Know about Form 10EE before it’s too late
- 1 day ago
- 3 min read
Once you become ROR (Resident Ordinarily Resident), India taxes the yearly growth in your 401(k), IRA, or RRSP even if you never make any withdrawals. Keep in mind that countries like the US, Canada, and a few others tax only withdrawals. This mismatch creates an issue as you can end up paying tax twice with no credit to offset it. Form 10-EE under Section 89A is the fix for this. File this form for that account, and India will hold off taxing its growth until you actually withdraw, matching how the US, UK, or Canada already tax it.
What you should know: 1) The accounts that actually qualify are traditional ones: 401(k) and traditional IRA in the US, RRSP in Canada. UK pensions, including SIPPs, generally fit this same test, though the department hasn't published a named list. The Explanation to Section 89A says a specified account is one where the income is taxed by such country at the time of withdrawal or redemption. So for accounts like Roth IRA or Roth 401k, withdrawal isn't taxed by the US at all, so there's no future foreign tax event for India to defer to.
This unclear tax treatment of Roth makes it likely that growth will be taxed in India every year. I’ve seen cases where folks have tried to claim deferral of ROTH under section 89A but received scrutiny notices in the last few years.
2) The clock starts in your first ROR year, not the year you moved back. RNOR years don't count.
3) File it on the income tax portal by your ITR due date; it's a separate form, not part of the return itself. Miss that date and the deferral is gone for good. Use a qualified CA to help you with this, as it’s not that simple and you would not want to take a risk on this one.
4) It doesn't replace Schedule FA. You still report the account every year either way.
5) Keep in mind, if you’re on a trial period in India (testing out life in India) and move abroad again and become NR under Indian rules, the election is treated as if it never happened from that point on. What this means is all the deferred growth gets taxed in one shot, in the year right before you become NR again.
Suppose Priya works in the US for ten years and her 401(k) grows to 400k. Once she returns to India, RNOR for two years covers her, and she doesn’t need to declare her foreign assets or file Form EE, as India doesn’t tax her income during these 2 years. Then in her first ROR year she files 10-EE, and for the next five years the account grows quietly, and none of it shows up on her Indian tax bill; the deferral works exactly as intended.
Then she gets a job offer back in the US. The moment she becomes NR again, the deferral collapses. Say that account grew 150k over those five years; all of it gets added to her Indian income for the year right before she left, taxed in one shot, even though the money is still sitting untouched and she won't withdraw it for another twenty years.
That's the real shape of this provision. It protects you cleanly while you stay put, and turns on you the moment your residency changes, whether or not you've touched the money.
The whole point of 10-EE is to match India's tax timing to when the money actually leaves the account, or when money is withdrawn from the retirement accounts. That only holds as long as you stay resident; the moment you're not, the timing snaps back apart. If there's any chance you might move again, get a cross-border advisor to map this out before you file, not after. Hope this saves someone a scramble :)
