Section 89A was inserted in Income Tax Act by Finance Act, 2021 w.e.f 01.04.2022 and hence made applicable for FY 2021-22.
Section 89A deals with providing relief from taxation on income from retirement benefit account maintained in a notified country wherein, assessee shall be provided relief in the form deferment of income from retirement benefit account till the date of actual receipt of amount instead of charging tax on such account on accrual basis.
Since assessee only receives income on maturity of such account and since it does not receives amount many people were facing it difficult to pay tax on such amount most people were old and didn’t had any other income. Hence, this relief will help many people by deferring tax to a period when they actually have money and pay tax.
Relevant extract of Section 89A of the Income Tax Act is as under:
“89A. Where a specified person has income accrued in a specified account, such income shall be taxed in such manner and in such year as may be prescribed.
Explanation.—For the purposes of this section,—
(a) “notified country” means a country as may be notified by the Central Government in the Official Gazette for the purposes of this section;
(b) “specified account” means an account maintained in a notified country by the specified person in respect of his retirement benefits and the income from such account is not taxable on accrual basis but is taxed by such country at the time of withdrawal or redemption;
(c) “specified person” means a person resident in India who opened a specified account in a notified country while being non-resident in India and resident in that country.”
Rule 21AAA has been notified by Income tax department on 04.04.2022 vide notification No. 24 of 2022 wherein procedure to claim the above mentioned benefit has been laid down.
Relevant extract of Rule 21AAA of Income Tax rules is as under:
“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.”
CBDT has vide Notification no. 25 of 2022 Dt. 04.04.2022 notified 3 countries as notified countries for the purpose of claiming relief under section 89 which is as under:
2. United Kingdom of Great Britain and Northern Ireland
3. United States of America
To claim the benefit assessee need to file Form 10EE before the due date of filing it’s Income Tax return u/s 139(1). The due date for filing Form 10EE has been mentioned in rule 21AAA.
To read notification No. 24/2022 Dt. 04.04.2022 CLICK ME.
To read notification No. 25/2022 Dt. 04.04.2022 CLICK ME.
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