India’s New Direct Tax Code (DTC) described as generous to residents unfortunately seeks to extract a mouthful from millions of non-resident Indians (NRIs). It is good news that the government is all set to replace the age-old Income Tax Act of 1961 and bring far reaching changes in the tax structure with an aim to tax those citizens in lower income brackets as little as possible, bring the growing number of rich people in the tax net and prevent tax evasion in the notoriously corrupt system.
With the possibility of archaic rules getting replaced with new ones from 2011-2012, emerging India seems to have welcomed the path-breaking initiative taken by the central government. However, scores of NRIs are disappointed and are sure to seek changes in the proposed laws that affect them negatively. For example, under the DTC, NRIs staying in India for more than 59 days in a year and 365 days or more over a period of four years prior to the financial year will be considered residents and are therefore liable to be taxed on their global income. Currently they can stay in India up to 181 days in a year and still have no tax liability on the income earned outside India.
With the possibility of archaic rules getting replaced with new ones from 2011-2012, emerging India seems to have welcomed the path-breaking initiative taken by the central government. However, scores of NRIs are disappointed and are sure to seek changes in the proposed laws that affect them negatively. For example, under the DTC, NRIs staying in India for more than 59 days in a year and 365 days or more over a period of four years prior to the financial year will be considered residents and are therefore liable to be taxed on their global income. Currently they can stay in India up to 181 days in a year and still have no tax liability on the income earned outside India.
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