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 (Photo: iStock)
(Photo: iStock)

Social security benefits in India remain protected when you work in Australia

  • The bilateral social security agreement between India, Australia is applicable from 1 Jan 2016. Your social security benefits in India will remain protected while you work in Australia
  • You can seek relief from double taxation of the income through benefits laid down in the double tax avoidance agreement between India, Canada

I am a non-resident Indian (NRI) living in Australia for the last six years and I plan to start working now. I want to know how will India’s social security pact with Australia affect my working status in here.

—Roshni Singh

The bilateral social security agreement between India and Australia is applicable from 1 January 2016. By virtue of this agreement, your social security benefits in India will remain protected while you work in Australia. The period of service in both the countries will be considered for availing retirement benefits, upon meeting specified conditions. This is relevant for claiming old-age pension, survivor pension and for permanent disability pension in India. Your employer in Australia can also make contributions to your social security account in Australia.

I am a permanent resident of Canada. I live in Canada and India but make money only in India. How do I transfer my income to my Canada bank account? Is it okay to remit from my Indian bank account to a Canada bank account? Are there any restrictions or limits? Also, is it okay to transfer money to my Canadian accounts from a taxation point of view?

—Name withheld on request

Any income which is earned in India or accrues or is deemed to accrue or arise in India shall be taxable in India. Therefore, firstly, you must make sure that you are paying taxes on income earned through sources in India. Such income must be reported in your income tax return filed in India. You also need to make sure your income is being received in a non-resident account in India. This could be an NRE (non-resident external) or an NRO (non-resident ordinary) account.

Income can be repatriated outside India when tax on such income has been duly paid. The Reserve Bank of India (RBI) has placed certain restrictions on income that can be received or repatriated from NRO and NRE accounts. Usually, balances in NRE account are freely repatriable, but balances in NRO accounts must meet certain conditions for being eligible to be repatriated. There is a cap of $1 million; this is the maximum amount that is allowed to be repatriated from an NRO account. Repatriations in excess of this limit may be allowed in certain exceptional circumstances.

Additionally, banks require certain compliances to be done before making a remittance overseas. A chartered accountant’s certificate in Form 15CB and self-declaration in Form 15CA will have to be made and submitted to the repatriating bank. The bank shall satisfy itself by seeking other details and supporting documents before allowing amounts to be repatriated. It is recommended that you comply with all the laid down conditions to ensure a smooth repatriation.

Since you are resident in Canada, your income may also be taxable in Canada. In such a case, you can seek relief from double taxation of the same income through benefits laid down in the double tax avoidance agreement (DTAA) between India and Canada.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com

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