Jeddah: The budget 2020 has served severe blow to NRIs living in Gulf countries where there is no income tax. However, an NRI, who is not taxed in the foreign country will become taxable in India.
The new rule that comes in effect from 1st April 2020 will have implications for many NRIs working and living in Gulf region, which is considered as tax heaven for individuals.
“If any Indian citizen is not a resident of any country in the world, he’ll be deemed to be a resident of India and his worldwide income will be taxed,” according to Finance Ministry.
“It is a serious concern for every NRI in gulf in plain terms”, commented Vijay Soni, president of Indian Management Accountant (IMA) western region chapter in Jeddah. He said that it needs more clarification from Indian finance ministry side to understand the new measure as this comes from the context modifying NRI status period.
He opines and hopeful that “It meant to be only those high-end business individuals who frequent between home and abroad to avoid tax but not ordinary NRIs”.
Budget has proposed to modify residency provisions to prevent tax abuse by some NRIs. Earlier, if an Indian spent over 165 days in India a year he / she was liable to pay tax in India. This has now been reduced to 120 days. The Budget document noted, “Instances have come to notice where period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year, is being misused. Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India.”
The external affairs ministry has been given Rs 17,346 crore in the Union budget, a decrease of Rs 26 crore from last year. The allocation of Rs.2994 crore for diplomatic missions and embassies remains nearly same as last year despite deprecating Indian Rupee against US dollar.
Also, government has earmarked Rs. 645 crore for other expenses which is an increase of Rs. 173 crore from previous revised allocation of Rs. 472.54. The cost of repatriation of destitute Indians in abroad to home and, also evacuation of Indians from abroad in case of war and civil disturbance cover under this account. It also spends small portion of amount for a scheme called Swaranapravasa Yojana, skill development scheme where it imparts training in some selected jobs for Gulf. The account also covers several other expenses of the ministry such as International conferences, visiting dignitaries.