The transparent taxation platform launched by India’s prime minister last week will be beneficial to non-resident Indians (NRIs) who are required to pay taxes on their income in India.
Narendra Modi last week launched ‘Transparent Taxation; Honoring the Honest’, a platform aimed at simplifying the tax rules for efficient tax administration and bringing more people in the tax net in a country of 1.3 billion population, but only 15 million pay taxes.
The platform for filing income tax returns is to ensure a transparent tax environment by eliminating the current physical interface between tax authorities and taxpayers. Check out a reliable site like https://www.cfoacc.com.sg/services/corporate-tax-filing-services if you need an access premium accounting and corporate tax services.
The new regime has taken away powers of regular assessing officers to conduct surveys and restricted them to only the investigation and tax deducted at source division.
The ‘Faceless appeal’ system allows a taxpayer to contest any claim without any personal interaction with authorities.
Notices, if any, will be sent only by the centralized computer system, and taxpayers can respond to them electronically without the requirement of visiting a tax office or meeting any official.
Modi also introduced a Taxpayers’ Charter that outlines rights and obligations of taxpayers through videoconferencing.
The charter has been introduced with defined rights and responsibilities so that the tax department would not doubt anyone without basis.
Under the charter, taxpayers will have the right to choose their representatives, lodge complaints and seek disposal of issues in a timely manner.
In return, the must maintain accurate records, disclose required information, and pay taxes on time.
NRIs to benefit
Though the taxpayers’ charter is aimed at residents, NRIs also will benefit from the new system.
Manu Kalakkad, managing partner, Emkay Consultancy, a chartered accountants and audit firm, explained: “NRIs generally complain that they are hassled by the tax department when they either fail to file their tax returns or understate income received in India.”
The new tax regulations brought in a team-based assessment in place of individual discretion, thus eliminating territorial assessment by expanding the scope of faceless assessment.
Non-resident taxpayers now know their obligations and what to expect from the tax bureaucracy.
NRIs are required to pay tax on income generated in India.
There is a general perception among NRIs that they need not pay income tax or file tax returns in India.
But NRI or not, any Indian citizen whose annual income, accrued in India, exceeds INR250,000 (£2,746, $3,533, €2,811) is required to file income tax return in India and pay taxes as the case may be.
NRIs are taxed on income earned or collected in India, and income accrued from fixed deposits and savings accounts, as well as capital gains.
An NRI’s income tax liability in India depends on his residential status for the year. If the status is ‘resident,’ his global income is taxable in India.
All transactions have become transparent after the introduction of the unique ID (Aadhaar card) and Pan card (permanent account number) the tax department having access to all bank transactions and deals involving the tax assesses.
No more harassment
AS Elavarasan, chairman of chartered accountants and auditing firm ASPA Management Consultancy, Dubai, said: “So far, NRI taxpayers have been subjected to arbitrary treatment or treated with suspicion by the tax officers who seek explanation for every transaction of NRIs who have complex international financial transactions.
“This often led to harassment and litigation. Now that the system has been made faceless, such assessees can offer explanation through their professional tax consultants or directly through online.”
Most NRIs desist from filing tax returns fearing that they will be asked to explain transactions to the tax officers or they will be served notices for non-compliance.
With the introduction of ‘No influence’ policy, NRIs will now volunteer to declare income received in India and pay taxes or claim refund, as the case may be.