Despite some earlier reports suggesting that NRIs earning ₹15 lakh or more in India but not paying taxes elsewhere might be treated as full residents, the whole picture is still unclear.
Some media reports have emerged, claiming under the new Income Tax bill, such NRIs will still be classified as Residents but Not Ordinarily Resident (RNOR). This means they will only pay tax on their income earned in India, not on foreign income.
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The basic rule for NRI is if you stay in India for 182 days or more in a year, you are a tax resident. You can also become a resident if you stay 60 days or more in a year and 365 days in the last four years.
However, NRIs visiting India and Indians working abroad don’t have to follow the 60-day rule. But if they earn more than ₹15 lakh in India, the 60-day rule extends to 120 days.
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Many believe stricter NRI tax rules are needed to prevent any fraud. Some people use the NRI status to avoid paying taxes despite earning significant income from India.
The proposed changes will likely curb these issues by simplifying the language and avoiding any loopholes that can be exploited. The bill will now be sent to the Lower House for scrutiny and more details will be clear once it is tabled.
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