I-T dept eyes NRIs' residential status, reopens tax assessments of 5 years

The department has pulled up people who evaded tax and were sent notices a month ahead of Budget 2019

The Income-Tax department is scrutining the ‘residential’ status of non-resident Indians (NRIs) and are sending  several of them notices to reopen tax assessments of  the last five to six years.  They have also been asked to share photocopies of their passports. 

Whether you are a resident Indian or NRI, taxation is an essential part but tax rules are different for NRIs. A person is an NRI if he or she leaves for the purpose of employment for 182 days. The NRI income tax will depend on your residential status. If you are an NRI you don't have to pay tax on global income earned but if you are a resident, tax has to be paid on global earnings too. Hence many Indians carefully divide their time between India and abroad. So persons who claimed NRI status (without fulfilling the norms on the period of stay) are being pulled up for alleged tax evasion and may be in for long litigation, reported the Economic Times.
 

Taxmen have reportedly sent notices to NRIs a month before the budget which proposed an amendment (with retrospective effect) in the black money Act to include NRIs in the definition of ‘assessee’ – a move that would make the laws more stringent. 

“Even if a person is forced to extend his stay in India beyond 182 days on genuine grounds like hospitalisation or marriage, there is no respite. The department has turned aggressive to ensure that foreign income of residents does not escape taxation,” said senior chartered accountant Dilip Lakhani to Economic Times.

At present, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, covers only resident Indians. The Finance Bill has expanded the definition of assessees to include NRIs. The tax department is learnt to have come across several NRIs and entities which featured in various global leaks, such as Panama Leaks and Paradise Papers, which are also being probed under the Act. These names wilfully concealed their foreign accounts to evade tax, Business Standard had reported earlier this week. 
 

Business Standard had quoted Amit Maheshwari, managing partner of Ashok Maheshwary & Associates as saying, “This will impact several individuals who may have left the country in the hope of avoiding the draconian Black Money Act. If they were residents in the years where the undisclosed asset was acquired or undisclosed income was earned, they will get covered under this Act. Interestingly, this coverage is retrospective and we expect this to be challenged in court." Read more here