The first 85,400 USD is considered tax free if you meet the requirements set forth by the IRS. These mainly are:
1. You have to be out of the US for 330 days out of 365 or
2. You have to be a bonafide resident overseas for a period encompassing an entire tax year (Jan-Dec).
Even if you cannot use the foreign income exclusion if your outfit pays Indian taxes you will have zero liability as you will be given credit for the foreign tax paid (33% in India). So when you crunch the numbers you will find that on an income of $100,000 USD you will have paid $33,000 in taxes, which is much more than you would pay in the US anyway. The airline will give you a form 16 which shows your gross pay and taxes paid.
If you made $10,000 in a month, your gross will show as 13,300 with taxes paid as $3,300. There are some outfits like AirIndia Express (NetxGen Recruiters) who DO NOT pay Indian taxes. In that case they will send you a 1099 and you will have to pay full US taxes. Make sure you deduct money accordingly or else you will be in for a shocker at the end of the year!
As an added note, the 330 days can start at anytime during the year. For example lets say you start a contract in India in November 2008. You can start your 365 day period from November 2008-November 2009. During that period you have to be out of the US for 330 days. You file for an extention in 2009 for taxes, to file in November 2009, which is when you will meet the the 330 requirement. Your income reported will still only be for what you earned in 2008. If you find it to be a bit complicated, find a CPA who handles foreign tax payers. Most programs like Turbotax can deal with simple tax stuff as well.