IMPACT ON NRIs Residential Status qua Income earned : CA NITIN PATHAK

Dear Friends,

Please take a note of there are many changes in NRIs reseidential status from F.Y.2020-21 

The Union Budget was presented in Parliament on 1^st February 2020 by the Finance Minister Nirmala Sitharaman and received the assent of the president on 27^th March, 2020. In this article some of the important changes made in the Finance Act 2020 which will be applicable to Non Resident taxpayers are discussed.

1. Definition of Residency Changed as under:

Sr. No.	No. of Days Stay in India	Residential Status
1	Less than 120 days
	If Total Income* does not exceeds Rs. 15 Lakhs	Non-Resident
	Individual, being a citizen of India, whose Total Income* exceeds Rs. 15 Lakhs	Deemed Not-Ordinary Resident (See Note-1)
2	120 days or more but less than 182 days
	If Total Income* does not exceeds Rs. 15 Lakhs	Non-Resident
	If Total Income* exceeds Rs. 15 Lakhs	Ordinary Resident/Not-Ordinary Resident (See Note-2)
3	182 days or more	Ordinary Resident/Not-Ordinary Resident (See Note-2)

*Total income means Indian Income and the income which accrue or arises outside India from a business controlled in or a profession set up in India shall be included.

Note – 1: Deemed Residency in India:

In case of an Individual, being a citizen of India, whose Total Income exceeds Rs. 15 Lakhs and who is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature will be treated as ‘Deemed Not-Ordinary Resident’.

 

Note – 2

If an Individual satisfy any one of the two following additional conditions, then he will treated as NOT-ORDINARY RESIDENT, otherwise he will be treated as ORDINARY RESIDENT:

Condition-1: Non-Resident in India in 9 out of 10 Preceding Previous Years

Condition-2: Total No. of days stay in India during 7 Preceding Previous Years are less than 730 days    

2. Impact on taxability of Income:

Taxability of Income

For Non-Resident

Income Received / deemed to be received / accrued or arisen / deemed to accrue / arise in India is Taxable in India.

For Not-Ordinary Resident / Deemed Not-Ordinary Resident

Income Which is Received / deemed to be received / accrued or arisen / deemed to accrue / arise in India & Income Which accrues or arises outside India being derived from a business controlled in or profession set up in India is Taxable in India.

For Ordinary Resident

Income Which is received / deemed to be received / accrued or arisen / deemed to accrue / arise in or Outside India. i.e. Global Income is Taxable in India.

Consequences of becoming resident in India: 

In case if you become resident of India, then you need to disclose all your global income in Indian tax return. In such case, you will get the credit of tax paid if any outside India, against the tax payable on such foreign income in India, so to say there will not be double taxation. But this will enhance compliance and unnecessary complications.

Our Advice: - If your total Indian Income exceeds Rs. 15 Lakhs, then You plan your trip to India in FY 2020-21(April 2020 to March 2021) in such a way that your stay in India less than 120 days.

   

Regards,

    CA Nitin Pathak & Team

Irrfan wrote a letter in 2018, which is his own obituary. See blog canitinmpathak.blogspot.com

Irrfan  wrote a letter in 2018, which is his own obituary.  

 excerpts from that;

“It’s been quite some time now since I have been diagnosed with a high-grade neuroendocrine cancer. This new name in my vocabulary, I got to know, was rare, and due to fewer study cases, and less information comparatively, the unpredictability of the treatment was more. I was part of a trial-and-error game.”

“I had been in a different game, I was travelling on a speedy train ride, had dreams, plans, aspirations, goals, was fully engaged in them. And suddenly someone taps on my shoulder and I turn to see. It’s the TC: “Your destination is about to come. Please get down.” I am confused: “No, no. My destination hasn’t come.” “No, this is it. This is how it is sometimes.

The suddenness made me realise how you are just a cork floating in the ocean with unpredictable currents! And you are desperately trying to control it.”

"In this chaos, shocked, afraid and in panic, while on one of the terrifying hospital visits, I blabber to my son, 'The only thing I expect from ME is not to face this crisis in this present state. I desperately need my feet. Fear and panic should not overrule me and make me miserable'.

“That was my intention. And then the pain hit. As if all this while, you were just getting to know pain, and now you know his nature and his intensity. Nothing was working; no consolation, no motivation.”

"As I was entering the hospital, drained, exhausted, listless, I hardly realised my hospital was on the opposite side of Lord’s, the stadium. The Mecca of my childhood dream. Amidst the pain, I saw a poster of a smiling Vivian Richards. Nothing happened, as if that world didn’t ever belong to me.

This hospital also had a coma ward right above me. Once, while standing on the balcony of my hospital room, the peculiarity jolted me. Between the game of life and the game of death, there is just a road. On one side, a hospital, on the other, a stadium. As if one isn’t part of anything which might claim certainty – neither the hospital, nor the stadium. That hit me hard.

I was left with this immense effect of the enormous power and intelligence of the cosmos. The peculiarity of MY hospital’s location – it HIT me. The only thing certain was the uncertainty. All I could do was to realise my strength and play my game better.”

“This realisation made me submit, surrender and trust, irrespective of the outcome, irrespective of where this takes me, eight months from now, or four months from now, or two years. The concerns took a back seat and started to fade and kind of went out of my mind space.

For the first time, I felt what 'freedom' truly means. It felt like an accomplishment. As if I was tasting life for the first time, the magical side of it. My confidence in the intelligence of the cosmos became absolute. I feel as if it has entered every cell of mine.

Time will tell if it stays, but that is how I feel as of now.”

“Throughout my journey, people have been wishing me well, praying for me, from all over the world. People I know, people I don’t even know. They were praying from different places, different time zones, and I feel all their prayers become ONE. One big force, like a force of current, which got inside me through the end of my spine and has germinated through the crown of my head.

It’s germinating – sometimes a bud, a leaf, a twig, a shoot. I keep relishing and looking at it. Each flower, each twig, each leaf which has come from the cumulative prayers, each fills me with wonder, happiness and curiousity. A realisation that the cork doesn’t need to control the current. That you are being gently rocked in the cradle of nature.”

Irrfan Khans letter. 2018.

○He wrote his obituary himself. Says it all.

ANALYSIS of THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020

Dear Professional colleagues,

In the scenario of Lockdown due to COVID-19, it's very pertinent for all of us to keep ourselves updated. 

KNOWLEDGE FLASH 1: ANALYSIS of THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020

Easy Analysis of EXTENSION of various DEADLINES under Income Tax Law is as under:-

Details of date extended for claiming any deduction or exemption under Income tax law:-
Sr. No.	Particulars	Extended time limit	Refer Note
1.	For deduction u/s.80C to 80GGC (i.e. Deduction under Heading B of chapter VIA)	30th June 2020	N1
2.	For deduction u/s.80H to 80RRB (i.e. Deduction under Heading C of chapter VIA)	No Extension	-
3.	For deduction u/s.80TTA to 80TTB (i.e. Deduction under Heading CA of chapter VIA)	No Extension	-
4.	For deduction u/s.80U (i.e. Deduction under Heading D of chapter VIA)	No Extension	-
5.	For Deduction/exemption u/s.54 to 54GB by making investment, deposit, payment, acquisition, purchase or construction	30th June 2020	N1
6.	For beginning of manufacture or production of articles or things or providing any services referred to in section 10AA (only for those cases where the letter of approval required to be issued in accordance with the provisions of the special economic Zones Act, 2005 has been issued on or before 31st March 2020	30th June 2020	N1
Conditions:- N1:- Above due dates are extended only for those deductions or exemptions for which due dates were falling between 20th march 2020 to 29th June 2020.
Other observations:- i)                    Except above, dates are not extended for claiming any deduction or exemptions under Income tax Act. ii)                   Above date can be extended further by central government through notification

 

Details of extension for payment of advance tax, TDS, TCS or any other tax
Sr. No.	Particulars	Extended time limit	Interest need to be paid
1.	Payment of TDS	30th June 2020	Maximum 9% per annum for month or part of month
2.	Payment of Advance tax under Income tax act	30th June 2020
3.	Payment of Tax under Vivad se Vishwas act, 2020	30th June 2020
4.	Payment of equalisation levy under chapter VIII of Finance act 2016	No Extension
5.	Payment of tax under “Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015”	30th June 2020
6.	Payment of tax under “Prohibition of benami property transaction Act, 1988”	30th June 2020
7.	Payment of Security transaction tax under chapter VII of Finance (No.2) Act, 2004	30th June 2020
Conditions for claiming extensions:- Above extension shall be available only if following conditions are complied:- i)                    Due date for above stated tax or levy was due to be paid between 20th March, 2020 to 29th June, 2020 ii)                   And such tax or levy is paid before 30th June, 2020
Benefits of extension:- If tax or levy (as stated above) is paid before given date then no penalty or prosecution shall be sanctioned for payment of such amount.

 

Details of extension for completion of different income tax proceedings:-
Sr. No.	Particulars	Extended time limit	Refer Note
1.	“Completion of any proceedings” or “passing of any order” or “issuance of any notice, intimation, sanction or approval”, For example, i)                    Issuance of any notice u/s.147 of the act ii)                   Passing an assessment order u/s.143(3), 144, 147 or 153A or 153C iii)                 Issuing intimation u/s.143(1) iv)                 Granting registration u/s.12AA or 80G of the act v)                   Passing an order u/s.154 of the act	30th June 2020	N1
2.	“Filling of any appeal, reply or application” or “Furnishing any report, document, return, statement” For example, i)                    Filing an appeal to CIT(A), Tribunal, High Court or Tribunal ii)                   Filling of any reply to notice issued under Income tax act iii)                 Filling of be lated Income tax return for AY2019-20 iv)                 Filling TDS return for Q4 for FY 2019-20 v)                   Issuing TDS certificates	30th June 2020	N1
Conditions:- N1:- Above due dates are extended only for those compliances for which due dates were falling between 20th march 2020 to 29th June 2020.
Other observations:- Above date can be extended further by central government through notification