FM rolls back NRI tax, restricts levy only on their income generated in India
In a big relief to the Non-Resident Indian community, the government has decided to restrict taxation only to the income generated by them from businesses in India, leaving their global income out of any levy. Moreover, taxes would need to be paid only on income of above Rs 15 lakhs.
 
The changes formed part of the amendments in the Finance Bill, 2020 proposed by Finance Minister in Parliament. The Lok Sabha passed the Finance Bill on Monday by voice vote without discussion.
 
Among the other changes introduced by Sitharaman in the Finance Bill includes a clarification that shareholders will have no tax liability if the company issuing the dividend has paid the DDT before April 1 but the shareholder received the dividend afterwards.
 
The budget proposal for taxing dividends in the hands of shareholders by abolishing the dividend distribution tax (DDT) has, however, been retained.
 
Further, the TDS rate on payment of dividend to non-resident and foreign company has been prescribed at 20 per cent. The Finance Bill earlier had not provided any specific rate of TDS in respect of payment of dividend to non-residents and foreign companies with the result such dividend would have fallen in residual clause of 40 per cent. The TDS rate of 10 per cent on dividend for resident is already prescribed in the Finance Bill.
 
Proposal to levy (tax collected at source) TCS on sale of goods is to continue despite huge paperwork and compliance obligations. However, exemption of such TCS in respect of Export Sales and also to sellers in respect of Import has been provided. But this provision along with TCS on foreign remittance will be applicable from October 1, 2020.
 
Moreover, the provision for tax to be deducted @2 per cent on withdrawal of cash from Bank, Co-opt Bank and Post Officer exceeding Rs. 1 crore in aggregate during the year has been amended. Now, in case of a person who has not filed the returns for preceding 3 years then tax will be deducted @2 per cent on withdrawal exceeding Rs 20 lakhs and @ 5 per cent on withdrawal exceeding Rs 1 crore. This provision will be applicable from July 1, 2020.
 
Government's budget proposal on NRIs had dented sentiments as this community is seen as a big investor in the development of the country. The budget not only changed the qualification criteria of NRIs mandating them a higher number of days stay overseas but also introduced a provision that would have made them liable for tax in India on their incomes generated outside the country.
 
In the Union Budget 2020-2021, the government proposed to spend Rs 30,42,230 crore in the next financial year, 12.7 per cent higher than the revised estimate of 2019-20. By passing the Bill, these financial proposals have been given effect.
 
The government has assumed a nominal Gross Domestic Product (GDP) growth rate of 10 per cent in 2020-21, versus the nominal growth estimate at 12 per cent for 2019-20. It expects that receipts will increase by 16.3 per cent to Rs 22,45,893 crore, owing to higher estimated revenue from divestment.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    CA Bodies Urge Extension of Deadline to 15th May for Payment of 100% Disputed Tax under VSVS
    Several bodies representing chartered accountants (CAs) from across the country have requested finance minister Nirmala Sitharaman to extend the timeline till 15 May 2020 for payment of 100% of ‘disputed tax’ for vivad se vishwas scheme (VSVS) in wake of the prevailing economic situations due to the outbreak of coronavirus (COVID-19). 
     
    In the letter six bodies of CAs have said, "We understand that there have been several issues raised by stake-holders post introduction of the revised bill by the government and frequently asked questions (FAQs) issued by the central board of direct taxes (CBDT), which is pending clarification and another set of FAQs will have to be rolled out by CBDT, which will take some time. Also, once rules and procedures are notified, there would be certain issues which will require clarifications from Government for smooth implementation and functioning of the Scheme."
     
    The letter is signed by presidents of IMC Chamber of Commerce and Industry, Bombay Chartered Accountants’ Society (BCAS), Chartered Accountants Association of Ahmedabad, Chartered Accountants Association of Surat, Karnataka State Chartered Accountants’ Association and Lucknow Chartered Accountants’ Society. 
     
    According to the CA associations, to avail the scheme under payment of 100% of ‘disputed tax’, taxpayers will have only eight to 10 days to decide to make application, get the same processed from designated authority (DA) and make the payment before 31 March 2020 to avail of benefit of payment of 100% of disputed tax.
     
    The procedure prescribed under VSVS itself provides 15 days for DA to issue certificate and thereafter another 15 days for the taxpayers to make payment under the scheme. "It will therefore be appreciated that since very little time (hardly 10 days) will be available with the taxpayer to do necessary filings and make payments under the scheme, which in effect will not be as promised in the scheme itself, i.e. time limit of 15 days each, necessary extension may be issued," the letter says.
     
    Due to the COVID-19 outbreak, there has been tremendous turmoil in economic situation in India and world-over. "Several business houses across India have asked their teams to refrain from coming to office and instead, work from home. Because of this, the interactions between tax payers and their tax professionals for the purpose of understanding and availing of VSVS has been hampered. Nowadays, very few meetings are taking place as the taxpayers do-not have enough data available with them on their computers while working from remote locations," the CAs have said.
     
    The associations NOT bodies suggested to extend the date till 15 May 2020 to provide a two-month period to taxpayers for evaluating the VSV scheme. In addition, it says, taxpayers should be allowed two or three instalments for payment of disputed taxes under the scheme as was permissible under the earlier scheme, so that the taxpayers are not burdened, in this severe economic meltdown.  
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    DGGI books 3 firms for GST evasion, issuing fake invoices worth Rs4,198 crore
    In yet another crack-down on tax evaders, the Directorate General of GST Intelligence (DGGI) has booked three firms for issuance of fake invoices, without actual supply of goods, worth Rs 4,198 crores.
     
    The three firms booked by the anti-evasion authority are Fortune Graphics Ltd, Reema Polychem Pvt Ltd and Ganpati Enterprises.
     
    A Finance Ministry statement said that the case was detected by officers using data analytics out of a case booked against exporter Anannya Exim. It was covered in the all India operation launched by DGGI-DRI in September last year against various exporters for fraudulently claimed IGST refund on the strength of ineligible ITCs.
     
    "During investigation, it was revealed that M/s Fortune Graphics Limited, M/s Reema Polychem Private Limited & M/s Ganpati Enterprises have issued invoices worth more than Rs 4,198 crore wherein tax amount of more than Rs 660 crore has been fraudulently passed on as ITC (input tax credit) to buyers of such fake invoices," the official statement said.
     
    In the course of investigation, it was also found that the Directorate of Revenue Intelligence (DRI) had booked a case of diversion of duty-free goods imported under advance authorisation scheme by Reema Polychem Pvt Ltd.
     
    One of the directors of Reema Polychem Pvt Ltd has been arrested under Section 69(1) of CGST Act, 2017 for offences under the provisions of Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017.
     
    "Role of other directors of these three firms is under investigation. Further investigations are in progress," the Ministry said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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