On 4th April, 2022, Central Board of Direct Taxes notified amendment to Income Tax Rules,1961 through Income-tax (6th Amendment), Rules, 2022. This amendment aims to tax incomes from retirement benefit account from 1st April, 2022.
Key Points:
- Rule 21-AAA has been inserted in Income Tax Rules, 1961 to tax the monetary benefits earned by people under retirement schemes. This will be applicable to “specified” individuals who have earned income during previous year.
- The assessment year can be that relevant year in which income from specified account or accounts will be taxed at the time of withdrawal or redemption.
- This is made available at the option of the “specified” person under Sub-rule (1) of Income Tax Rules. Scope of “Specified Persons” is according to 89-A of the Income tax Act, 1962.
- The total income of the specified will not include income which-
(a) has already been included in the total income of such specified person in any of the earlier previous years during which such income accrued and tax thereon has been paid in accordance with the provisions of the Act.
(b) was not taxable in India, in the previous year during which such income accrued, on account of,—
(i) such specified person being a non-resident, or not ordinarily resident referred to in clause (6) of Section 6, during that previous year
(ii) application of the Double Taxation Avoidance Agreement
- When specified person is non-resident, the income accrued in the specified account will be taxed in accordance of previous assessment year and will be paid off before filing returns.
- When a person who has earned income through specified account ( 89-A of Income Tax Act, 1961) for retirement benefits maintained in notified country. These notified countries are those which are notified by Central Government. Recently Canada, United Kingdom of Great Britain and Northern Ireland, United States of America were added to list of notified countries in Sec. 89-A of Income Tax Act from 4th April, 2022.