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

Rohan, a resident in India, opened a retirement benefit account in a notified country while he was non-resident in India and resident in that country. Under section 158 of the Income-tax Act, 2025, which feature must the account have to be a 'specified account'?

A specified account is a retirement benefit account maintained in a notified country, whose income that country taxes at the time of withdrawal or redemption rather than on accrual. Hence the option describing taxation on withdrawal or redemption is correct, since section 158(2)(b) uses exactly this test.

  1. AThe account must be one whose income is taxed by the notified country at the time of withdrawal or redemption and not on accrual basisCorrect
  2. BThe account must be one whose income is taxed by the notified country on accrual basis every year
  3. CThe account must have been opened by Rohan after he became resident in India
  4. DThe account must be maintained in any country, whether or not notified by the Central Government

Explanation

Section 158(2)(b) defines a specified account as a retirement benefit account maintained in a notified country, whose income is taxed by that country at withdrawal or redemption and not on accrual. The accrual-basis option reverses this test. The account must also be opened while the person was non-resident in India, not after becoming resident.

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