The FM announced relief for non-resident Indians (NRIs) from double taxation. In the US, there are pension plans like 401K and Individual Retirement Accounts, which are not taxable unless the subscriber withdraws from them. However, any income earned in these accounts gets taxed in India.
This is because according to the current provisions of the I-T Act, income is taxable on accrual basis.
So, if a person moves to India and becomes a resident Indian for tax purposes, they get taxed on any income they earn in these accounts.
“The mismatch in the timing of taxation and double taxation is sought to be addressed by prescribing I-T Rules such that there is relief from double taxation,” said Sonu Iyer, tax partner & national leader, People Advisory Services, EY India.
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