· Global Income of NRIs will not be Taxed in India Now
· TDS on Dividends for Foreign Companies Set at 20%, No Tax for Dividend Already Paid
New Delhi: The Lok Sabha passed the Finance Bill, Monday, by voice vote without discussion, amid ruckus in the House with opposition parties seeking a fiscal stimulus package in the wake of the Coronavirus outbreak.
In the Union Budget 2020-2021, the government proposed to spend Rs 30,42,230 crore in the next financial year, 12.7% higher than the revised estimate of 2019-20. By passing the Bill, these financial proposals have been given effect.
The government has assumed a nominal Gross Domestic Product (GDP) growth rate of 10% in 2020-21, versus the nominal growth estimate at 12% for 2019-20. It expects that receipts will increase by 16.3% to Rs 22,45,893 crore, owing to higher estimated revenue from divestment.
While several amendments were passed, finance minister Nirmala Sitharaman withdrew some affecting non-resident Indians. In the passed Bill, NRIs having income above Rs 15 lakh from business in India will fall under the tax net, but their global income will not be taxed in India.
Further, the tax deducted at source (TDS) rate on payment of dividend to non-resident and foreign company has been set at 20%.
The finance minister had introduced the new system of optional income tax slabs for individual taxpayers, where deductions and exemptions cannot be claimed, which was also passed by the Upper House of Parliament.
The proposal for taxing dividends in the hands of shareholders by abolishing the dividend distribution tax (DDT) was also passed. While the new rule kicks into effect from April 1, 2020, the government has clarified that shareholders will have no tax liability if the company issuing the dividend has paid the DDT before April 1.