Taxability - employee of USAID

[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

USAID Employee in India: Taxability of Income Without Exemption in Income Tax Act or Double Taxation Agreement. An inquiry was made regarding the taxability of a USAID employee working in India, questioning whether their income is exempt from Indian taxes. The inquirer noted the absence of any exemption in the Indian Income Tax Act or any specific legislation by the Indian Parliament, unlike the United Nations (Privileges and Immunities) Act, 1947. A respondent advised that if no exemption is found under section 10 or related provisions of the Income Tax Act, 1961, or in any Double Taxation Avoidance Agreement, the income should be considered taxable in India, and the client should be advised to pay tax or deduct TDS accordingly.