Plant growth and agriculture is largely affected by soil salinity. Increasing trend of salinity stress limits plant metabolism and development. This study was carried out to find out the effect of soil salinity on plant physiology and defense mechanism. As a result of abiotic stress and biotic stress plant emits higher amount of volatile organic compounds (VOC), which tries to help plant to survive under adverse environmental conditions, but this emission is detrimental to the environment. Furthermore, we studied the inoculation effect of halotolerant ACC deaminase-producing bacteria to control volatile emission, impact on photosynthetic machinery in rice plants under saline condition. In this study, we exposed IR29 (salt sensitive) and FL478 (moderately salt tolerant) rice plants to salt stress at different concentrations, such as 0, 50, 100 mM and compared the effect of salt stress on gas exchange attributes, ethylene emission, emission of biogenic volatile organic compounds, between these two rice cultivars. Ethylene is considered as a stress marker for plants. We observed that ethylene emission was markedly higher in salt sensitive rice cultivar, but recovered after Bioinoculation. Higher concentration of salt treatment remarkably reduced Photosynthesis, stomatal conductance to water vapour, and light-adopted photosystem II (PSII) quantum yield estimated by maximum chlorophyll fluorescence (Fv/Fm); IR29 is a known salt sensitive cultivar and FL478 is a moderately salt tolerant cultivar. A clear difference in their photosynthetic activities were observed in response to gas exchange parameters. 1-8-Cineole and δ3-Carene were highly emitted monoterpenes detected under high saline condition. Emission of sesquiterpenes namely, longifolene and α-caryophyllene were markedly higher after 10th day of salt exposure. However, the rate of emission was reduced after Bioinoculation and bacterial inoculation (RS16: Brevibacterium iodinum) in both the cultivars, has recovered rice plants from mild to severe stress.