Budget 2020 Shockwaves are felt abroad as well.NRIs are left guessing as to what it means for them? Worry not, we have summed up issues that are making life hard for NRIs.
Criteria for Residential Status Changed… FinMin slashed the required criteria for Resident Status. It now takes 120 days, reduced from 182 days previously. Dr. Girish Ahuja, a senior member of ICAI says that this change will help to curb the outflow of unregistered Income out of India. We’re hoping that he is correct…. Fingers Crossed.
RNOR overhauled… Prior to the Budget 2020, an Individual had to be a Resident for 2 out of 10 previous years. Now, the requirement was amended to 4 out of 10 previous years for Residents but Not Ordinary Residents. Is the government tightening the grip on NRIs with one hand & giving leeway to ‘Genuine Cases’ on the other?
Enter Section 6 IA…This new clause has a great impact on NRIs. From April 1, 2020, Indian citizens that are not a resident of any country will now be a Deemed Resident of India. Meaning, they will now have to disclose details of all the financial assets overseas like house property, bank account details, etc. This will make dodging taxes all the more difficult. It is a big step forward fighting black money.
DDT for NRIs… We all know someone who lives overseas and invests in Mutual Funds and equities in India. Here is a news for them… DDT is abolished in #Budget2020. So, TDS will now be deducted u/s 195 for the dividend paid to NRI shareholder and is taxable at the slab rates. Not to worry… This TDS can be claimed while filing Income Tax Return.
FM hopes this will boost investments in India.
FY 2019–20 is inching to an end. When the new FY begins, these budget changes will come into effect. The massive change was the New Tax Regime. It allows taxpayers to choose from old and new income tax slab rates.
But here is the catch… You cannot claim any Chapter VIA deductions under the new tax regime. But, you can continue to enjoy all Chapter VIA deductions under the old income tax regime. Let’s take a tour of these deductions which allows you to lower your taxable income (under the old tax regime).
The most popular… The deduction is u/s 80C for your investments like — ELSS, mutual funds, etc. and expenses like home loan repayment, etc. upto INR 1,50,000. An additional deduction upto Rs.50,000 u/s 80CCD(1B) can be claimed for investments in the National Pension Scheme (NPS).
Be prepared… Medical emergencies come unannounced… Be cautious with preventive health checkups, Medical Insurance, etc. claim deductions for these expenses u/s 80D. And for special medical conditions u/s 80DD, 80DDB & 80U.
Education is necessary, but also expensive… Deductions u/s 80E helps for Interest paid on Education Loan — it has no maximum limit. However, it can be claimed a maximum of 8 consecutive years.
First home is always special… and ITD understands that… claim a deduction on payment of Interest on Home Loan.
Other deductions include donations, interest paid on savings accounts, rent paid and more.