CBDT vide Notification No. 24/2022 dated 4th April, 2022 in G.S.R. 256(E) through Income-tax (6th Amendment), Rules, 2022 notifies Rule 21AAA to provide relief from taxation of income from retirement benefits account maintained in a notified country in accordance with the provisions of section 89A of the Income-tax Act, 1961 (‘Act’). Further, the relief is required to be claimed in Form 10-EE.
This new Rule 21AAA and Form 10EE is inserted in the Income-tax Rules, 1962 (‘Rules’) with effect from the assessment year 2022-23.
Finance Act, 2021 introduced section 89A to provide relief from double taxation to non-resident Indians (NRIs) on money accrued in foreign retirement accounts maintained in a notified country.
Section 89A provides that the income of a specified person from ‘specified account’ shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions “specified person”, “specified account” and “notified country”.
As per the requirement of section 89A, the government has notified rule 21AAA and Form 10EE for providing relief to NRIs on income accrued in foreign retirement accounts maintained in a notified country.
As per the Rule, if any income accrued on foreign retirement accounts maintained in a notified country in the previous year 2021-22 (AY 2022-23) then the taxpayer shall have the option to defer and include such income in the previous year in which income from foreign retirement accounts is taxed at the time of withdrawal or redemption.
The Rule further provides that income from foreign retirement accounts which is already included in the total income and taxed in any previous year then the same shall not be included in the total income of the taxpayer in any subsequent period and no credit for foreign tax can be claimed.
Further, where the income was not taxable in India in view of the non-resident status of the taxpayer or due to the application of DTAA and if any foreign tax is paid thereon, no credit for foreign tax paid on such income can be claimed in India.
Further, the taxpayer is required to exercise the option for all the foreign retirement accounts.
In the case where the taxpayer becomes non-resident in any previous year then it shall be deemed that the taxpayer has not exercised any option as per Rule 21AAA(1) and accordingly the relief that was granted to him shall be withdrawn and taxed in the previous year immediately preceding the previous year in which he becomes a non-resident.
Electronic filing of Form 10EE
The option to be exercised as per Rule 21AAA(1) for deferment of the income on foreign retirement funds to the year of withdrawal/redemption by the taxpayer, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2022, shall be in Form No. 10-EE and it shall be furnished electronically under digital signature or electronic verification code (EVC).
The option in Form 10EE shall be required to be filed on or before the due date for furnishing the return of income prescribed under section 139(1) of the Act.
The option once exercised in Form 10EE cannot be withdrawn and shall apply to subsequent previous years also.
In this context, it should be noted that CBDT vide Notification No. 25/2022 dated 4th April, 2022 has notified the following countries for the purpose of claiming relief under section 89A read with Rule 21AAA-
Read the full text of Notification No. 24/2022 dated 4th April, 2022 on Rule 21AAA to provide relief to NRIs from Double Tax on Foreign Retirement Funds
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 4th April, 2022
G.S.R. 256(E).—In exercise of the powers conferred by section 89A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:─
1. Short title and commencement:- (1) These rules may be called the Income-tax (6th Amendment), Rules, 2022. (2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), after rule 21AA, the following rules shall be inserted, namely:—
“21AAA. Taxation of income from retirement benefit account maintained in a notified country – (1) Where a specified person has income accrued in a specified account or accounts, during a previous year relevant to any assessment year beginning on or after the 1st day of April, 2022, such income shall, at the option of the specified person, be included in his total income of the previous year relevant to the assessment year in which income from the said specified account or accounts is taxed at the time of withdrawal or redemption, as the case may be, in the notified country.
(2) Where the option has been exercised by a specified person under sub-rule (1), the total income of the specified person for the previous year in which income is taxable under sub-rule (1) shall not include the income which,—
(a) has already been included in the total income of such specified person in any of the earlier previous years during which such income accrued and tax thereon has been paid in accordance with the provisions of the Act; or
(b) was not taxable in India, in the previous year during which such income accrued, on account of,—
(i) such specified person being a non-resident, or not ordinarily resident referred to in clause (6) of section 6, during that previous year; or
(ii) application of the Double Taxation Avoidance Agreement, if any,
and the foreign tax paid on such income, if any, shall be ignored for the purposes of computation of the foreign tax credit under rule 128.
(3) The option under sub-rule (1) shall be exercised by the specified person in respect of all the specified accounts maintained by the specified person.
(4) In a case where the specified person becomes a non-resident during any relevant previous year, then-
(i) the option exercised under sub-rule (1) shall be deemed to have never been exercised with effect from the relevant previous year; and
(ii) the income which has accrued in the specified account or accounts during the period, beginning with the previous year in respect of which the option under sub-rule (1) was exercised and ending with the previous year immediately preceding the relevant previous year, shall be taxable during the previous year immediately preceding the relevant previous year and tax shall be paid on or before the due date for furnishing the return of income for the relevant previous year.
(5) The option to be exercised under sub-rule (1) by the specified person, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2022, shall be in Form No. 10-EE and it shall be furnished electronically under digital signature or electronic verification code on or before the due date specified under subsection (1) of section 139 of the Act, for furnishing the return of income.
(6) Subject to the provisions of sub-rule (4), the option once exercised for a specified account or accounts in respect of a previous year under sub-rule (1) in Form No. 10- EE shall apply to all subsequent previous years and cannot be subsequently withdrawn for the previous year for which the option was exercised or any previous year subsequent to that previous year.
(7) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems), as the case may be, shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall be responsible for evolving and implementing appropriate security, archival and retrieval policies in respect of Form No. 10-EE.
Explanation.— For the purposes of this rule,-
(i) “due date” shall have the meaning assigned to it in Explanation 2 to sub-section (1) of section 139 of the Act;
(ii) “notified country”, “specified account” and “specified person” shall have the meaning assigned to them in the Explanation to section 89A of the Act;
(iii) “relevant previous year” shall mean the previous year during which the specified person becomes nonresident subsequent to the previous year in respect of which option under sub-rule (1) has been exercised.‖.
3. In the principal rules, in the Appendix-II, after Form No. 10E, the following form shall be inserted, namely :-
“FORM No. 10-EE
[See sub-rule (1) of rule 21AAA]
[Notification No. 24/2022 [F. No. 370142/7/2022-TPL]
NEHA SAHAY, Under Secy.
Note:- Principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number S.O. 969, dated the 26th March, 1962 and was last amended vide notification number G.S.R 252 dated 1st April, 2022.
2 Comments
Where can I find form 10ee for relief under 89a foreign retirement account in income tax portal.
ReplyDeleteThe form 10EE is now available on income tax portal
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