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

01 April 2020 04:12

New Delhi: 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.Governments 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.
FM rolls back NRI tax, restricts levy only on their income generated in India. This article is published at 01 April 2020 04:12 from Sify Indian Business and Finance News, click on the read full article link below to see further details.

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Tags : rolls, back, restricts, levy, only, their, income, generated, India

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