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Thank you for your reply and I would like further clarification on your answers.
1) Can you please elaborate on resident,ordinarily resident or domicile in UK category. I mean whether I'm a resident or ordinary resident..??
2) Please note that as the pension gets credited to my Non Resident Expatriate (NRE) account in India and it is exempted from any tax in India. This income tax return will be for the other domestic income I have and I do show the pension income in my tax return but do not pay tax on it. In this instance is there any tax liability here in UK for the same.
Also do I need to provide(submit) any documentary evidence to HMRC that tax (or no tax) has been paid in India on my pension. If yes then what type of documents are accepted by HMRC.?
3) Sorry I did not put the question no. 2 right at first place. My question is supposing the pension received overseas is taxable in UK, can I then re-invest the taxable amount into some tax saving schemes(like pension etc) in UK and thereby avoid any tax.?
Thanks for your reply and need further clarification.
1) Suppose if I decide to pay tax on this pension in India. In this case if I pay 'X' tax in India and it would have been 'Y' if I paid the tax in UK then do I need to pay the difference in UK if 'Y' is more than 'X'..?
2) What documents do I need to submit to HMRC as a proof of tax payment in India?
I am sorry but I could not understand your reply fully. I would like to put it this way:
Thank you very much for your reply. Now your reply is clear to me. Here are last two questions.
1) Suppose if my income in India is not taxed as it falls within the tax allowance as per Indian tax rules then do I need to show this income (In this case pension received in India) as a foreign income in self assessment tax return here in UK and then claim tax credit..? It will be 'NIL' tax return so as such no tax paid in India.
2) Suppose if my income in India is taxed then only I have to show it as a foreign income in self assessment and apply for tax credit..?
Thanks for your detailed clarification. It is clear to me now that if I pay tax in India on my pension then I do not need to pay any tax in UK. But I need to show this in my foreign income and then claim tax relief on the same. Also if my Indian income including the pension is below the personal allowance limit (NIL return) then I do not show it in my UK personal tax return.
Could you please provide reference of the HMRC document to substantiate this..?