The income tax department has provided relief upon some non-residents and foreign investors from filing ITR from FY 2020-21, an initiative that has a motive to simplify the compliance load.
Via notification department of Central Board of Direct Taxes (CBDT) specified that non-residents (corporates or others poses no income excluding the income through the investment in the funds, being Alternate Investment Fund Category III situated in International Financial Services Centres (IFSC) or GIFT city is not needed to furnish the ITR.
Moreover, the subjected investors who are the non-residents who run as per the guidelines of the SEBI who in the financial year poses only the transacted in a capital asset like Global Depository Receipts, Rupee Denominated Bonds, derivatives or other mentioned securities, listed on the acknowledged stock exchange in IFSC, shall indeed get exempted from furnishing the income tax return.
It is towards the situation that the thought to the transfer of these assets is released in foreign currency and there is no additional income that is earned through these individuals in India. But in dual cases which are mentioned above these classes of non-residents will need to provide that they are privileged from the need to collect the PAN.
Under the IT guidelines, there is no need for the PAN if the tax shall have been deducted under compliance upon the non-resident’s income and remitted to the government through the mentioned fund.
Moreover, the needed information and the documents such as contact information, TIN and residential status declaration, are furnished through the non-resident to the ‘specified fund’.
Tax expert calls that the government poses complete tax-related data concerned towards the assessee who has been exempted from furnishing the ITR and their income is under the deduction of the tax at source. The initiative shall not get influence the government’s treasury.
“Exempting such non-residents from the obligation of filing the return of income, simply eases their compliance burden. Reducing the compliance burden on taxpayers reflects on the country’s efficient tax administration, which will further improve investor confidence,” said the tax expert.
Another tax expert stated that notification mentioned that the investors from foreign who had invested in the fund operating in Gift City and poses the income through these funds will not be needed to furnish the tax return in India stated that they shall have no additional income in India.
“Anyway, such investors are not required to have PAN in India and the relaxation further makes it easier to invest without much compliance hassles and this will help in further boosting the status of Gift city as a preferable investment destination, commented tax expert.”
In both, the situation where the ITR filing exemption is mentioned the tax officer can access the records of the entities as transactions are as per the securities transaction Tax and is implemented in the stock exchange.
“The notification aims at reducing the compliance burden of non-resident taxpayers in India and is a welcome move from the Government of India, and will promote the government’s ‘Ease of Doing Business initiative, said the tax expert.”
The tax expert pointed that the notification furnished the exemption to these taxpayers to furnish their income returns non-resident unitholders of a Category III AIF set-up in IFSC, on the other side the exemption shall be furnished previously from receiving the PAN in India, and there is no particular privilege permitted to them to furnish the return of income in India.
“The notification also provides a similar exemption to investors that are solely earning income from trading in debt and derivative securities listed on IFSC exchange, the income from which is exempted from tax u/s 47(viiab) of the Act, said the tax expert.”
