Salary Income Exempt from Tax

By | May 5, 2026
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Salary Income Exempt from Tax

Certain categories of salary income are fully or partially exempt from tax under specific conditions, often applicable to foreign citizens or special circumstances.

Exempt Salary Categories

  • Teachers from SAARC Member States
    • Exemption applies under DTAA agreements for teachers, professors, or research scholars visiting another SAARC country for teaching or research.
    • Exemption is valid for up to 2 years from the date of arrival.
  • Salary Received from the United Nations (UN)
    • Salaries and pensions paid by the UN are exempt under the UN (Privileges and Immunities) Act, 1947.[Circular No. 293, dated February 10, 1981]
  • Non-Resident Seafarers
    • Salary earned for services rendered on foreign-going ships (Indian or foreign-flagged) outside India is exempt, even if credited to an NRE account in India.[Circular No. 13/2017, dated April 11, 2017]
  • Diplomatic Personnel
    • Remuneration received by foreign citizens serving in an embassy, high commission, legation, consulate, or trade representation of a foreign state is exempt, provided that reciprocal exemption is available to Indian officials in that country.
  • Foreign Employees
    • Salaries of foreign nationals working for foreign enterprises in India are exempt if:
      • The enterprise does not conduct business in India.
      • The employee’s stay does not exceed 90 days.
      • The remuneration is not deductible under the Income-tax Act.
    • Ship Crew Members
      • Salaries of non-resident foreign nationals employed as ship crew are exempt if their stay in India does not exceed 90 days.
    • Foreign Trainees
      • Remuneration received by a foreign national as an employee offoreign governments for training in Indian government undertakings, statutory corporations, or government-owned companies is exempt.
    • Gratuitous Payments to Legal Heirs
      • Lump-sum payments made to the legal heirs of employees who die in active service or ex-gratia payments for injury or death while on duty are not taxable. [Circular No. 573, dated August 21, 1990 & Circular No. 776, dated June 8, 1999]