I hold a PAN (permanent Account Number) and OCI (Overseas Citizenship of India) card and am a current citizen and tax resident of Australia. I am planning to come back to India after retirement. Will my Australian retirement funds which are tax-free in Australia be also tax-free in India, if I decide to become an Indian tax resident in the future?


Datta Datta
Answered on February 10,2020

When you are a resident in India for income tax purposes, income earned anywhere in the world shall be taxable in India. Besides, it is mandatory for residents who hold foreign assets, bank accounts and financial interest to report these matters in their tax returns in India. If you have earned any income from these sources, it must also be included in your tax return in India. Upon your return, check your residential status as per income tax laws. To be a resident of India for tax purposes, you must meet any of the following “Conditions" and both the “Additional Conditions":

The “Conditions" are: you are in India for 182 days or more in the financial year (FY); or you are in India for 60 days or more in the FY and 365 days or more in the four FYs immediately preceding the relevant FY.

“Additional Conditions" are you are a resident in India in two of the 10 FYs immediately preceding the relevant FY; and you are in India in the seven years immediately preceding the relevant FY for 729 days or more.

If you do not meet any of the first set of conditions you would be a non-resident in India (NRI). If you meet the first set of conditions but not the additional conditions, you would be resident but not ordinarily resident (RNOR) in India.

If you are a resident, you must report these balances in your Indian tax return. You can avoid paying tax on them twice by referring to the Double Taxation Avoidance Agreements (DTAA).


 
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