I left India three years again and now I’m a non-resident Indian. Will my Employees’ Provident Fund (EPF) account proceed to accrue curiosity until I flip 58 years previous? Also, if my account turns into inoperative after three years, ought to I withdraw the funds, and can this be taxable ?
—Name withheld on request
An account is assessed as an inoperative account through which contribution has not been acquired for 3 years after retirement or everlasting migration overseas or in case of demise.
At current, all accounts will earn curiosity until a member attains the age of 58 years. Your account will flip inactive solely whenever you attain that age.
In case a member withdraws funds from his EPF and has rendered lower than 5 years of service and gathered quantity is greater than ₹50,000, tax deducted at supply (TDS) at 10% might be deducted on the curiosity quantity and the member has to pay tax on the curiosity quantity acquired.
However, if the member has accomplished 5 years of steady service, then from the date of non-contribution to the EPF account to the time of withdrawal, you’re eligible to earn the curiosity. However, such curiosity is taxable. The curiosity earnings earned throughout your employment stays tax-exempted although.
What occurs if there isn’t a double taxation avoidance settlement (DTAA) between India and one other nation, and earnings is earned in that nation?
—Name withheld on request
Even if the nation through which tax is paid has not entered into any settlement with India, reduction as per Section 91 within the Income Tax Act shall be offered on doubly taxed earnings.
The deduction of decrease of the next shall be allowed: tax paid on such earnings outdoors India and tax payable on such doubly taxed earnings in India as per the tax charges.
For the aim of claiming tax credit score, the taxpayer has to submit Form 67 earlier than submitting the earnings tax return. It exhibits particulars of the supply and quantity of earnings earned overseas in INR, taxes paid outdoors India in INR, nation through which taxes are paid, trade charge for computation of tax credit score, and so on.
Along with Form 67, the taxpayer must submit an announcement of overseas earnings supplied to tax (it may be a return of earnings filed within the overseas nation or certificates issued by the overseas tax authority) or an announcement specifying the character of earnings and the quantity of tax deducted or paid by the taxpayer (just like TDS certificates issued in India), or another certificates specifying earnings and taxes.
Taxpayer additionally ought to present a self-attested assertion specifying the earnings earned and taxes paid overseas, accompanied by proof of fee of taxes paid or deducted overseas.
Since the taxes paid in overseas international locations are in foreign exchange, the credit score shall be decided by conversion of the forex of fee of overseas tax on the telegraphic switch shopping for charge on the final day of the month instantly previous the month through which such tax has been paid or deducted.
Archit Gupta is founder and chief government officer, Clear.in.
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