GST Council: NRIs Income up to Rs. 15 Lakhs Exempted from Tax Levy

Paying heed to the current scenario, FM Nirmala Sitharman has granted a considerable relief to non-resident Indians. The threshold limit has been set to Rs. 15 lakhs per year (income from assets in India) for a tax levy while exempting global incomes.

FM Nirmala Sitharaman recently gave relief to REITs and InvITs through changes in the taxation of dividends. Apart from that, all the foreign e-commerce firms will now have to give an additional 2% equalization fees or in other words Google Tax to the government. As a result of alterations in the Finance Bill, excise duty on petrol and diesel also hiked up the bill was an uncertain decision of the ruling taken to cope up with the financial loss caused to the nation due to novel coronavirus.

Opposing Equalization Levy

The bill later got a green signal from the Parliament and will thereon be levied on businesses like Airbnb, Uber and other similar e-commerce companies that do not have a permanent establishment in India.

While all the other norms are welcomed, equalization levy on e-commerce transactions is the only complaint. Equalization levy on e-commerce firms that do not have a permanent base in India is offended by many. Equalization levy will directly affect the income of e-commerce businesses Get to know the details of the clear impact of GST over e-commerce industry in the Indian market. Also, we have covered latest news and updates. Read More as till now they were exempt from the tax levy. Adding over to this loss, the foreign e-commerce firms that were earlier under the ambit of import of goods as gifts causing evasion of tax duties.

The government earlier proposed to tax the entire income of the NRIs including the global income but later on it was clarified that the global income is exempt from any tax and only income from the assets in India will be taxed from the Government. Tax on global income was a step against non-residents who spend a very short span under one tax jurisdiction simply to avoid being taxed over their income. The government has now altered the norms allowing the global income to escape from the tax levy. As per the amendments, those who have stayed for 120 days or more in India and have income above Rs. 15 in the previous year (from income sources in India) shall get taxed over their earnings.

“The liability to pay tax on such NRIs will be only in respect of business controlled in India or profession set up in India and that too when such income exceeds the threshold of Rs 15 lakh,” said Rakesh Nangia, chairman, Nangia Andersen Consulting.

Welcoming the Relaxations

Relaxations are accepted but this won’t benefit the larger community that is struggling with other problems amidst this COVID 19. The Tax Deducted at Source (TDS) rate on dividend payments to non-resident and foreign businesses are set at 20%.

The amendment introduced by Nirmala Sitharaman related to additional excise duties on petrol and diesel prices got approval from the parliament. The excise duty on petrol earlier was Rs. 10 per liter now has increased to Rs. 18 per litre and the same on diesel has increased to Rs. 12 per litre from Rs. 4 per litre earlier.

The increase in excise duties will let the government hike up fuel rates and use the cash in global fuel prices to generate revenue. FM is determined on the new income tax regime (applicable on a voluntary basis). The new regime has lower income tax rates The Finance Minister announced the Union Budget for Financial Year 2020-21 on Feb 1, 2020, in the Parliament. Through the introduction of the budget. Read More but does not include deductions or exemptions on investments by the taxpayers.

Parliament concluded saying that a TCS shall be imposed on the sale of goods (goods supplied to sellers for imports has been exempted). The provision will be effective from 1 October 2020. Additionally, a TCS of 5% shall be levied on foreign remittances from 1 October 2020. That was earlier supposed to start from 1 April 2020. The norm related to tax on dividends that will be taken by the shareholders has been approved along with abolishing the Dividend Distribution Tax (DDT). The said provision will be applicable from 1 April 2020. Shareholders will not be taxed if the company has already paid the DDT before 1 April 2020.