The Kerala state Assembly on Thursday passed a resolution against the Union government’s proposed amendment to Section 6 of the Income Tax Act, which reduces the time period for non-resident Indians to stay in the country to be exempted from being taxable. The resolution moved by Kerala Chief Minister Pinarayi Vijayan demanded that the Centre should withdraw such a proposal to amend Section 6 of the Income Tax Act, that will adversely affect non-resident Indians (NRIs).
As per the present provisions of the Income Tax Act, a person who is living outside India (NRI) is not taxable for the revenue that is made in other countries, but only for the income in India. The Act also defines a person as a resident of India, if they stay in the country for 182 days or more.
But in the Finance Bill tabled recently by the Centre along with the Union Budget, it has been proposed that a person will be considered a resident of India if they stay in the country for 120 days or more, with effect from April 1, 2021. The amendment also proposes to tax NRIs who are not paying tax in any other country.
This means that those living in the country for at least 120 days will have to pay tax on their global earnings. Though the Centre proposed the amendment citing it as a step against tax evasion, the proposal has created apprehension among many non-resident Indians.
According to reports, the resolution was tabled by Industries Minister EP Jayarajan for the Chief Minister. EP Jayarajan reportedly told the Assembly that the resolution should be passed so that the issue gets the attention it needs throughout the country. Meanwhile, Opposition Leader Ramesh Chennithala also said that people are apprehensive about such an amendment.
After Union Finance Minister Nirmala Sitaraman put forth the proposal, Chief Minister Pinarayi Vijayan on Sunday had sent a letter to Prime Minister Narendra Modi conveying the apprehensions of the state which has a high NRI population. “The government of Kerala places on record its strongest disagreement with the move in the Finance Bill, 2020, which is brought in the guise of checking tax abuse, but will in reality hurt those who toil and bring foreign exchange to the country,” the letter said.