While I was employed overseas, I bought shares of a foreign bank which I continue to hold on my return to India. I get dividend on these shares in dollars, which is converted to local currency and credited to my savings account. Is there any tax implication on this income?

Scheheriar M Vasunia

We understand that following your return to India, you would qualify as ordinarily resident in India. Hence, your worldwide income will be subject to taxes in India. Accordingly, any dividend received by you from a foreign source is taxable in India under the head “Income from other sources”. 

However, if the same dividend income is subject to tax in the source country as well, you would be eligible to claim tax relief in India for the taxes paid in the source country, in accordance with the relevant provisions of the Double Taxation Avoidance Agreement between India and the source country.

Also, with the introduction of the new legislation on “Black Money (undisclosed Foreign income and Assets) and Imposition of Tax Act, 2015”, holding of foreign assets requires mandatory filing of income tax return in India for an ordinarily resident. Any non-disclosure of the foreign income/ foreign assets held would attract interest and penal consequences under this Act.

I worked in a bank from September 2004 to February 2009 and then joined another bank. The EPF was lying with my previous organisation till 2013 and was not transferred to my new employer. However, the PF was withdrawn after nine years, that is, in June 2013. TDS was deducted thereon and I had also shown it in my IT returns and claimed the amount u/s 89 for the AY 2014-15.

I have now received a demand from the IT authorities for payment of income tax, interest and penalty on the said amount. When I approached the CPC with my rectification request, I was informed that I had to fill form 10(E) online to claim the exemption.

Also, I have not received any interest on the amount held by my previous bank after I had left the job in February 2009.

Sanjiv Bhasin

According to India’s tax regulations, provident fund (PF) withdrawal is subject to tax, if a person has not rendered continuous service for a period of five years. This would apply even in the case of a change of employment when the balance is not transferred and mapped to the new employer. With respect to the relief claim that you have made, you may have to fill and submit the form 10E electronically as indicated. Further, it would also be advisable to file a letter with the jurisdictional tax officer stating that Form 10E has been filed online and hence, the claim for relief u/s 89(1) could be processed.

All accounts would continue to earn interest for 36 months after discontinuation of contributions.  Hence, if you have not received any interest for this period, you could write to the regional PF Commissioner and lodge your compliant through the online PF grievances management facility ( epfigms.gov.in ).

The writer is Partner, Deloitte, Haskins and Sells, LLP. Send your queries to taxtalk@thehindu.co.in

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