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

Ravi, a resident in India, opened a retirement benefit account in country X while he was a non-resident in India and a resident of X. Country X has been notified by the Central Government, and taxes the income of that account only at the time of withdrawal or redemption, not on accrual. Under the Income-tax Act, 2025 (section 158), is Ravi a 'specified person' and is the account a 'specified account'?

Ravi is a specified person and the account is a specified account. He is resident in India, opened a retirement benefit account in a notified country while non-resident in India and resident there, and that country taxes only on withdrawal or redemption, not on accrual.

  1. AYes, because he is resident in India and opened the account while non-resident in India and resident in the notified countryCorrect
  2. BNo, because the account must have been opened while he was resident in India
  3. CNo, because the notified country must tax the income on accrual basis
  4. DYes, but only if he opened the account after becoming resident in India

Explanation

Section 158(2)(c) defines a specified person as a person resident in India who opened a specified account in a notified country while non-resident in India and resident in that country. The account is specified because it is a retirement benefit account in a notified country taxed on withdrawal or redemption, not on accrual. Hence both conditions are met; the option requiring accrual taxation reverses the definition.

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