Along with the changes in the income tax slabs, the government has sought to modify non-resident status of an individual, in a bid to tax the entire worldwide income of a citizen who does not fit into the resident bracket of any country and does not pay tax.
Addressing a press conference after the Budget, Revenue Secretary Ajay Bhushan Pandey said the government has made changes to the norms specifying a person’s non-resident status, according to ANI.
Earlier, as per the Income Tax Act, if an Indian citizen stays out of country for more than 182 days, he becomes non-resident.
“So we’ve made some changes. Now, in order to become a non-resident, he has to stay out of country for 240 days,” Pandey told reporters in New Delhi, with Finance Minister Nirmala Sitharaman by his side.
This means if a citizen stays for just 125 days or just above 4 months in the country, he is liable to paying tax as per the norms for a regular resident, unlike the earlier 182 days or six months.
Interestingly, the government has set its eyes on people who have evaded tax by using the non-resident option.
Many countries specify norms for resident status so as to tax individuals, but taking advantage of this norm, some people stay in a country less than the specified days and are able to evade tax.
“Some people are residents of no country. They may be staying in different countries for certain number of days,” Pandey noted, adding, “So if any Indian citizen is not a resident of any country in the world, he’ll be deemed to be a resident of India and his worldwide income will be taxed.”