Income from US retirement fund (IRA, 401k)
It is with respect to ITR2 filing in case of income from USA specially with respect to retirement fund. In USA – the income from retirement fund is taxed on withdrawal basis and whereas in India – it is on accrual basis. The Govt has inserted a new provision in 2022 – section 89A – by which one can defer the income to future year.
I have a specific question – what a right way is to report such income from retirement fund. Below I am giving a hypothetical number and seeking advice in which way it is to be reported in ITR2. The income from Retirement fund account can be reported in ITR2 in OS 1e.
Retirement fund account X.
Short term Capital Gain = 5 lakhs INR
Long Term CG = 10 lakhs INR
Dividend Income = 10 lakhs
Interest income = 1 lakh
Total is 26 lakhs INR. So this 26 Lakhs is to be reported as a single number in OS or bifurcated somewhere? Now this 26 lakhs is going to be added to other income and taxed at normal rates which could be as high as 30%. Is there any way that the long term CG can be so reported that it is taxed as 20%?
IN USA – the withdrawal was of 20 Lakhs INR. So I need to report 20 lakhs income in this year and claim deduction of 6 lakhs u/s 89A for future years.
A detailed answer would be appreciated.