G Teja (Partner) (49 Points)
02 September 2013Hi,
I have a query on whether Pension (social security benefit) received by an Indian resident and ordinary resident from USA upon retirement is Taxble in India? What are the provisions in DTAA regarding this issue.
Could you kindly clarify me?
Regards,
Teja.
CA Dhruva Kalamanji
(Chartered Accountant )
(1996 Points)
Replied 02 September 2013
If the assessee is a resident in india and ordinary resident in india then -
the assessee's all the income(Indian and foreign) will be included in the total income and thus it will be taxed.
@VaibhavJ
(Believe!! Live your dreams!)
(33516 Points)
Replied 02 September 2013
Hi,
Pl check DTAA as per my knowledge if tax is paid on the same in USA then it is exempted by DTAA.
Thanks
CA Dhruva Kalamanji
(Chartered Accountant )
(1996 Points)
Replied 02 September 2013
Several former residents of the United States (U.S.), who have settled in India, derive Social Security Benefits and Public Pensions in the U.S. In general terms, an individual who is Resident & Ordinarily Resident (R&OR) for tax purposes in India is required to pay tax in India on his or her global income. However, as per Article 20(2) of the Double Tax Avoidance Agreement (DTAA) between India and the U.S., such Social Security Benefits and Public Pensions paid by the U.S., even to an Indian Resident and R&OR under Indian Tax Laws, are taxable only in the U.S. and not required to be offered for income-tax in India.
and hence according to the article 20 (2) of DTTA pension from us need not be taxed in india again
@VaibhavJ
(Believe!! Live your dreams!)
(33516 Points)
Replied 02 September 2013
you may refer link https://mukeshpatel.in/save-tax-the-smart-way/pensions-social-security-from-us-uk-tax-exempt/
Thanks
CA Pallav Singhania
(IT System Auditor)
(33262 Points)
Replied 02 September 2013
For determining taxability relevant DTAA has to be looked in.
Generally taxable in the foreign country since pension is received in respect of services rendered in the foreign country.
Further if the person is resident in India, which I believe u mean ROR then the fact the receipts are first credited in India or in the foreign country has no relevance because the Global Income becomes taxable in India...
Regards,
G Teja
(Partner)
(49 Points)
Replied 02 September 2013
Thanks a lot for all the replies,
Regards,
Teja
ravitheja
(CA Final)
(77 Points)
Replied 08 January 2014
DTAA or Income Tax Act,1961 which ever is benefical is applicable to the assessee and subject to the condition that the assessee has obtained a TRC from the foreign country based
Mr. DKS Certified Accounting Technician
Read more at: /forum/pension-received-from-usa-is-taxable-in-india--263606.asp#.Us0k49IW3ng
Several former residents of the United States (U.S.), who have settled in India, derive Social Security Benefits and Public Pensions in the U.S. In general terms, an individual who is Resident & Ordinarily Resident (R&OR) for tax purposes in India is required to pay tax in India on his or her global income. However, as per Article 20(2) of the Double Tax Avoidance Agreement (DTAA) between India and the U.S., such Social Security Benefits and Public Pensions paid by the U.S., even to an Indian Resident and R&OR under Indian Tax Laws, are taxable only in the U.S. and not required to be offered for income-tax in India. and hence according to the article 20 (2) of DTTA pension from us need not be taxed in india again
there is no need to tax the income.
Abhinav
(CA)
(397 Points)
Replied 04 April 2017
As per India USA DTAA Article 20 (2), only USA will have the right to tax such income, and not India. However, if a person who is an ROR as per Income Tax Act, receives such income, he has to file a tax return in India and disclose the income in Schedule FSI in compliance with provisions of Income Tax Act, and to avoid penal implications under Black Money Act. I've discussed it in detail in this post: Receiving USA Social Security benefits after R2I: Analysis and Implications
Thanks!
CA H R SHENOY
(PROPRIETOR)
(70 Points)
Replied 12 April 2017
Thank you very much Sir, for a very useful, informative article .
CAclubindia
