The Modi government on Monday relaxed the contentious tax residency rules in Finance Bill 2020 by setting a Rs 15-lakh income threshold above which an individual will be considered to be a resident taxpayer if he has stayed in the country for more than 120 days.
Finance minister Nirmala Sitharaman had sparked a major controversy when she cut the residency period from 182 days to 120 days in her recent budget.
In an amendment introduced just before the bill was passed by Lok Sabha on Monday, the government said “an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding Rs 15 lakh during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.”.
The explanatory memorandum to the budget had said: “Instances have come to notice where a period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year, is being misused. Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India.”
Several parliamentarians had pressured the government to restore the 182-day residency rule but Sitharaman refused to budge.
However, she did make a minor concession by setting the Rs 15-lakh income threshold which many experts feel will take some of the sting out of the original proviso.
The government tacked on an explanation to the concession. It said: “The expression income from foreign sources means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).”
PM video-conference
Prime Minister Narendra Modi on Monday asked India Inc to ensure that production of essential items is not impacted in the wake of the coronavirus outbreak and there was no hoarding and black marketing.
