Section 158 — Relief from taxation in income from retirement benefit account maintained in a notified country. Successor to s.89A of the 1961 Act.
Section 158 is in Chapter IX — Rebates and Reliefs, which runs from section 155 to section 160.
Sub-section (1) provides that income accrued to a specified person in a specified account is to be taxed in such manner and in such tax year as may be prescribed. The section itself neither fixes a year nor prescribes a method.
Sub-section (2) supplies the three definitions the charge runs on. A "notified country" is a country as may be notified by the Central Government. A "specified account" is an account maintained in a notified country by the specified person for his retirement benefits, the income from which is taxed by that country at the time of withdrawal or redemption and not on accrual basis. A "specified person" is a person resident in India who opened a specified account in a notified country while being non-resident in India and resident in that country.
An account of this kind is taxed by the foreign country only when money comes out of it, while Indian law would otherwise reach the income as it accrues, so the same income can be taxed in different years in two countries and the credit for foreign tax can fall where there is no Indian tax to set it against. The section supplies the machinery to align the two, by leaving the manner and the year to be prescribed rather than following the ordinary accrual rule.
Nothing operative is in the section. Sub-section (1) is a pointer: the accrued income is taxed in the manner and in the tax year that is prescribed, so neither a deferral nor any particular treatment can be read into the words, and the rules have to be consulted for the outcome. Two gateways come first. The country must have been notified under clause (a), and the account must be one the notified country taxes at withdrawal or redemption and not on accrual under clause (b). Clause (c) constrains the person: the account must have been opened while he was non-resident in India and resident in that country.
An individual worked abroad in a country notified by the Central Government and, while non-resident in India and resident there, opened a retirement benefits account which that country taxes only on withdrawal. He returns to India and becomes resident. Income accrues in the account during a tax year without any withdrawal. He is a specified person holding a specified account, so sub-section (1) applies and the manner and tax year in which that accrued income is charged are governed by what has been prescribed, not by the ordinary rule that would tax it as it accrues.
Not through any notice or form of its own; it is met when reporting a foreign retirement account in the return and deciding in which year the accrued income goes in. Because the manner, the year and the country are all left outside the section, it cannot be applied without checking the notification and the prescription.
shall be taxed in such manner and in such tax year, as may be prescribed
the income from which is taxed by that notified country at the time of withdrawal or redemption and, not on accrual basis
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the notifications index.
