In a recent ruling by Honorable high court of Delhi states
that employee contributions to overseas pensions
were not taxable, provided that the employee is not receiving any benefit
currently out of the scheme. The relief applies for the savings made for future
retirement.
This can be termed as bonus for expats with QROPS living or
working in India . This historic case
between Yoshio Kubo and others against the
Commissioner of Income-Tax, resulted in giving clarifications for other tax
issues for expats in India.
For example, apart from
pension decision including QROPS, the following other rulings also included:
Ø
There should be no tax on employer contributions
to overseas social security or private
medical insurance
Ø
Tax paid by
the employer on rent free accommodation is excluded while working out the value
of the
Ø
There should
be no tax for Hypothetical tax withheld from expat salaries
Ø
Refunds of
tax deducted at source should not be taxed
Ø
paying for
expat tax returns by employer is not taxed
It was the issue before the court was whether tax borne by employers for expat
employees was a non-monetary perquisite – a benefit that should be taxed – and
whether employer contributions to overseas social security was taxable
The ruling of the honorable
court is termed as historic & landmarking one in the tax law of India. This
ruling has a bearing on expat workers and their employer’s wide range of tax
issues in India.
“The judgment confirmed
the rules that should be applied on three main issues, namely grossing up
benefits, taxing employer contributions to offshore social security and
hypothetical tax”
The honorable court also
digged at other expats pay issues and gave clear rulings on how benefits are
taxed in India. This is a favorable move for expat’s in India since India is
one of the largest expat destinations in whole Asia.
This landmark ruling aid’s
many british expat workers retirement planning in India as they are not liable
to pay taxes on any further contributions into their overseas pension
funds(QROPS schemes).
No doubt, this also
boosts attracting top talents, high skilled expats to the country helping this
fast growing economy to grow further fast.
Please contact me for
an informal chat about the transfer scheme, finding right QROPS scheme in India
to get your UK pensions transferred and Retirement planning with my following
Contact details.
Mr Ravi Kumar.
Financial Consultant. Exide Life Insurance Co Ltd
28, 6th Floor,
Centenary Building, Adjacent to Raheja Towers, M.G Road, Bangalore-560
001.
Cell: +91
9980927393, +91 9844519872
Email:
ravi.sampige@gmail.com
