NRI TAX rules changed, know the New rules
- Variations in NRI tax rules
- NRI status maintained for staying less than 120 days
- Record of the previous years adjudicated
In this time budget, some facilities have been given to NRIs i.e., Non – Resident Indians. On 27th March 2020, this bill has got the President’s approval, that is now it has become the Finance Act 2020. Under this, those NRIs were included who stayed in India for 120 days in a financial year. Earlier the duration of this period was less than 182 days.
An amendment at the time of the passing of the budget was that a short period of 120 days would be applicable only in cases where the total Indian Income (Income earned in India) of such visiting persons during the financial year is more than Rs. 15 lakhs. Likewise, those visiting NRIs, whose total Income in India (defined as taxable income) is up to 15 lakhs during the financial year, will remain NRIs even if they do not last more than 181 days. This will not be easy because the person’s status who is staying for 120 days in the current year will depend on four years record.
In fact, if he has been in India for 365 days in the last four years, then in such a case, he will be considered as a resident individual for Income Tax. Although this may ring an alarm bell for NRIs. But, the relief is that he would be regarded as “Resident but not Ordinarily Resident (RNOR)” In this state, their foreign income (i.e., income earned outside India) will not be taxable in India.
Here, the main point is that the dividends of Indian companies will be taxable in the hands of shareholders. On the other hand, since interest on FCNR and NRE deposits is exempt. Therefore, it will not be a part of taxable income.