# Salary paid by Government of India for services rendered outside India
## Core Rule
When the Government of India pays salary to an Indian citizen for services rendered outside India, the salary is deemed to accrue or arise in India and is therefore taxable in India — regardless of where the services are performed or where the salary is received.
## Important Carve-Out — Section 10(7)
Although the salary is taxable, any allowances or perquisites paid by the Government outside India to such employees are fully exempt under Section 10(7).
| Component | Taxability |
|---|---|
| Salary | Taxable in India |
| Allowances paid outside India | Exempt u/s 10(7) |
| Perquisites paid outside India | Exempt u/s 10(7) |
## Connected Point — Rest / Leave Period
For an employee posted abroad, salary for the rest period and leave period (before, between, or after foreign assignments) is also taxable in India if the service contract spans such periods (e.g., April 2025 → July 2025 work, rest period, Sept 2025 work, leave period, return March 2026 — all salary taxable).
## Key Takeaway
The status of the payer (Government of India) and the citizenship (Indian) of the recipient are the trigger conditions — the place of rendering service is irrelevant for the salary, but is relevant for claiming exemption of allowances/perks.