A UN official's salary is exempt from Indian income tax, but not through any Section 10 clause. It is exempted by the United Nations (Privileges and Immunities) Act, 1947, whose Section 2 gives the 1946 UN Convention the force of law in India, and Article V, Section 18(b) of that Convention exempts officials' salaries and emoluments. The UN pension is likewise exempt, and CBDT Circular 293 of 1981 confirms the position. Two limits: the exemption covers only the organisation's salary, so your Indian rent, interest and gains are still taxable; and it covers officials, not independent consultants or contractors, whose fees are taxable.
Pension received by UN retirees is exempt from income tax based on the ruling of the Karnataka High Court in the case of CIT v. Ramaiah [1980] 126 ITR 638. The High Court considered the effect of section 18(b) of article V of the Schedule to the United Nations (Privileges and Immunities) Act, 1947.
The petitioner was a former UN employee and the Vice-President of the Association of Former UN Personnel in and of India (AFUNPI), who had been receiving a pension from the United Nations. The question was whether such a pension was exempt from taxation.
The Karnataka High Court held that the amount of pension received is chargeable to tax under the head “Salary” and the meaning of the expression “salary” given in section 17 automatically applies to any amount of pension received by a person.
The amount of pension received by a former UN employee falls within the description of the word “salary” and the immunity granted under the Section 18(b) of the United Nations (Privileges And Immunities) Act, 1947 becomes applicable. Therefore, the pension received by any former UN employee was exempt from taxation.
After the said judgement, the Central Board of Direct Taxes (CBDT) issued circular No. 293, dated 10 February 1981, confirming the exemption.