Commuted pension recieved from usa
This query is : Open
16 August 2018
Sub: Taxability of USA Lump sum Pension received in India (As Ordinary resident of India).
Facts:
· Received Lump sum Pension (No Gratuity) from USA ($44,190 = INR 28,33,153) on 03/11/2017. USA did not impose any tax on the lump sum.
· Was working in USA for Private companies since Aug 2003 – Feb 2015.
· Came back from USA to India in Feb 2015. Currently I am resident of India (996 days as on Nov 03 2017). I am not a Citizen of USA or a Green card holder. Present age = 41Yrs.
Tax interpretation on Lump sum Pension income.
· As I am Indian citizen, Indian Pension laws are applicable for paying taxes on Global income.
· Per Indian tax laws, for Non Govt. Employee, the computation of commutation value of pension is as follows:
· Basic pension per US pension plan = $814 per month for rest of life (After Oct 1 2042..retirement age 65)
· Date of Birth – Sep 25, 1977
· Date of VRS – 11 March, 2015. Pension received on 03/11/2017.
· Commutation factor: 9.145 (35 Years) per Commutation table.
· Hence given above: Commutation value of pension, if 100 % pension is commuted is $814 * 100% *12 months*9.145 =$89,328 (INR = 58 Lakhs.)
· Per Indian Tax laws 50% of Commutation value of pension is exempt. Which is equal to 29 Lakhs Rs
· As I have received 28.3 Lakhs only, hence Entire Amt. is Exempt from Tax.
Please advice if my above logic is correct.. Thx much for help!
Facts:
· Received Lump sum Pension (No Gratuity) from USA ($44,190 = INR 28,33,153) on 03/11/2017. USA did not impose any tax on the lump sum.
· Was working in USA for Private companies since Aug 2003 – Feb 2015.
· Came back from USA to India in Feb 2015. Currently I am resident of India (996 days as on Nov 03 2017). I am not a Citizen of USA or a Green card holder. Present age = 41Yrs.
Tax interpretation on Lump sum Pension income.
· As I am Indian citizen, Indian Pension laws are applicable for paying taxes on Global income.
· Per Indian tax laws, for Non Govt. Employee, the computation of commutation value of pension is as follows:
· Basic pension per US pension plan = $814 per month for rest of life (After Oct 1 2042..retirement age 65)
· Date of Birth – Sep 25, 1977
· Date of VRS – 11 March, 2015. Pension received on 03/11/2017.
· Commutation factor: 9.145 (35 Years) per Commutation table.
· Hence given above: Commutation value of pension, if 100 % pension is commuted is $814 * 100% *12 months*9.145 =$89,328 (INR = 58 Lakhs.)
· Per Indian Tax laws 50% of Commutation value of pension is exempt. Which is equal to 29 Lakhs Rs
· As I have received 28.3 Lakhs only, hence Entire Amt. is Exempt from Tax.
Please advice if my above logic is correct.. Thx much for help!
CA R SEETHARAMAN
(Expert)
18 August 2018
In case of 100% commutation 50% of money received is exempt.
18 August 2018
Thank you Sir for your help! Much appreciated. Sir, this pension is received in India, when I was working in USA for a foreign Private company. I am still eligible for the exemption in India correct! Thx Much
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