§ 98. Mr. Lowasked the Secretary of State for Commonwealth Relations if he now has a further statement to make about the decision of the Government of India to deduct tax from pensions paid by them to residents in the United Kingdom.
§ Mr. Gordon-WalkerAs a result of the representations made to the Government of India about the administrative arrangements for the collection of Indian tax on these pensions, the Government of India have now agreed that for the time being no deduction for Indian tax should be made from pensions that were paid yesterday. Accordingly, these pension payments were made with deduction only for United Kingdom tax, where this tax is payable.
Instructions from the Government of India about the detailed arrangements for the collection of Indian tax are on their way to London. In the meantime, brief telegraphic summaries of the instructions show that Indian tax is to be deducted initially from pensions to be paid in May, June and July as if the pension is the total world income, which I take to mean, as if the pensioner had no income other than his pension. Any additional Indian tax on pensions for these three months which can properly be claimed by the Government of India, together with Indian tax on pensions paid during April and current 160W Indian tax, will be paid by deductions spread over pension payments made in the eight months beginning in August.
When Indian tax is deducted, the normal United Kingdom tax, if any, will be adjusted at the same time in order to give the measure of relief from double taxation provided by United Kingdom law. The relief will be the equivalent of the Indian tax, or three-quarters of the United Kingdom tax, whichever is the less.