The tax residency rules for the Non- resident Indians have been amended by the Budget 2020.
An NRI who visited India would be considered as a resident of India if they spent 182 days or more days in the previous year in the country in addition to an aggregate stay of either 365 days or more days in the preceding four years, this was considered till the financial year of 2019-20.
According to the Budget 2020, the tax residency rules for the NRIs have been amended as it has proposed for lowering the threshold period of stay in the previous year to 120 days from the earlier 182 days.
The budget has also proposed for amending the definition of “not ordinarily resident” as an individual has been classified as “not ordinarily resident” if he has been a non- resident in the country India for nine out of the ten preceding years, this has been done until the financial year of 2020.
The proposal that has been made for lowering the threshold for visiting the NRI qualifying residents in India might result in the global income of the Non- resident Indians undergoing double taxation. The Non- resident Indians include the ones in India and also in the country of their tax residence.
The government of India is seeking to tax the Non- resident Indians who are said to be carrying on the substantial economic activities from India. Under the residence criteria which is present currently regarding the minimum stay of 182 days in a financial year, the Non- resident Indians are said to remain as non- resident in India perpetually and also that they will not be declaring and paying the tax on their global incomes in India.
It has been said that the Non- resident Indians might face issues of having the dual tax residence, dual homes, economic interests and dual citizenship and that it is also likely to cause difficulty for the individuals of high net- worth in order to determine their tax residence.
It has been proposed by the Budget 2020 to deem the citizens of India as the tax residents of India, who are not the tax residents of any country and that such individuals would not be able to employ the rules of the international taxation in order to avoid the taxes in India.
The Budget 2020 has said that the individuals who are the non- residents of all the countries in which they work but are the citizens of India would be deemed as Indian tax residents and that they would have to pay the tax in India.
