'Another disaster': Kerala CM Pinarayi Vijayan slams Budget plan to tax Non-taxpaying NRIs

Kerala Chief Minister Pinarayi Vijayan slammed Finance Minister Nirmala Sitharaman's proposal to amend the Income Tax Act to tax Non-Resident Indians (NRIs) who aren't otherwise taxed in a foreign country. Revenue Secretary Ajay Bhushan Pandey said while addressing a press conference that some people stay in different countries for a certain number of days but are not residents of any one of those. “So if any Indian citizen is not a resident of any country in the world, he will be deemed to be a resident of India and his worldwide income will be taxed,” said Pandey.

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Reacting to this, Vijayan, who's state has one of the largest shares of total NRI population employed abroad, said the Centre's tax plan will be "another disaster" and impact hard-working Indians in the Middle East. According to RBI, Kerala accounts for roughly a sixth of all the money deposited in NRI accounts. On Twitter, he expressed his strong disagreement with the move in the Finance Bill 2020 and called on the Centre to withdraw such consideration.

READ | Union Budget 2020: Govt Proposes Tax For Non-taxpaying NRIs, Minimum Stay Raised

New tax plan

While Indian residents got huge relief on the income tax front with restructured tax slab, the Union Budget 2020 was a setback for non-resident Indians (NRIs). Earlier, an Indian needed to stay at least 182 days abroad to attain the NRI status, now the time period has been increased to 240 days.

“We have made changes in Income Tax Act where if an Indian citizen stays out of the country for more than 182 days, he becomes non-resident,” said Revenue Secretary Ajay Bhushan Pandey during a press conference on Saturday. “We have made some changes. Now, in order to become a non-resident, he has to stay out of the country for 240 days,” he added.

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Disadvantage to NRIs

The latest decision regarding the income tax on NRIs is considered as a big disadvantage as many Indians stay overseas to save tax. If Indian citizens residing in such foreign countries will be taxed, they will prefer staying back in India, leading to a drop in the amount of remittances India gets from NRIs living abroad.

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(Image credit: PTI)