Indian finance minister Pranab Mukherjee sought to reassure delegates on the double taxation of non-resident Indians (NRIs) under the Direct Taxes Code (DTC), at the 9th Pravasi Bharatiya Diwas (PBD) Convention held this month in New Delhi. He asked the diaspora not to panic about the proposal which is still in its formative stages.
The PBD Convention is an annual event providing a platform for the exchange of views and networking to overseas Indians on matters of common interest and concern to them. It is also aimed at helping the Indian government to better understand and appreciate the expectations of the overseas Indian community.
The NRIs have plenty that they are unhappy about, such as getting visas, voting rights and the double taxation issue. Under current income tax rules the NRIs only have to pay tax if they stay in India for 180 or more days in a financial year, and many are opposing the move by the government to change this to only 60 days.
Mr Mukherjee explained that for an overseas Indian to become a resident Indian two criteria need to be fulfilled: an individual doesn’t become a resident Indian if he has not stayed for more than 60 days in any financial year, and he will be a resident only if he stays for 365 days or more in the four preceding financial years. He said that only when both these are met will an individual be considered for taxation purposes, and then his global income will only be taxable if he fails to satisfy other conditions, one of them being the person staying in India for less than 730 days in the preceding seven years.
The Indian government has been attempting to renegotiate its double tax treaties in order to establish how much money has been moved out of the country by its residents. Mr Mukherjee has written to 78 countries asking them to amend existing tax treaties, and he has insisted on their adding on Article 26 of the Model Tax Convention of the Organization for Economic Cooperation and Development, which provides a legal basis for the bilateral exchange of information for tax purposes.
The PBD Convention is an annual event providing a platform for the exchange of views and networking to overseas Indians on matters of common interest and concern to them. It is also aimed at helping the Indian government to better understand and appreciate the expectations of the overseas Indian community.
The NRIs have plenty that they are unhappy about, such as getting visas, voting rights and the double taxation issue. Under current income tax rules the NRIs only have to pay tax if they stay in India for 180 or more days in a financial year, and many are opposing the move by the government to change this to only 60 days.
Mr Mukherjee explained that for an overseas Indian to become a resident Indian two criteria need to be fulfilled: an individual doesn’t become a resident Indian if he has not stayed for more than 60 days in any financial year, and he will be a resident only if he stays for 365 days or more in the four preceding financial years. He said that only when both these are met will an individual be considered for taxation purposes, and then his global income will only be taxable if he fails to satisfy other conditions, one of them being the person staying in India for less than 730 days in the preceding seven years.
The Indian government has been attempting to renegotiate its double tax treaties in order to establish how much money has been moved out of the country by its residents. Mr Mukherjee has written to 78 countries asking them to amend existing tax treaties, and he has insisted on their adding on Article 26 of the Model Tax Convention of the Organization for Economic Cooperation and Development, which provides a legal basis for the bilateral exchange of information for tax purposes.
