Kerala Chief Minister Pinarayi Vijayan slammed Finance Minister Nirmala Sitharaman's proposal to amend the Income Tax Act to tax Non-Resident Indians (NRIs) who aren't otherwise taxed in a foreign country. Revenue Secretary Ajay Bhushan Pandey said while addressing a press conference that some people stay in different countries for a certain number of days but are not residents of any one of those. “So if any Indian citizen is not a resident of any country in the world, he will be deemed to be a resident of India and his worldwide income will be taxed,” said Pandey.
Reacting to this, Vijayan, who's state has one of the largest shares of total NRI population employed abroad, said the Centre's tax plan will be "another disaster" and impact hard-working Indians in the Middle East. According to RBI, Kerala accounts for roughly a sixth of all the money deposited in NRI accounts. On Twitter, he expressed his strong disagreement with the move in the Finance Bill 2020 and called on the Centre to withdraw such consideration.
Central Govt is scrambling to create another disaster with the proposed amendment to IT ACT's provisions regarding resident status. The move, revealed in the Finance bill presented along with the Budget, will adversely impact the hard-working Indians in the Middle East.— Pinarayi Vijayan (@vijayanpinarayi) February 2, 2020
Their remittance have helped this country wade through difficult times. We record our strong disagreement with the move in the Finance Bill, brought in under the guise of checking tax abuse, but in reality is going to hurt those who toil and bring foreign exchange to the country.— Pinarayi Vijayan (@vijayanpinarayi) February 2, 2020
Once again, with a "masterstroke", the many will be punished for the sins of a few crooks. Like demonetization and GST; the crooked will find their way, and the working lives of decent Indians will be destroyed. The Central Govt should desist from going ahead with this amendment.— Pinarayi Vijayan (@vijayanpinarayi) February 2, 2020
While Indian residents got huge relief on the income tax front with restructured tax slab, the Union Budget 2020 was a setback for non-resident Indians (NRIs). Earlier, an Indian needed to stay at least 182 days abroad to attain the NRI status, now the time period has been increased to 240 days.
“We have made changes in Income Tax Act where if an Indian citizen stays out of the country for more than 182 days, he becomes non-resident,” said Revenue Secretary Ajay Bhushan Pandey during a press conference on Saturday. “We have made some changes. Now, in order to become a non-resident, he has to stay out of the country for 240 days,” he added.
The latest decision regarding the income tax on NRIs is considered as a big disadvantage as many Indians stay overseas to save tax. If Indian citizens residing in such foreign countries will be taxed, they will prefer staying back in India, leading to a drop in the amount of remittances India gets from NRIs living abroad.
(Image credit: PTI)