Form 40: Option concerning a retirement-benefit account maintained in a notified country under section 158
Source checked 21 October 2026 · Original author: Finin2min Editorial Desk
Purpose, person and period
Option concerning a retirement-benefit account maintained in a notified country under section 158.
The specified person exercises the section 158 option for all specified retirement accounts, supplying account statements, foreign-tax basis and any earlier-Indian-income reconciliation.
Period gate: This numbered form belongs to the Income-tax Rules, 2026, effective 1 April 2026. The predecessor 10-EE is a concordance, not permission to change an earlier-year filing into a new-law form. For earlier periods, use the applicable 1961 Act form and saved procedure.
Controlling rule and source pages
Rule 74; Section 6(13), Section 263(1), Section 158. Physical PDF pp 412-414; printed Gazette pp 1944-1946.
Rule 74 — connected rule text
74. Taxation of income from retirement benefit account maintained in a notifi ed country. – (1) If a specified person has income accrued in a specified account or accounts during a tax year, such income shall, at his option, be included in his total income of the tax year in which income from the said account or accounts is taxed up on withdrawal or redemption, as the case may be, in the notified country. (2) Where the option has been exercised by a specified person under sub -rule (1), the total income of the specified person for the tax year in which income is taxable under sub- rule (1) shall not include the income which, — (a) has already been included in the total income of such specified person in any of the earlier tax years during which such income accrued and tax thereon has been paid in accordance with the provisions of the Act; or (b) was not taxable in India, in the tax year during which such income accrued, on account of, — (i) such specified person being a non -resident, or not ordinarily resident as referred to in section 6(13), during that tax year; or (ii) application of the Double Taxation Avoidance Agreement, if any, and the foreign tax paid on such income, if any, shall be ignored for the purposes of computation of the foreign tax credit under rule 76. (3) The option under sub-rule (1) by the specified person shall be exercised (a) in respect of all the specified accounts maintained by the specified person; and (b) in Form No. 40, which shall be furnished on or before the due date specified under section 263(1)(c). (4) In a case where the specified person becomes a non-resident during any relevant tax year, then— (a) the option exercised under the sub-rule (1) shall be deemed to have never been exercised with effect from the relevant tax year; and (b) the income which has accrued in the specified account or accounts during the period, beginning with the tax year in respect of which the option under the said sub -rule was exercised and ending with the tax year immediately preceding the relevant tax year, shall be taxable during the tax year immediately preceding the relevant tax year, and tax shall be paid on or before the due date of filing the return of income for the relevant tax year. (5) Subject to the provisions of sub-rule (4), once the option is exercised for a specified account or accounts in respect of a tax year under sub-rule (1) in Form No. 40, it shall apply to all subsequent tax years and cannot be subsequently withdrawn for the tax year for which the option was exercised, or for any subsequent tax year. (6) For this rule,— (a) the expressions "notified co untry", "specified account" and "specified person" shall have the meanings respectively assigned to them in section 158(2); (b) "relevant tax year" means the tax year during which the specified person becomes non -resident subsequent to the tax year in respect of which option under sub-rule (1) has been exercised.
Completed field illustration
Fictional data, not for filing. A fictional returning resident has one assumed eligible US retirement account opened while non-resident and elects for all specified accounts.
| Form field / block | Completed fictional entry |
|---|---|
| Specified person / PAN / contact | Priya Arun Sharma / synthetic ZZZPS0000Z / retirement@example.invalid |
| Tax year option exercised | 2026-27 |
| Part B row 3: specified account / retirement fund | MODEL-RETIRE-040 / Example US Retirement Fund, assumed eligible account |
| Notified country / opening date | United States / 1 January 2010, while the person was assumed non-resident |
| Balance at preceding financial year-end | Rs 1,00,00,000 equivalent at 31 March 2026, assumed |
| Taxable basis in notified country | Receipt/withdrawal basis, assumed plan and foreign-law facts |
| Year eligible to withdraw / nature of income | 2035-36, assumed / interest and dividend |
| Income already included in earlier Indian total income / years | Nil / not applicable |
| Income not taxable in India in earlier NR/RNOR period | Rs 5,00,000 in 2025-26; assumed non-resident status and foreign accrual facts |
| Row 4: include on foreign withdrawal/redemption taxation basis? | Yes; one specified account only, all such accounts included |
| Annexures A-1 / A-2 / A-3 | Model account statement / foreign-tax basis evidence / no earlier included income to reconcile |
| Declaration | Option applies to all specified accounts and continues; NOT SIGNED |
This illustrates the named fields, not every possible schedule. Use the complete official extract for additional applicable fields, annexures and verification. “Not signed” means no professional certification or authority action has occurred.
Reconcile the example
- One specified account is disclosed; there is no selective election omitting another account in this scenario.
- Previously excluded income is identified separately from the account balance.
This does not assert that every US retirement arrangement qualifies. Determine section 158/Rule 74 specified-person, account and country conditions and preserve the foreign-law evidence. The printed declaration says the option cannot be withdrawn for that or subsequent years.
Prepare, furnish and retain
- Use the form identity and period above, then determine the person who prepares, issues or verifies it from Rule 74. An authority-issued order is not an applicant filing.
- Collect the records that support the actual fields in the example; keep any mandatory schedules and annexures specified in the complete source form.
- Reconcile dates, amounts, units and identifiers to the underlying records. Preserve the applicable rule version and any later correcting notification.
- Where the rule prescribes electronic furnishing, use the current official utility/schema and authorised verification. A local PDF does not produce a portal acknowledgement.
- Retain the submitted version, supporting schedules and actual acknowledgement or issued certificate/order, as applicable. This fictional model supplies none of those evidential outcomes.
Download the correct documents
Official Form 40 source extract Filled sample — fictional field illustration
The official extract preserves source pages; later amendments are supplied with affected forms. Read the April corrigendum where its printed-page corrections apply. The filled field illustration is an educational model and cannot be filed.
Primary sources
Questions readers ask
Does this sample prove approval, filing or a professional conclusion?
No. It completes the named fields using synthetic facts. It has no real signature, DSC, approval or acknowledgement.
Can I use the legacy form number for a current tax-year obligation?
Establish the governing period first. A predecessor number is a cross-reference; earlier-year procedures and current-year forms must be kept distinct.