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

Mr. Arvind Nair moved to the UAE for employment and, while non-resident in India and resident in the UAE, opened a retirement benefit account there. That country has been notified by the Central Government for the purpose of the relief for retirement benefit accounts, and the account's income is taxed in the UAE only at withdrawal or redemption, not on accrual. In the current tax year Mr. Nair has become resident in India. Under section 158 of the Income-tax Act, 2025, which statement is correct?

Mr. Nair is a specified person, because he is now resident in India and opened the account in a notified country while non-resident in India and resident there. The income accrued in the account is therefore taxed in India in the manner and tax year prescribed, not exempt and not on ordinary accrual.

  1. AHe is a 'specified person' and the income accrued in the account is taxed in India in such manner and tax year as prescribedCorrect
  2. BHe is not a specified person because he is resident in India in the current year
  3. CThe relief applies only if the account was opened while he was resident in India
  4. DThe income of the account is exempt in India permanently, with no prescribed manner of taxation

Explanation

A specified person is a resident in India who opened a specified account in a notified country while non-resident in India and resident in that country. Mr. Nair meets this. Section 158(1) says the income accrued is taxed in the manner and tax year prescribed, so it is not exempt and not taxed on a normal accrual basis. Residence in India in the current year is a requirement, not a bar.

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