How long will interest accrue on the EPF account?

I left India three years ago and now I am a non-resident Indian. Will my Employee Provident Fund (EPF) account continue to generate interest until I turn 58? Also, if my account becomes inoperative after three years, do I have to withdraw the funds, and will this be taxable?

—Name withheld on request

An account is classified as an inoperative account in which contribution has not been received for three years after retirement or permanent migration abroad or upon death.

Currently, all accounts will earn interest until a member reaches age 58. Your account will only become inactive when you reach this age.

In the event that a member withdraws funds from their EPF and has rendered less than five years of service and the accrued amount is greater than 50,000, withholding tax (TDS) at 10% will be deducted from the amount of interest and the member will have to pay tax on the amount of interest received.

However, if the member has completed five years of continuous service, from the date of non-contribution to the EPF account until the time of withdrawal, you are eligible to earn interest. However, this interest is taxable. Interest income earned during your employment, however, remains tax-exempt.

What happens if there is no Double Taxation Avoidance Agreement (DTAA) between India and another country and income is received in that country?

—Name withheld on request

Even if the country in which the tax is paid has not entered into any agreement with India, relief under Section 91 of the Income Tax Act will be granted on double taxed income.

Deduction of the lesser of the following is permitted: the tax paid on such income outside India and the tax payable on such double taxed income in India in accordance with the tax rates.

For the purposes of claiming the tax credit, the taxpayer must submit Form 67 before filing the tax return. It shows details of source and amount of income earned abroad in INR, taxes paid outside India in INR, country in which taxes are paid, exchange rate for credit calculation tax, etc.

In addition to Form 67, the taxpayer must submit a tax-offered foreign income statement (this may be an income statement filed in the foreign country or a certificate issued by the foreign tax authority) or a statement specifying the nature of the income and the amount of tax deducted or paid by the taxpayer (similar to TDS certificates issued in India), or another certificate specifying the income and taxes.

The taxpayer must also provide a self-attested statement detailing income earned and taxes paid abroad, together with proof of payment of taxes paid or deducted abroad.

As taxes paid abroad are denominated in foreign currencies, the credit is determined by converting the currency of payment of the foreign tax at the buying rate by telegraphic transfer on the last day of the month immediately preceding the month during which this tax was paid. been paid or deducted.

Archit Gupta is founder and CEO of Clear.in.

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