Retiring in Australia with an Indian pension or EPF balance: which country gets to tax it?

Tax taken out in India does not settle the question. Under the tax treaty between Australia and India, a private Indian pension in Australia is taxable only here, provided the pensioner counts as an Australian resident under the treaty. The Australian Taxation Office says most foreign pensions and annuities are taxable in Australia even when the paying country has withheld tax. A pension for government service in India works the other way, until the pensioner becomes an Australian citizen.

That matters to people who left India with a provident fund balance and to parents retiring here on an Indian pension. Temporary residents, broadly people on temporary visas without an Australian citizen or permanent resident spouse, are not taxed here on most foreign income, the ATO says. Its 2026 tax return instructions add that under Australia’s tax treaties, “foreign tax authorities tell us about foreign source income paid to (and the tax withheld from) Australian resident taxpayers”.

Two kinds of Indian pension in Australia

The treaty, signed in Canberra on 25 July 1991 and amended by a protocol signed in December 2011, deals with pensions in two articles.

Article 18 covers annuities and every pension other than those for government service: those paid to a resident of one country are taxable only in that country.

Article 19 covers any pension “paid by, or out of funds created by,” India, one of its political subdivisions or a local authority, for services rendered to that government. Such a pension is taxable only in India, unless the recipient is “a resident and a citizen” of Australia; then it is taxable only here. Under that wording, the pension of a retired central government officer living in Adelaide as a resident but not a citizen is India’s to tax. Once the officer also holds Australian citizenship, it is Australia’s alone. Pensions for work in a business carried on by a government go back to the ordinary rules, Article 18 among them.

Where a foreign pension is not taxable in Australia, the myTax instructions say it is left off the return.

The schemes the treaty never names

India’s Employees’ Provident Funds Scheme of 1952, the EPF, and its Employees’ Pension Scheme of 1995 are run by a board of trustees, assisted by the Employees’ Provident Fund Organisation under the labour ministry. Neither is named in the treaty; the ATO’s synthesised text never mentions provident funds. Nor do the ATO’s 2026 myTax instructions on foreign pensions mention India. Which of the two pension articles applies to a pension from the 1995 scheme is not spelled out in either document.

The provident fund balance raises a separate question: whether Australian law treats the fund as a foreign super fund. The ATO says such a fund may be known in its home country as “a retirement fund, pension fund, retirement savings plan or similar”. Its foreign super pages do not mention India’s scheme. For individual cases the ATO issues private rulings, which it says legally bind it when they apply to a person who relies on them.

Six months from becoming a resident

For money that counts as foreign super, the ATO’s rules turn on timing. A lump sum received within six months of becoming an Australian resident for tax purposes is tax-free if two conditions hold. It must relate only to a period when the person was not a resident, or to a stretch after residency began that ended before the payment. And it must not exceed the amount vested in the member.

After six months, the part of a withdrawal that relates to applicable fund earnings goes into assessable income. The ATO describes these, broadly, as earnings on the foreign interest accrued since the person became a resident; section 305-75 of the Income Tax Assessment Act 1997 sets out the exact calculation. For someone who became a resident in 2018 and withdraws in 2026, the balance vested just before then sits outside those earnings either way.

The other route the ATO sets out is a transfer into a complying Australian fund, where the foreign fund’s rules and home-country law allow it. The transfer is treated as a member contribution and can count towards contribution caps. A member can choose to have some or all of the applicable fund earnings taxed inside the Australian fund, where the rate is generally 15 per cent. That choice requires the whole interest to move directly, with none left behind, and more than six months since residency began or the foreign job ended. The Australian fund must have the member’s tax file number within 30 days of the transfer, or return the whole amount to the foreign fund.

When India has already taken tax

The treaty allows Indian tax, paid under Indian law and in line with the treaty, as a credit against Australian tax on an Australian resident’s income from Indian sources. The ATO’s 2026 guide to the foreign income tax offset draws the same boundary: only tax correctly imposed under foreign law and any tax treaty counts. In the guide’s example, a treaty caps a country’s tax on interest at 10 per cent, the country charges 25 per cent, and only the 10 counts towards the offset. The taxpayer “would need to seek a refund of the balance” from that country’s tax authority.

For pensions, the myTax instructions tie the offset to withheld tax that the person had no right to have refunded, on a pension that is also taxable in Australia. Both pension articles in the India treaty use the word “only”. The ATO adds that someone receiving a pension from a treaty country may be able to arrange for tax not to be withheld from future payments.

Read together, the treaty asks two things of a pension: whom the work was done for, and where the pensioner is resident and holds citizenship. Provident fund balances get no article of their own. The ATO’s foreign super rules, broadly, count earnings from the day a person became a resident.