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Virus could hit the way Indian revenue authorities tax their individual, foreign income.
Govt has decided to tax only the income generated by NRIs from the biz in India, leaving their global incomes.
Indians who are on deputation overseas or have settled overseas — whether by way of acquiring a permanent residency such as a green card in the US, or acquiring citizenship of a foreign country — need to be aware of their tax obligations in India. A recent move seeking details from non-residents of foreign bank accounts in income tax (I-T) returns caused anxiety about whether India was taking steps to tax global income. The Central Board of Direct Taxes (CBDT) subsequently clarified that providing such details was optional and it was to facilitate refunds in those cases where individuals did not have a bank account in India. Here is a primer explaining the tax incidence for Indians overseas:
Clarification that overseas earnings of bona fide workers won’t be taxed is ambiguous, say experts.
In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession.
"CBDT may need to clarify reporting requirement for unlisted equity shares in foreign companies for NR/NOR,” said Sonu Iyer, tax partner and people advisory services leader at EY India.
An NRI is spared tax on income outside India. A resident is required to pay tax on global earnings.
Overseas residential details, tax identification numbers & residential status in India will need to be provided.
Only, tax residents of India (ROR) are subject to tax on their global income, which would include interest income on overseas bank accounts.
NRIs are unable to upload their ITRs when they mention their country of residence & several representations on the issue have been made to the govt.
Governed by rules and conventions of banking secrecy, banks in Switzerland and tax havens divulge information only after account holders give their consent.
"It is proposed to amend the relevant provision to provide that on furnishing of alternative documents, the higher rate will not apply," the Budget says.
The Revenue Department today said reporting and certification requirements in case of payments made to non-residents will be relaxed from April 1, 2016.
It also meant convenience as many countries don’t require US passport holders to get visas. Now, these NRIs who have bought real estate or made other investment in India could be taxed as per the US taxation laws.
On June 18, 2014, the IRS announced new Streamlined Foreign Offshore Procedures (SFOP), which will significantly alter all future voluntary disclosures.
FATCA requires all foreign financial institutions to enter into an agreement with the US government & disclose foreign account information of US accountholders.
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