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Agencies
New Delhi
In a major relief to millions of Indians living outside the country including in the Middle East, the Indian government has announced measures for non-resident Indians by relaxing a budget proposal to tax them, putting in place a threshold of Rs1.5 million for the levy of tax on incomes emanating from India, while leaving out global incomes from the tax ambit.
In her last budget presentation in February, India’s Finance Minister Nirmala Sitharaman had proposed to tax global income of NRIs who are not taxed in any jurisdiction, but later clarified that only incomes of NRIs derived from doing business in India or undertaking a profession in the country will be taxed.
In the latest move, the finance minister has now amended the budget provision to tax only those Indian citizens who have stayed in the country for a period of 120 days or more and had total income, other than from foreign sources, exceeding Rs1.5 million in the previous year.
“The liability to pay tax on such deemed resident will be only in respect of business controlled in India or profession set up in India and that too when such income exceeds the threshold of Rs1.5 million,” said Rakesh Nangia, chairman, Nangia Andersen Consulting. Further, such persons have been categorised as ‘not ordinarily resident’ if they reside in India for 120 days or more but less than 182 days.
“The relaxation is welcome. However, the threshold seems to be on the lower side to benefit the community at large,” said Amit Singhania, partner at law firm Shardul Amarchand Mangaldas. Further, the tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20 percent.
As per the new amendments, the tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20 per cent. Tax collected at Sources (TCS) of five per cent on foreign remittances will also be applicable from October 1, 2020, instead of the earlier date of April 1.
New Delhi
In a major relief to millions of Indians living outside the country including in the Middle East, the Indian government has announced measures for non-resident Indians by relaxing a budget proposal to tax them, putting in place a threshold of Rs1.5 million for the levy of tax on incomes emanating from India, while leaving out global incomes from the tax ambit.
In her last budget presentation in February, India’s Finance Minister Nirmala Sitharaman had proposed to tax global income of NRIs who are not taxed in any jurisdiction, but later clarified that only incomes of NRIs derived from doing business in India or undertaking a profession in the country will be taxed.
In the latest move, the finance minister has now amended the budget provision to tax only those Indian citizens who have stayed in the country for a period of 120 days or more and had total income, other than from foreign sources, exceeding Rs1.5 million in the previous year.
“The liability to pay tax on such deemed resident will be only in respect of business controlled in India or profession set up in India and that too when such income exceeds the threshold of Rs1.5 million,” said Rakesh Nangia, chairman, Nangia Andersen Consulting. Further, such persons have been categorised as ‘not ordinarily resident’ if they reside in India for 120 days or more but less than 182 days.
“The relaxation is welcome. However, the threshold seems to be on the lower side to benefit the community at large,” said Amit Singhania, partner at law firm Shardul Amarchand Mangaldas. Further, the tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20 percent.
As per the new amendments, the tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20 per cent. Tax collected at Sources (TCS) of five per cent on foreign remittances will also be applicable from October 1, 2020, instead of the earlier date of April 1.
