Published 19:54 IST, February 1st 2020
Union Budget 2020: Govt proposes tax for non-taxpaying NRIs, minimum stay raised
While Indian residents got huge relief on the income tax front with restructured tax slab, the Union Budget 2020 was a setback for the non-resident Indians.
- India News
- 3 min read
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 the press conference.
“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.
In another significant change, an NRI who is not taxed in the foreign country will be taxed in India. Revenue Secretary said that some people stay in different countries for a certain number of days but are not residents of any 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.
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.
For individual taxpayers in India, Union Minister Nirmala Sitharaman provided tax relief by proposing a new income tax regime with reduced rates. Under the new tax structure, an individual will have to pay a 10 per cent tax for income between Rs 5 lakh - Rs 10 lakh. Similarly, if the income is between Rs 7.5 lakh to Rs 10 lakh, an individual will have pay tax at a reduced rate of 15 per cent.
“Similarly for the income between Rs 10 lakh to Rs 12.5 lakh, the taxpayer will pay at the reduced rate of 20 per cent against the current rate of 30 per cent,” said Sitharaman during the budget presentation.
Updated 14:19 IST, February 2nd 2020