According to the amendments announced by the Indian government last week, only those Indian citizens will be taxed who have stayed in the country for 120 days or more and had total income, other than from foreign sources, exceeding Rs 15 lakh in the previous year.
Highlights:
- Threshold of Rs 15 lakh for the levy of tax on incomes emanating from India.
- Non-resident ecommerce firms will face a 2% equalisation levy.
- NRIs will be categorised as ‘not ordinarily resident’ if they reside in India for 120 days or more but less than 182 days.
Gujarat-based Chartered Accountant Manoj Jain explains, “The government had proposed in the budget in February that Non-Resident Indians (NRIs) who earn an income in India, and do not pay taxes in any other foreign country will be taxed.”
However, the government has now decided to tax only the income generated by NRIs from businesses in India. So, their global income will not be taxed in India.”
In her announcement last week, the Indian finance minister also specified that income above Rs 15 lakhs would only be taxed.
Another change is a 2% levy on international e-commerce platforms operating in Indian.
“All non-resident e-commerce firms such as Uber and Air BnB will face a 2% equalisation levy. This applies to only the businesses which don’t have any permanent establishments in India, and their turnover is less than Rs 20 mn. Since equalisation levy is not a part of the income tax, so it does not fall under tax treaties and will have to be paid,” says Mr Jain
Listen to this interview with Manoj Jain, CA to understand the changes:
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