Certain interest to non-residents [Section 10(4)]
As per section 10(4)(i), in the case of a non-resident any income by way of interest on certain notified securities or bonds (including income by way of premium on the redemption of such bonds) is exempt from tax.
As per section 10(4)(ii) in the case of an individual, any income by way of interest on money standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Management Act, 1999, and the rules made thereunder is exempt from tax.
Exemption under section 10(4)(ii) is available only if such individual is a person resident outside India as defined in clause (w) of section 2 of the Foreign Exchange Management Act, 1999 or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account.
Interest on notified savings certificates [Section 10(4B)]
As per section 10(4B), in the case of an individual, being a citizen of India or a person of Indian origin, who is a non-resident, any income by way of interest on notified savings certificates (subscribed in convertible foreign exchange) issued before the 1st day of June, 2002 by the Central Government is exempt from tax.
Interest on Rupee Denominated bonds [(Section 10(4C)]
Any interest received or receivable by a non-resident or foreign company in respect of Rupee Denominated Bond (as referred to in Section 194LC) issued outside India during the period 17- 09-2018 to 31-03-2019 by an Indian company/business trust shall be exempt from tax.
Income from transfer of GDRs, Rupee Denominated Bonds or Derivatives by Category-III AIFs [(Section 10(4D)]
Specified funds shall be eligible to claim exemption with respect to income accrued or arisen or received by it which is attributable to units held by a non-resident (not being a PE in India) or to the investment division of offshore banking unit. Such exemption is allowed in respect of the following incomes:
(a) Income from transfer of a capital asset as referred to in Section 47(viiab) on a recognised stock exchange located in IFSC and consideration is paid or payable in ‘convertible foreign exchange’;
(b) Income arising from transfer of securities (other than shares in a company resident in India);
(c) Income from securities issued by a non-resident (not being a PE of a non-resident in India) and where such income otherwise does not accrue or arise in India;
(d) Income from a securitization trust which is chargeable under the head ‘Profits and gains from business or profession’; or
(e) Income attributable to the investment division of offshore banking unit1.
‘Specified Fund’ mean the following funds:-
(a) Investment Division of an Offshore Banking Unit An investment division of an offshore banking unit, being an investment division of a banking unit of a non-resident located in International Financial Services Centre (IFSC) as referred under Section 80LA(1A), shall be treated as specified fund if it satisfies the following conditions:- 
- It should be granted a certificate of registration as a Category-I Foreign Portfolio Investor under the SEBI (Foreign Portfolio Investors) Regulations, 2019; 
- It’s operations must be commenced on or before 31-03-2024; and 
- It must fulfil prescribed conditions including maintenance of separate books of accounts for investment division.
(b) Alternative Investment Fund An Alternative Investment Fund (AIF) shall be treated as specified fund if it satisfies the following conditions:- 
- It should be established or incorporated in India in the form of a trust, company, LLP or body corporate;
- It should be granted a certificate of registration as Category-III AIF and is regulated under the SEBI (AIF) Regulations, 2012 or International Financial Services Centres Authority Act, 2019;  It should be located in an International Financial Services Centre (IFSC); 
- It’s all the units must be held by non-residents except units held by sponsor or manager.
Income of a non-resident from transfer of non-deliverable forward contracts, offshore derivative instrument, over-the-counter derivatives or income distributed on the offshore derivative instruments [Section 10(4E)]
Any income accrued or arisen to, or received by a non-resident as a result of:
(a) The transfer of non- deliverable forward contracts or offshore derivative instruments or over – the counter derivative; or
(b) Distribution of income on offshore derivative instruments, entered into with an offshore banking unit of an IFSC referred to in Section 80LA(1) shall be exempt from tax.
Royalty income of non-resident on leasing of aircraft to an IFSC unit [Section 10(4F)]
Royalty income of a non-resident on account of leasing of aircraft or ship in a previous year to an IFSC unit shall be exempt from tax if such unit is eligible for deduction under section 80LA in that year and has commenced its operations on or before the 31st March 2024
Income of non-resident from Portfolio Services and specified activities [Section 10(4G)]
Any income received by a non-resident from portfolio of securities or financial products or funds, managed or administered by any portfolio manager on behalf of such non-resident. This exemption will be available only if income arises in an account maintained with an Offshore Banking Unit in any International Financial Services Centre. The CBDT may also notify specified activity carried out by specified person that will fall under scope of section 10(4G) exemption.
However, the exemption will be limited to the extent such income accrues or arises outside India and is not deemed to accrue or arise in India.
Exemption to non-residents or IFSC units on transfer of shares of domestic company engaged in aircraft leasing business in IFSC [Section 10(4H)]
An exemption is allowed to income earned by a non-resident or Unit of an IFSC as referred to in Section 80LA(1A).
The exemption shall be allowed subject to the following conditions:
(a) Non-resident or Unit of an IFSC must be engaged primarily in the business of leasing of an aircraft;
(b) Income should be in the nature of capital gains arising from the transfer of equity shares of a domestic company;
(c) Domestic company must be a Unit of an IFSC as referred to in Section 80LA(1A);
(d) Domestic company must be engaged primarily in the business of leasing of an aircraft;
(e) Domestic company must commence its operations on or before 31-03-2026;
(f) Equity shares of the domestic company must be transferred within 10 years of commencing of its operations. However, if the domestic company commenced its operations before 01-04-2024, the 10-year time limit shall be counted from 01-04-2024.
For the above purposes “aircraft” means an aircraft, helicopter, an engine or part of an aircraft or a helicopter.
Remuneration received by specified diplomats and their staff [Section 10(6)(ii)]
As per section 10(6)(ii), in case of an individual who is not a citizen of India, remuneration received by him as an official (by whatever name called) of an embassy, high Commission, legation, Commission, consulate or trade representative of a foreign State, or member of the staff of any of that official is exempt from tax, if corresponding Indian official in that foreign country enjoys a similar exemption.
Salary of a foreign employee and non-resident member of crew [Section 10(6)(vi), (viii)]
As per section 10(6)(vi), the remuneration received by a foreign national as an employee of a foreign enterprise for services rendered by him during his stay in India is exempt from tax, provided the following conditions are fulfilled—
(a) the foreign enterprise is not engaged in any trade or business in India ;
(b) his stay in India does not exceed in the aggregate a period of 90 days in such year ; and
(c) such remuneration is not liable to be deducted from the income of the employer. As per section 10(6)(viii), any salaries received by or due to a non-resident foreign national for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of 90 days in the year is exempt from tax.
Remuneration of a foreign trainee [Section 10(6)(xi)]
As per section 10(6)(xi), the remuneration received by a foreign trainee as an employee of foreign Government during his stay in India in connection with his training in any establishment or office of, or in any undertaking owned by,—
i. the Government ; or
ii. any company owned by the Central Government, or any State Government
iii. any company which is a subsidiary of a company referred to in item (ii) ; or
iv. any corporation established by or under a Central, State or Provincial Act ; or
v. any co-operative society wholly financed by the Central Government, or any State Government
Tax paid on behalf of foreign company deriving income by way of royalty or fees for technical services [Section 10(6A)]
Tax paid by Central Government, State Government or an Indian concern on behalf of a foreign company deriving income by way of royalty or fees for technical services in pursuance of an agreement made after March 31, 1976 but before June 1, 2002 will be exempt from tax in the hands of such foreign company provided such agreement is in accordance with the industrial policy of the Indian Government or it is approved by the Central Government.
Tax paid on behalf of foreign company or non-resident in respect of other income [Section 10(6B)]
Tax paid by Central Government, State Government or an Indian concern on behalf of a foreign company or non-resident in respect of any income (not being salary, royalty or fees for technical services) will be exempt from tax in the hands of such foreign company or non-resident if such income is received in pursuance of an agreement entered into before June 1, 2002 by the Central Government with the Government of a foreign State or international organisation or any other related agreement approved by the Central Government.
Tax paid on behalf of foreign Government or foreign enterprise deriving income by way of lease of aircraft or aircraft engine [Section 10(6BB)]
Tax paid by an Indian company, engaged in the business of operation of aircraft, on behalf of foreign Government or foreign enterprise deriving income by way of lease of aircraft or aircraft engine will be exempt from tax in the hands of such foreign Government or foreign enterprise if such lease rental is received under an agreement which is approved by Central Government and entered during the period between 31-3-1997 to 1-4-1999, or after 31-3-2007.
Technical fees received by a notified foreign company [Section 10(6C)]
Section 10(6C) grants exemption from tax in respect of income arising to notified foreign company by way of royalty or fees for technical services received in pursuance of an agreement entered into with that Government for providing services in or outside India in projects connected with security of India.
Royalty/Fees received by non-resident from National Technical Research Organisation [Section 10(6D)]
As per section 10(6D), income arising to non-resident by way of royalty or fees for technical services from services rendered to National Technical Research Organization (‘NTRO’) will be exempt from tax in India.
Allowance/perquisites to Government employee outside India [Section 10(7)]
As per section 10(7), any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India is exempt from tax.
Income of foreign Government employee under co-operative technical assistance programme [Section 10(8)]
As per section 10(8), remuneration received directly or indirectly by an individual, from the foreign Government in connection with a co-operative technical assistance programme and projects in accordance with an agreement entered into by the Central Government and such foreign Government, is exempt from tax. Further, exemption is available in respect of any other income of such an individual which accrues or arises outside India and is not deemed to accrue or arise in India, provided such individual is required to pay income-tax/ social security tax to the foreign Government.
Remuneration or fees received by a non-resident consultant/its foreign employees [Section 10(8A), (8B)]
Under section 10(8A),
(a) remuneration or fees received by a consultant* directly or indirectly out of the funds made available to an international organisation, under a technical assistance agreement between such organisation and the Government of a foreign State and
(b) any other income which accrues or arises to him outside India and is not deemed to accrue or arise in India, in respect of which such consultant is required to pay income-tax/social security tax to the foreign Government of the country of his origin, is exempt from tax.
*Consultant means any individual who is either not a citizen of India, or being a citizen of India, is not ordinarily resident in India or any other person who is a non-resident and is engaged by the international organization for rendering technical services in India in accordance with an agreement entered into by the Central Government and the said international organization and the agreement relating to engagement of consultant is approved by the prescribed authority.
Section 10(8B) grants similar exemption to the employee of the above discussed consultant, if such employee is either not a citizen of India or being a citizen of India, is not ordinarily resident in India and the contract of his service is approved by prescribed authority before the commencement of his service.
Note: The provisions of sections 10(8A) and (8B) shall not be applicable with effect from Assessment Year 2023-24. [Amendment by the Finance Act, 2022]
Income of a family member of an employee serving under co-operative technical assistance programme [Section 10(9)]
As per section 10(9), the income of any member of the family of any such individual as is referred to in section 10(8)/(8A)/(8B) accompanying him to India, which accrues or arises outside India and is not deemed to accrue or arise in India, in respect of which such member is required to pay any income or social security tax to the Government of that foreign State or country of origin of such member, as the case may be, is exempt from tax.
Note: The provisions of section 10(9A) shall not be applicable with effect from Assessment Year 2023-24. [Amendment by the Finance Act, 2022]
Income received by certain foreign companies in Indian currency for import of crude oil etc. [Section 10(48)]
Any income received in India in Indian currency by a foreign company on account of sale of crude oil, any other notified goods or rendering of notified services to any person in India is exempt from tax provided-
(i) receipt of such income in India by the foreign company is pursuant to an agreement or an arrangement entered into by the Central Government or approved by the Central Government;
(ii) having regard to the national interest, the foreign company and the agreement or arrangement are notified by the Central Government in this behalf; and
(iii) the foreign company is not engaged in any activity, other than receipt of such income, in India.
Any income of a foreign company on account of storage and sale of crude oil [Section 10(48A)]
Any income arising to a foreign company through storage of crude oil in a facility in India and sale therefrom to any person resident in India is exempt from tax provided that-
a) the storage and sale by the foreign company is pursuant to an agreement or an arrangement entered into by the Central Government or approved by the Central Government; and
b) having regard to the national interest, the foreign company and the agreement or arrangement are notified by the Central Government in this behalf
Any income of a foreign company on account of sale of leftover stock of crude oil [Section 10(48B)]
Section 10(48B) provides that any income accruing or arising to a foreign company on account of sale of leftover stock of crude oil, if any, from a facility in India after the expiry of an agreement or an arrangement or on termination of said agreement in accordance with the terms mentioned therein shall be exempt subject to such conditions as may be notified by the Central Government in this behalf.
Lease rent of an aircraft [Section 10(15A)]
Lease rent of an aircraft or an aircraft engine paid to a foreign Government or to a foreign enterprise by an Indian company, engaged in the business of operation of aircraft is not taxable in the hands of such foreign Government or non-resident concern, if such payment is in pursuance of an agreement (approved by the Central Government) made before April 1, 1997 or after March 31, 1999 but before April 1, 2007. If such agreement is entered into during April 1, 1997 and March 31, 1999 or after March 31, 2007, then exemption under section 10(15A) is not available. However, in such a case, if tax on such payments is borne by the payer, then tax so borne by the payer is exempt in the hands of payee under section 10(6BB), provided agreement is approved by the Central Government.
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