Union Finance Minister Nirmala Sitharaman presented the budget for the year 2020-21 on Saturday. In the part on income tax, the proposition that NRIs have to pay tax to the Indian government from now on spooked the diaspora. The Ministry of Finance has, therefore, clarified in which cases an NRI will have to pay tax through a statement.
The ministry said through a press release that in the case of an Indian citizen who becomes an honorary citizen of India under this proposed provision, income earned outside India by him will not be taxed in India, unless it is from an Indian business or profession. Necessary explanations will be included in the relevant provision of the law if required.
According to the press release, the new provision is not intended to bring NRIs who work lawfully in other countries under the tax purview. The new provision is being wrongly interpreted, the press release said, to create the kind of image that Indians who are actual labourers in other countries, including the Middle East and who are not liable to tax in these countries, are taxed on that income in India. What they have earned here. This interpretation is not correct.
The Finance Bill 2020 proposes that an Indian citizen shall be treated as resident in India if he is not liable to be taxed in any country or jurisdiction. This is an anti-misuse provision, as it has come to the notice that some NRIs shift their stay in low or tax-free jurisdiction to avoid tax payment in India.
The Narendra Modi government has given a huge relief to taxpayers in the budget 2020-21. Finance Minister Nirmala Sitharaman on Saturday introduced changes in tax slabs while presenting the budget for the financial year 2020-21.
There will be no tax on income up to 2.5 lakh in the new tax system. Income from 2.5 lakh to 5 lakh will be taxed at 5%. Income from 5 to 7.5 lakh will be taxed at 10%. Earlier there was no slab of 10 per cent. 7.5 lakh to 10 lakh income will be taxed at 15%. There will be 20% tax on income from 10 lakh to 12.5 lakh.