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As per the existing Income Tax laws, an NRI is liable to pay tax on global income if he is in India in that year for a period or periods amounting to 182 days. Now, the duration limit has been cut down to 60 days. In addition, the DTC has also removed the ‘Resident Not Ordinarily Resident (RNOR)’ category to simplify the tax laws, the official said. Now, there will be only two categories, ‘Resident’ and ‘Non-Resident’, the official added.
“With this change, a non-resident would be at greater risk of becoming an ordinary citizen and become liable to pay tax in India as the threshold limit has been reduced“, says PwC Executive Director (Tax) Kuldeep Kumar. Further, there would be liability on a resident belonging to a country where the tax rate is lower than India and there is a Double Taxation Avoidance Agreement (DTAA) between both the countries.
At present, India has comprehensive DTAAs with about 74 countries, including the USA, Singapore, UK, Thailand, South Africa, Saudi Arabia, New Zealand and Australia.
The main purpose behind the move is to plug loopholes that led to tax evasion earlier. But, experts predict such a move will repel NRIs from visiting their homeland. NRIs play an important role in Indian economy.
“If the World Bank is correct, every dollar remitted contributes 3 dollars to the GDP growth—which means that NRIs are contributing almost $90 billion to the growth of India’s rural economy…”
— Shekhar Kapoor, the noted film maker, who pursues as much of his dreams overseas as in India. Dissuading them from visiting India might not be such a good idea after all. And on the other hand, maybe such a step was needed.
What do you think???
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