NRI status & Taxable Income in India effective from FY2020-21

NRI status & Taxable Income in India effective from FY2020-21

For non-resident Indians (Indian citizens or Persons of Indian Origin (‘PIO’) who have been residing outside India), until March 31, 2020, NRIs who visited India could stay in India up to 181 days in a financial year and still could maintain “Non-resident” status in India.

The Finance Act, 2020 and the Finance Act 2021 (assented by the President on 28 March 2021) have made far-reaching changes regarding the determination of the residential status of NRIs for the financial year ended March 31, 2021, and March 31, 2022. This change will directly impact the NRI community.

Highlights:-

⦁ Visiting NRIs whose total income (which is defined as taxable income) in India is up to Rs 15 lakh during the financial year will continue to remain NRIs if the stay does not exceed 181 days, as was the case earlier.

⦁ Dividends distributed by Indian companies would be taxable in the hands of the shareholders and as such, would form part of the taxable income. On the other hand, since interest on FCNR and NRE deposits are exempt it will not form a part of taxable income. This amendment is effective from the financial year 2020-21, viz. April 1, 2020, to March 31, 2021.

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⦁ An individual whose taxable income exceeds Rs 15 lakh and stays in India for 120 days or more (but less than 182 days) and is treated as a resident individual will still be treated as “Resident but Not Ordinarily Resident (RNOR)”. In the case of RNOR individuals, the foreign income (i.e., income accrued outside India) shall not be taxable in India. Foreign sources mean income that accrues or arises outside India (except income derived from a business controlled in or a profession set up in

Scope of taxation in India based on Residential Status

1ROR – Resident and Ordinarily Resident,
RNOR – Resident and Not Ordinarily Resident and
NR – Non-Resident

Way forward :

NRIs need to carefully consider the total Indian income and plan their travel itinerary based on the amendment for their period of stay.

The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

The positive aspect is that in most cases, NRIs can continue to visit India for up to 181 days in the financial year and even in other cases where the period of stay in India is 120 days up to 181 days (and also for 365 days or more in preceding 4 years) or more or in case of Indian citizens who are not tax residents of any other country and are deemed to be tax residents of India, the status would be RNOR (if their Indian Income exceeds INR 15 lakhs) and hence foreign income shall not be taxable in India.

FY21 FDI inflows up 10%, highest jump in investments from Saudi Arabia

FY21 FDI inflows up 10%, highest jump in investments from Saudi Arabia

According to the government, India received the highest-ever total foreign direct investment (FDI) inflow of $81.72 billion in FY21, up 10% from 2019-20. Inflows of equities, earnings reinvested, and other capital make up total FDI.

Singapore led the way with a 19 percent increase in foreign direct investment equity inflows over the previous fiscal year, followed by the United States and Mauritius. Saudi Arabia, on the other hand, saw the largest rise in foreign investment of $2.81 billion in FY21 compared to $89.93 million the previous year.

Saudi Arabia is the top investor in terms of percentage rise among the top ten countries in 2020-21, according to the government.

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FDI of $59.64 billion were recorded in FY21, up from $49.98 billion the previous year.

The commerce and industry ministry stated in a statement that “measures implemented by the government on the fronts of Foreign investment policy changes, investment facilitation, and ease of doing business have resulted in higher foreign investment inflows into the country.”

According to the report, foreign investment equity inflows from the US and the UK increased by 227 percent and 44 percent, respectively.

According to the statement, computer software and hardware emerged as the leading sector with roughly 44 percent of total Foreign investment equity investment, followed by Construction (Infrastructure) Activities (13 percent) and Services Sector (8 percent).

FDI
Gujarat, Karnataka, and Delhi are the top recipients of FDI in the Computer Software & Hardware sector

According to the statement, equity in the primary sectors of construction (infrastructure), computer software & hardware, rubber goods, retail trading, drugs & pharmaceuticals, and electrical equipment increased by more than 100 percent in 2020-21 compared to the previous year.

Gujarat is the biggest recipient state for foreign investment equity inflows this year, accounting for 37% of total foreign investment equity inflows, followed by Maharashtra (27%), and Karnataka (27%). (13 percent ).

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Income Tax Return Filing

AY 2018-19 Income Tax Return Filing | Which ITR Form should you file?

The Central Board of Direct Taxes has notified the new RTI forms for the AY 2018-19 Income Tax Return (for the 2017-18 fiscal year). To facilitate the filing of inquiries, some sections of the forms have been streamlined.

The new form of ITR in PDF format is made available, while Excel (or) Java Utilities for IS 2018-19 will be available soon on the income tax India e-filing website.

What is Assessment Year (AY) & Financial Year (FY)?

The fiscal year (FY) is the year you earned the income. If you file a return this year, the fiscal year will be 2017-18. For example, if you had an income between April 1, 2017, and March 31, 2018, then 2017-18 will be designated by AF. The assessment year (YY) is the year in which you file returns, that is, 2018-19. The last filing date for the 2017-2018 fiscal year is July 31, 2018 (as of now).

Income Tax Slab Rates for FY 2017-18

The income tax slabs & rates are categorized as below:

  • An individual resident under the age of 60 Years.
  • Senior Citizen (an Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year).
  • Super Senior Citizen (an Individual resident aged 80 years or more at any time in the past year).

Income Tax Return Filing

New ITR 1 (Sahaj) Form For Year Analysis 2018-19

Direct Tax Central Board (CBDT) has filed a Form of Tax Return Form (Form ITR) for Assessment Year 2018-19. For the Year of Assessment 2017-18, a single page simplified by ITR Form-1 (Sahaj) was notified. This initiative benefits from the 3 crore taxpayers, who have submitted back to their respective Forms. For the Year of Assessment 2018-19 also, one page simplified ITR Form-1 (Sahaj) has been notified.

  • This form can be used if you have;
    • Salary or Pension Income
    • Income from a home owner’s property (excluding cases where loss has been lost from previous years)
    • No business income / no Capital gains
    • No asset in a foreign country or no income from a source outside India
    • Agricultural  income which is less than Rs 5,000
    • Income from other sources like FD/Shares/NSC etc.,
    • No income from lottery or horse racing.TR Form-1 (Sahaj) may be filed by an individual resident other than an unusual resident, earning up to Rs 50 lakh and receiving income from salary, home property / other income (interest etc.).
  • Additionally, home-related salary and property components have been rationalized and provide basic salary details (such as those available in Form 16) and income from home property has been reimbursed command.

  • Click here to download a new ITR 1 Form for IS 2018-19.
  • Please note that NRIs can not file form ITR-1 from IS 2018-19 until the beginning.

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