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CA Final · Direct Tax Laws & International Taxation · Non Resident Taxation

Meera, a resident in India, opened a retirement savings account in a foreign country while she was non-resident in India and resident in that country. That country's law taxes the account income only when money is withdrawn, not as it accrues. Under section 158 of the Income-tax Act, 2025, which further condition must be met for the account to be a 'specified account' whose income gets the relief?

The account must be maintained in a country notified by the Central Government. Section 158 defines a specified account as a retirement benefit account in a notified country, taxed there on withdrawal or redemption rather than on accrual. Joint holding, repatriation or using an Indian bank branch are not required.

  1. AThe account must be maintained in a country notified by the Central GovernmentCorrect
  2. BThe account must be held jointly with a resident Indian spouse
  3. CThe account balance must be repatriated to India every tax year
  4. DThe account must be opened with an Indian bank's foreign branch

Explanation

Section 158(2) defines a specified account as one maintained in a notified country for the person's retirement benefits, where that country taxes income at withdrawal or redemption and not on accrual. Notification of the country by the Central Government is therefore essential. Joint holding, annual repatriation and an Indian bank's branch are not conditions in the section.

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