Date: February 14, 2025
Income Tax Bill: NRIs Earning Over 15 Lakh May Be Taxed
Income Tax Bill: NRIs With ₹15 Lakh Income to Be Taxed as Indian Residents
The Union Finance Minister, Nirmala Sitharaman, is expected to introduce the new Income Tax Bill in Parliament today. This bill aims to replace the existing Income Tax Act of 1961 and simplify its language for better clarity.
One of the key highlights of the new tax bill is its impact on Non-Resident Indians (NRIs). According to reports, NRIs earning over ₹15 lakh per annum in India may now be classified as Indian residents for tax purposes. This means they will be liable to pay income tax on their earnings in India.
The proposed bill aims to close existing tax loopholes and prevent tax evasion by individuals who claim NRI status but continue to earn a substantial income in India.
New Criteria for Tax Residency Under the Income Tax Bill
As per the new bill, an individual will be considered a resident of India for tax purposes if:
- They stay in India for at least 182 days in a financial year.
- They stay in India for at least 60 days in a financial year and have spent a total of 365 days or more in the last four years.
However, there are exceptions to the 60-day rule:
- Individuals leaving India as part of an Indian crew ship or for employment abroad will not be affected.
- NRIs visiting India will also be exempt, unless they earn ₹15 lakh or more in India (excluding foreign income). In such cases, the 60-day rule will be extended to 120 days.
This adjustment ensures that genuine NRIs and expatriates are not unnecessarily burdened while closing tax loopholes that allow high-income earners to avoid taxation.
How Will This Affect NRIs?
If implemented, this new taxation rule could have a significant financial impact on NRIs who have businesses, investments, or rental income in India. Key consequences include:
- Higher tax liabilities for NRIs earning over ₹15 lakh annually in India.
- More stringent tax compliance for NRIs staying in India for an extended period.
- Better enforcement against tax evasion through residency loopholes.
While this move aims to increase tax transparency and revenue collection. It may also raise concerns among NRIs, especially those frequently visiting India.
Conclusion: What’s Next for NRIs?
With the new Income Tax Bill set to be presented in Parliament, NRIs and financial experts are closely monitoring the situation. If passed, this bill will bring major tax reforms, impacting high-earning NRIs and redefining tax residency rules in India.
Stay tuned for further updates on this crucial taxation reform and its implications for Non-Resident Indians (NRIs).