Dubai: India’s union budget presented on Saturday has left expats in the UAE shocked and confused with the finance ministry making amendments on the definition of Non Resident Indians (NRIs) and proposing changes in taxation.
The amendments stipulate 240 days, instead of 182 days, of overseas stay to be considered as an NRI and any Indian staying in India for 120 days or more will be considered as a resident and taxed. Another proposal is to impose taxation on worldwide income if “an NRI is living different countries,” according to India’s Revenue Secretary Ajay Bhushan Pandey.
Some reactions from Indian expats in the UAE:
ASHISH MEHTA, Founder & MD, Ashish Mehta & Associates
“This Union budget 2020 may discourage investments from NRIs whether in businesses or personal investments as it has dented their confidence. NRIs may invest in their country of residence and other countries and in this instance, UAE tends to gain as this may increase NRI investments in the UAE, whether residing in the UAE or other countries. In the past, NRIs have always assisted the government whenever Indian foreign reserves have required inflow of money. Hope the government will re-consider this move and not implement the new rule.”
NAVEEN SHARMA, Head Accounting, Audit & Advisory Services Focus Group:
“Budget proposal to reduce the time of stay in India from 182 days to 120 days for an Indian citizen or person of Indian origin to become resident in India is outrageous. Instead of six months now, Indian citizen has to stay eight months every year outside the country, only then will they be considered as NRI.
A lot of Gulf-based Indians go to their motherland India to start or expand their business and it is usual that they have to spend lot of time initially in their new business and now they will have one more headache : worry about their NRI status because if they lose their NRI status, their entire global income will be taxable.
Second proposal to treat an Indian citizen who is not liable to pay tax anywhere would be deemed to be resident in India and hence liable to pay tax on their Global Income will create panic. Urgent clarification is required whether Indian citizen who are residents and employed in the Gulf countries are covered or not.
These are backward looking budget proposal and will create lot of confusion and anxiety among the hardworking Indian population in the Gulf region.”
Jitendra Gianchandani, Chairman of Jitendra Consulting Group:
“Although the whopping double digit GDP growth 10 per cent doesn’t have a mathematical answer, it shows the Government’s intention to recover the lost ground in the past to reach the $5 trillion economy. By abolishing Dividend Distribution Tax and simplified direct tax, the Finance Minister has set the twin dragons of growth, consumption and investment on the roll.
“However, the Finance Minister was silent on the job creation, which was the need of the hour. No change in long-term capital gain has brought disappointment in corporate India. All in all, there was no out-of-box announcements considering the goal of making India a $5 trillion economy. There was no major plan to revive the already slowing down Indian economy.”
Anish Mehta, Chairman, Institute of Chartered Accountants of India:
“This [proposed taxation on worldwide income of NRIs not paying tax anywhere else] is something that Indian expats have been scared of. What we understand now is that even Indians staying more than 240 days overseas will be considered as residents if they are staying in non-taxation countries like in the Middle East.
"If it is about a tourist visiting different countries to evade income tax, how can the government assess the income he is earning abroad? These things have to cleared.
“NRIs have been thinking that there will be some positive proposals in their favour in the budget and this is just the opposite, whether it is about cutting short the number of days of stay in India to lose the NRI status or the taxation of worldwide income if an NRI is not paying tax anywhere else.”
Sajith Kumar Pk, CEO and MD, IBMC Financial Professionals Group:
“As per the new proposal, NRIs should not stay more than 120 days at a stretch in India. If the NRI status is lost in that case, his or her global income also becomes taxable in India. It will be another headache if a business person does not provide satisfying documents of economic involvement in India during multiple visits that exceed more than 182 days.”
Pawan Kumar Chaudhary, banking and finance professional:
“The redefining of Non Resident Indian and the caveat about taxing NRIs not paying tax in any other country has confused the Indian diaspora here. While it seems fine to have raised the number of days a person needs to stay outside India to 240 from 182 to qualify as NRI, the decision to tax expats who are not paying tax elsewhere needs a clarification.
The new proposal aims at bringing those in the tax net who had hitherto been traveling outside the country for the stipulated time only to maintain an NRI status for tax purposes.”
Punnakkan Muhammad Ali, general secretary of Incas UAE
“Tax is not a big concern for the vast majority of Indian expats who are blue-collar workers. What matters to them is their social security and health benefits. There is nothing about these things in the budget."
SAJEEV PURUSHOTHAMAN, spokesperson, NRI Cell of the ruling BJP party
“The only change that is going to impact the NRIs is the number of days that they need to stay overseas for maintaining the NRI status. This is to catch those people who live six months outside and six months in India and enjoy the benefits of both being NRIs and residents.
"They roam around in foreign countries for 182 days and make investments there and stay in India during the rest of the year and avoid being taxed. Now, they will have to stay abroad for more than 240 days. It will not be easy for them. They will be under the scanner of the Indian authorities.”