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Mr. Klaus and Mr. Pierre, who are not citizens of India, are officials of the embassies of Country P…

Schedule IV (Table: Sl. No. 2), read with section 11 of the Income-tax Act, 2025, excludes from total income the remuneration of an embassy official of a foreign State who…

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Mr. Klaus and Mr. Pierre, who are not citizens of India, are officials of the embassies of Country P and Country Q in India respectively. Each is a subject of the country he represents and is not engaged in any business, profession or employment in India other than as such an official. Country P gives a similar exemption to Indian officials posted there, but Country Q does not. Under Schedule IV (Table: Sl. No. 2) of the Income-tax Act, 2025, how is their remuneration for tax year 2026-27 treated?

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Correct answer A

Schedule IV (Table: Sl. No. 2), read with section 11 of the Income-tax Act, 2025, excludes from total income the remuneration of an embassy official of a foreign State who is not a citizen of India, provided officials of the Indian Government in that country enjoy a similar exemption and the official is a subject of the country represented with no other business, profession or employment in India. The reciprocity condition is met for Country P but not for Country Q, so "Mr. Klaus's remuneration is excluded from total income, but Mr. Pierre's remuneration is taxable".

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