How India’s new tax laws could affect NRI investors

SourceKhaleej Times

Entrepreneurs who use tax havens such as the UAE to dodge taxation in India are in hot waters. The reason – India’s tax laws now define the term 'liable to tax.' Countries usually tax their citizens based on their domicile(s) or residential status. Many high-net-worth individuals (HNIs) have been planning their stay in countries in such a manner that they are not liable to tax in any country. This amendment could affect Indian citizens living in countries where the taxation statute does not apply to individuals whose taxable income in India is above Rs1.5 million. Such citizens are regarded in India as 'Residents and Not Ordinary Residents'.

These businessmen are now obliged to pay tax on India's overall income, as staying in India beyond the stipulated 120 days also means they control their enterprises in the UAE. Presently, the law does not define the term 'liable to tax under section 6 relating to residency rule of the IT Act. Now, it is proposed that the term' person liable to tax'... is defined as a person having a liability of tax under the law of any country and includes a case where more...