Budget 2020: Govt proposes Income Tax on Non-Taxpaying NRIs

NRIs - NRIs Income Tax

In a setback to Non-Residential Indians ( NRI ), the Central Government has proposed the Income Tax on Non-Taxpaying NRIs in the Union Budget 2020.

In the Finance Bill, 2020, the Government has made a substitution in Section 6 i.e., the words “one hundred and eighty-two days”, the words “one hundred and twenty days”. An Indian now has to stay abroad for 240 days a year, against 182 previously. In other words, an Indian national, to claim the non-resident status, can’t stay in India for 120 days or more in a year.

According to proposed Section 6 (1A), it reads that, “Notwithstanding anything contained in clause (1), an individual, being a citizen of India, shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.”. A non-resident Indian, who is not taxed in the foreign country, will become taxable in India.

The proposed amendment may be Tax harassment for NRIs, though Finance Minister has said in the budget speech itself, they will not tolerate any Tax harassment. Also, this results in slow pursuit of foreign money to India. The proposed provision itself not clear in the interpretation of the term mentioned which may require some further clarifications from the Government.

Presently, If an ‘NRI,’ his / her income which is earned or accrued in India is taxable in India. Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on a savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India.

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