Article 20 of the Double Taxation Avoidance Agreement (DTAA) between India and the USA specifically addresses the taxation of Social Security benefits and public pensions. Here’s a detailed explanation:
Article 20: Social Security and Public Pensions
Article 20(2) states that Social Security benefits and public pensions paid by the United States are taxable only in the United States. This means that these benefits are not subject to income tax in India, regardless of the recipient’s residence status (resident, RNOR, or NR).
Key Points:
- Taxation in the US: Social Security benefits and public pensions are taxed according to US tax laws.
- Exemption in India: These benefits are exempt from Indian income tax, even if the recipient is an Indian resident or RNOR.
- No Double Taxation: The DTAA ensures that these benefits are not taxed twice, once in the US and again in India.
This provision is particularly beneficial for individuals who receive Social Security benefits or public pensions from the US while residing in India, as it prevents double taxation and provides tax relief.
For more detailed information, you can refer to the full text of the DTAA between India and the USA, available on the Income Tax India website or consult a tax professional.
