Last year, my employer informed us about the discontinuation of their superannuation scheme from LIC, to which I have been contributing since 1993. I was asked to either completely withdraw or switch over to other insurers. Accordingly, I opted for withdrawal and received ₹14,82,892. After deduction of TDS of ₹48,639 u/s 192 and ₹38,935 u/s 194A, I received the net amount. I also paid advance tax, amounting to ₹1,30,000 on December 10, 2014. Do I have to pay anything more on this amount? Are there any rebates or concessions available for this?
Shankar Ramesh Iyer
As per Section 10(13) of the Income Tax Act, 1961, any payment from an approved superannuation fund is exempt, provided the same is received in the circumstances specified in the section, viz. death, retirement or incapacitation. Since you have withdrawn from the scheme during your employment and assuming you have not attained the specified age, this withdrawal would be wholly taxable without any rebate/concessions. With regards to the tax liability, the amount withdrawn will have to be included in your taxable income and tax computed at applicable rates. We are unable to comment on the actual quantum of tax since we do not have information on your taxable income and tax deductions/remittances till date.
We are planning to return India in July 2015 and I understand that for financial year 2015-16, starting from April 1, 2015, we will be considered resident Indians. Will my Bahrain income from April 2015 to June 2015 and end of service benefit received in July 2015 be taxable in India?
Saurabh Aggarwal
We understand that you would be returning to India in July 2015. Based on this and assuming you would continue to stay in India post-repatriation, you would qualify as a resident for tax purposes for the year 2015-16. Furthermore, if your stay in India during the preceding seven tax years exceeds 729 days, you will qualify as an ordinarily tax resident and be taxable in India on your global income. This would mean that income earned/received both in India and overseas would be subject to India taxes. In your case, this would include the income earned/received in Bahrain. However, this would not lead to double taxation of such income, assuming, based on the tax regulations in Bahrain, this income would not suffer tax in Bahrain.
Accordingly, you would have to determine the tax liability on this income and settle the same through the advance tax mode within the specified due dates.