Section 10(8B) Income Tax Exemption for Employees of Technical Assistance Consultants
Section 10(8B) of the Income-tax Act, 1961 provided a specific exemption for qualifying remuneration paid to certain employees of consultants working on approved international technical assistance programmes in India. It also addressed certain foreign-source income where the statutory conditions were satisfied.
Meaning and scope of Section 10(8B)
The provision concerns an individual who is not a citizen of India or is not ordinarily resident in India, and who is an employee of a consultant referred to in Section 10(8A). It is linked to technical assistance programmes or projects involving internationally funded arrangements. This is not a blanket exemption for all foreign employees, all consultants or all salary earned in India.
Who can claim the exemption?
| Requirement | Explanation |
|---|---|
| Eligible individual | An individual who is either not an Indian citizen or is not ordinarily resident in India, as specified in the provision. |
| Qualifying employer | The individual must be an employee of a consultant of the kind referred to in Section 10(8A). |
| Approved service contract | The employee's contract of service must have the approval of the prescribed authority. |
| Qualifying work | The remuneration must relate to services rendered in India in connection with the technical assistance programme or project covered by Section 10(8A). |
| Other foreign income | Any separately claimed exemption for income accruing or arising outside India is subject to the statutory foreign income or social-security tax condition. |
Income covered and amount exempt
1. Remuneration for services rendered in India
Qualifying remuneration received by the employee from the Section 10(8A) consultant for services connected with the covered technical assistance programme may be excluded from total income when the applicable statutory requirements, including contract approval, are met. There is no general monetary ceiling stated in this clause for qualifying remuneration; however, only income within the clause's scope is exempt.
2. Certain income arising outside India
The provision also extends to other income of the eligible individual that accrues or arises outside India, provided that the income is subject to income tax or social-security tax in the foreign country or state as required by the law. The foreign-source condition should be established with relevant records; merely receiving money into an overseas bank account does not establish foreign accrual.
How Section 10(8A) and Section 10(8B) are connected
Section 10(8A) deals with qualifying remuneration or fees of a consultant engaged to provide technical services in India under specified technical assistance arrangements funded through an international organisation and connected with an agreement involving a foreign government. Section 10(8B) separately deals with eligible employees of such a consultant. The employee cannot rely on Section 10(8B) without establishing the employer's relevant Section 10(8A) status and the employee's own eligibility.
Read the related article on Section 10(8A) exemption for technical assistance consultants.
Approval by the prescribed authority
Approval of the contract of service is an express condition. The historical approval mechanism for Sections 10(8A) and 10(8B) involved the prescribed authority in the Department of Economic Affairs, Ministry of Finance, with the required Central Board of Direct Taxes concurrence. The applicable rules, delegation and approval procedure must be checked for the relevant period. A project agreement, visa or employment letter alone should not be treated as proof of statutory approval.
Illustrative example
A consultant engaged under a qualifying international technical assistance programme assigns an eligible employee to work in India. The employee's service contract receives the required approval. Remuneration attributable to the approved programme can qualify for the Section 10(8B) exemption under the 1961 Act, provided all other statutory conditions are satisfied. Income from unrelated consulting work does not automatically become exempt. Separately, foreign-source income must meet its own statutory tax condition.
Documents to retain
- Technical assistance agreement and project documents establishing the Section 10(8A) connection.
- Consultant's engagement agreement and evidence of qualifying funding arrangements.
- Employee's service contract and approval by the prescribed authority.
- Passport, citizenship and tax-residency information, as applicable.
- Payroll records and details of work performed under the project in India.
- Foreign tax or social-security records where foreign-source income exemption is claimed.
Important distinctions
Section 10(8B) is different from Section 10(8), which concerns certain personnel assigned to cooperative technical assistance programmes under agreements between governments. It is also distinct from the separate provisions governing employees of foreign enterprises, diplomatic personnel and double-taxation treaty relief. Eligibility must be established under the precise provision applicable to the tax year.
Official sources and further reading
- Income Tax Department - Acts, rules and guidance
- India Code - official legislative texts
- Income Tax e-Filing portal
- Other exemptions under Section 10
- Guide to tax-exempt income
Frequently asked questions
Is every employee of a foreign consultant exempt?
No. The consultant must fall within Section 10(8A), the employee must meet the eligibility conditions and the contract of service must be approved.
Is the entire salary exempt?
The full qualifying remuneration may be exempt under the relevant provision, but salary unrelated to the specified programme is not automatically covered.
Does the exemption cover all overseas income?
No. The foreign-source income limb is subject to its own conditions, including the relevant foreign income-tax or social-security tax requirement.
Last reviewed: 10 October 2026. This article describes Section 10(8B) under the Income-tax Act, 1961 and notes the transition to the Income-tax Act, 2025. Check the legislation and notifications governing the relevant tax year before claiming relief.