September 6th, 2010 
Ziaulla Namani
The infamous Direc Tax Code (DTC), which is in the news may disappoint the NRI. The DTC could bring NRI’s under the blanket of tax. The new DTC has changed the provision which allowed NRI to do away with the tax in any country giving the reason of double tax.
The new tax code is expected to be applicable from April 1, 2012, says an individual shall be resident in India in any financial year if he is in the country for more than 59 days in that year and has been in India for more 365 days in the four preceding financial years. Industrialists like Ravi Ruia and Anil Agarwal has acquired NRI status.
Official with the central board of direct taxes (CBDT), the apex direct tax arm of the government said, “The DTC has only attempted to clean up the provision in line with the laws globally.”
The line being outside India in the current law of income tax exempted individuals who stayed outside India for six months from paying taxes. But officials’ feels that this can be flexibility could be misused to escape the tax.
If statistics are to believed then more than 25 million Indians stay overseas and one million visits the country every year. NRIs especially those working in the gulf countries visit India for longer durations.
Vikas Vasal, executive director at consulting firm KPMG said, “This could result in a situation where in the overseas income of NRIs may be subject to tax under certain situations.”
Amitabh Singh, partner at Ernst & Young, said this coulddiscourage the overseas Indian population who routinely visit India to meet their relatives and friends.
“They will now have to restrict their stay to less than 60 or be in danger of becoming tax residents,” he said.
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