FM rolls back NRI tax, restricts levy only on their income generated in India


New Delhi, Mar 23 (IANS): In a big relief to the Non-Resident Indian community, the government has decided to restrict taxation only to the income generated by them from businesses in India, leaving their global income out of any levy. Moreover, taxes would need to be paid only on income of above Rs 15 lakhs.

The changes formed part of the amendments in the Finance Bill, 2020 proposed by Finance Minister in Parliament. The Lok Sabha passed the Finance Bill on Monday by voice vote without discussion.

Among the other changes introduced by Sitharaman in the Finance Bill includes a clarification that shareholders will have no tax liability if the company issuing the dividend has paid the DDT before April 1 but the shareholder received the dividend afterwards.

The budget proposal for taxing dividends in the hands of shareholders by abolishing the dividend distribution tax (DDT) has, however, been retained.

Further, the TDS rate on payment of dividend to non-resident and foreign company has been prescribed at 20 per cent. The Finance Bill earlier had not provided any specific rate of TDS in respect of payment of dividend to non-residents and foreign companies with the result such dividend would have fallen in residual clause of 40 per cent. The TDS rate of 10 per cent on dividend for resident is already prescribed in the Finance Bill.

Proposal to levy (tax collected at source) TCS on sale of goods is to continue despite huge paperwork and compliance obligations. However, exemption of such TCS in respect of Export Sales and also to sellers in respect of Import has been provided. But this provision along with TCS on foreign remittance will be applicable from October 1, 2020.

Moreover, the provision for tax to be deducted @2 per cent on withdrawal of cash from Bank, Co-opt Bank and Post Officer exceeding Rs. 1 crore in aggregate during the year has been amended. Now, in case of a person who has not filed the returns for preceding 3 years then tax will be deducted @2 per cent on withdrawal exceeding Rs 20 lakhs and @ 5 per cent on withdrawal exceeding Rs 1 crore. This provision will be applicable from July 1, 2020.

Government's budget proposal on NRIs had dented sentiments as this community is seen as a big investor in the development of the country. The budget not only changed the qualification criteria of NRIs mandating them a higher number of days stay overseas but also introduced a provision that would have made them liable for tax in India on their incomes generated outside the country.

In the Union Budget 2020-2021, the government proposed to spend Rs 30,42,230 crore in the next financial year, 12.7 per cent higher than the revised estimate of 2019-20. By passing the Bill, these financial proposals have been given effect.

The government has assumed a nominal Gross Domestic Product (GDP) growth rate of 10 per cent in 2020-21, versus the nominal growth estimate at 12 per cent for 2019-20. It expects that receipts will increase by 16.3 per cent to Rs 22,45,893 crore, owing to higher estimated revenue from divestment.

 

  

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Comment on this article

  • Joseph, Qatar

    Tue, Mar 24 2020

    Reminds me of Yeshwant Sinha the former BJP Finance Minister who a couple of years had proposed to levy taxes on NRI's. Due to this the coffers of RBI was empty and no remittances from abroad were sent to the treasury. Whatever was being sent was through hundi. Someone needs to remind this old lady.

    Additionally, she does not even know that it is only because of NRI remittances that the economy is afloat and surviving. Otherwise the facelift of India would come crashing "face down on the ground" if there were no remittances.

    DisAgree Agree [15] Reply Report Abuse

  • RDS, MANGALORE

    Tue, Mar 24 2020

    NRIs beware, this is only temporary withdrawal due to current crisis and rupees touching 76/ USD. Do not trust this government specially present FM. When things get back to normal she will introduce this tax again! There is no consistency with their policy at all . Here we resident Indians have been taxed on everything except the air we breath!

    DisAgree Agree [29] Reply Report Abuse

  • Alwin, Mangalore

    Mon, Mar 23 2020

    What is there for common citizens from central government. Will you cut all taxes as relief to the citizens sabka Vikas sabke sath

    DisAgree [2] Agree [13] Reply Report Abuse

  • Sahil, Mangaluru

    Mon, Mar 23 2020

    NRI Provide golden eggs (remittance). What else need more...... RBI should impose regular intervance basis check in all banks. Whether NRI money safe or not.
    What about PMC NRI holder?

    DisAgree [1] Agree [45] Reply Report Abuse

  • Anil, Dubai

    Mon, Mar 23 2020

    HA HA ...
    May be they have realized ... that money has not remitted up-to their expectation from foreign countries ... off-course people are not fools...!!

    DisAgree Agree [21] Reply Report Abuse

  • Ajay Rebello, Kallianpur

    Mon, Mar 23 2020

    Only desperate conditions like those faced in early 90s will force the government to give up some of its control on the economy, without which the economy can't grow.

    DisAgree [2] Agree [27] Reply Report Abuse

  • G Veer S, Nagpur

    Mon, Mar 23 2020

    Basically no change except the taxable amount is raised to Rs 15 lakhs from Rs 10 lakhs. BTW, for NRIs what business opportunities are in India now???. No customers even for chai and Pakodas, banks are bankrupt and the never ending list goes on..........Govt is doing the easy and cheap way to contain corona virus spread by ordering stay home method and clap and mum on compensation for less fortunate who can not go out and earn income. At least provide food/ take out for them in Indira canteens if not cash compensation.

    DisAgree [2] Agree [55] Reply Report Abuse

  • Valerian DSouza, Udupi/Mumbai

    Mon, Mar 23 2020

    Too many taxes, too many changes, too many times is going to mess up every thing. There is no consistency in policy matters implies that there's no proper planning!
    These matters will have adverse impact as businesses planning, cost implications, Tax planning and qualities will be affected.

    DisAgree [2] Agree [69] Reply Report Abuse


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