemption under section 10 or other related provisions of the Income Tax Act, 1961 on the one side, and no reference in the related DTAA, you have to refer to the basic provisions of Income Tax Act and if taxable in India on the basis of accrue or arise or deemed to accrue or arise, you may advise your client to pay tax (or to deduct TDS) in India.

AI Summary

Taxability of foreign organization employees: absence of statutory exemption requires accrual assessment and tax payment or TDS.
Taxability of a USAID employee turns on whether remuneration accrues or arises in India or is deemed to accrue or arise; absent a statutory exemption under the Income Tax Act or relief under a double taxation agreement, applicable domestic rules should be applied and tax paid or TDS deducted if the income is taxable.