Foreign income is not taxable under DTAA

—Name withheld on request

assuming that you will qualify as a ‘resident and ordinarily resident’ in India upon return; As a ‘resident and ordinarily resident’ of India, you will be taxable on worldwide income in India and will be required to report all foreign assets in India’s Income Tax Return (ITR). Accordingly, pension income of Canadian employers and Government of Canada will be taxable in India.

However, exemption from income tax can be claimed under Article 18 of the Double Taxation Avoidance Agreement (DTAA) between India and Canada. Even if exemption from income tax is claimed under DTAA, it will still be required to be reported in ITR as foreign income.

Any pension received in a bank account outside India will not be taxable in India if you qualify as a ‘non-resident’ or ‘resident but not ordinarily resident’ of India in the initial years of withdrawal.

I am an NRI (Non-Resident Indian). i have income ₹10 lakhs from two farmhouses that I have rented in India. How much tax do I have to pay? Am I allowed any tax deduction?

—Name withheld on request

Rental income from any property situated in India is taxable in the hands of the owner of the house property. The method to calculate taxable rental income is as follows: Gross Annual Value (GAV) less municipal taxes gives Net Annual Value (NAV). This will reduce the standard deduction of 30 per cent on NAV and interest on housing loan, which will then be taxable rental income. GAV is the greater of the following: The amount at which the property can reasonably be expected to be let out or the actual rent received or receivable.

In other words, GAV compares the actual rent received or receivable with the estimated rent that the property will receive.

Sonu Iyer is EY India’s Tax Partner and People Advisory Services Leader.