Foreign commuted pension

ITR 217 views 4 replies

Sumit

Manager

29 Points Joined 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 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.

Is the above logic correct?

Please advice. Thx Much for help!

Replies (4)

Avtar Singh

363 Points Joined June 2018

Amount received fr0m USA will taxable since you are now resident

Thx Sire for a quick response. I agree amount recieved is taxable in India as i am a resident now. However per indian laws, Isn't Commuted Pension income recieved from private sources exempted (to the extent 50% of Commuted pension .... no gratuity involved)? your help is much appreciated!.

Ashwin Kumar

CA ipcc

449 Points Joined October 2017

the exemption of 50% is available only if you were not in reciept of gratuity at time of recieving pension.... if you had recieved the amount in 2015 i.e in the year you stopped working then the whole amount would have been exempted on the basis that the amount was recieved by anon resident for a service rendered outside india...but as you are resident at the time of reciept the whole amount is taxable and the exemption of 50% is available only to a employee who recieved commuted pension and was not in reciept of gratuity at the time of reciept from a COMPANY IN INDIA