The Kerala State Legislative Assembly has passed a Resolution against Central Government’s move to introduce Income Tax for Non-Residential Indians (NRI).
The resolution is against the Union government’s proposed amendment to Section 6 of the Income Tax Act, which reduces the time period for non-resident Indians to stay in the country to be exempted from being taxable.
The resolution was moved by Kerala Chief Minister Pinarayi Vijayan demanded that the Centre should withdraw such a proposal to amend Section 6 of the Income Tax Act, that will adversely affect non-resident Indians (NRIs).
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.
Last Week, the Finance Ministry has issued a clarification regarding Proposal to Income Tax on Non-Taxpaying NRI in the Finance Bill 2020. The Clarification said that, NRI’s Overseas Income will not be Taxed.
The Finance Ministry said that, the Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India if he is not liable to be taxed in any country or jurisdiction.
