Taxability of foreign pension recieved by rnor

pratiksha wahi (Querist) 23 June 2021 This query is : Resolved
I have a doubt. Suppose Mr.X , a resident but non ordinary resident, receives his superannuation pension income from Australia after deduction of tax by Australian govt. at the rate 35% . The pension income is deposited by the govt. directly in Mr. X's A/C in a Bank say IDBI Bank in India and it is not deposited in any bank account in Australia. The pension income accrues and arises from Australia.My doubt is that whether the pension income credited to Mr.X's bank account in India is taxable in India as income of RNOR received or deemed to be received in India???? Also please give relevant IT sections and case laws if possible...Since the RNOR is not having any bank account in australia, it is deposited in his account in India. So can any relief be claimed for the same?????? One more Kind request...Pls give me the applicable sections and case laws too if possible to justify ur answer..It will help me to an great extent

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This discussion addresses whether a superannuation pension received from Australia by a Non-Ordinary Resident (RNOR) of India is taxable in India. Generally, under the India-Australia Double Taxation Avoidance Agreement (DTAA), pensions are taxable only in the country of residence. Therefore, if Mr. X qualifies as an Australian resident for DTAA purposes and obtains a tax residency certificate, the Australian pension income may be exempt from tax in India, even if deposited into an Indian bank account. However, if Mr. X is considered an Indian resident under the DTAA, the pension would be taxable in India.

P. Venu (Expert) 24 June 2021
Why 'suppose' - is this not a real time issue?

T. Kalaiselvan, Advocate (Expert) 26 June 2021
Under the India income tax law, if you qualify as “resident and ordinarily resident" in India, your worldwide income is taxed in India.
In other words, pension paid to a resident of Australia under DTAA will be taxable only in Australia or vice-versa.
Under Article 18 of DTAA between India and Australia, pensions and annuities paid to a resident of one of the contracting states is taxable only in that state. In other words, pension paid to a resident of Australia under DTAA will be taxable only in Australia or vice-versa.
In your case, annuity income earned in Australia may be claimed as exempt from tax in India under Article 18 of India-Australia DTAA, if:

a) You qualify as a resident of Australia; b) You qualify as resident of Australia under India-Australia DTAA (despite being resident of India as per the domestic tax law of India); c) You obtain a tax residency certificate from Australia tax authorities for the relevant financial year; and d) Annuity income is covered within the ambit of the definition of annuity as per Article 18 of the India-Australia DTAA. Thus, it is important to analyze your residential status under the India-Australia DTAA. For instance, the benefit of Article 18 cannot be availed if you are a resident of India as per India-Australia DTAA. In such case, the annuity will be taxable in India.

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