Direct Tax code- removal of RNOR status

[boom]

your global income is taxed if you become resident indian. If H1B guys reside outside india and meet NR criteria then their foreign income will not be taxed in india but their india generated income (rentals, investments etc) will still be taxed in india.

[nodegree]

DIRECT TAX CODE ALSO SAYS:

3. Residence-Based Taxation

A significant shift under the DTC is taxing Indian residents on their global income. This change aligns India’s tax framework with international practices, simplifying compliance for individuals with overseas earnings.

[1] Does it mean that the social security will be taxed in India after ROR, currently India does not tax SS.

Any comments?

Global income was always taxable in India, except during RNOR period.

SSA income was already taxable in India for ROR:
https://www.livemint.com/money/personal ... 65433.html

In that article

. For example, any benefit received from the US Social Security Authorities is taxable only in the US and exempt from Indian income tax as per the DTAA between India and the US

.

[satish1961]

DIRECT TAX CODE ALSO SAYS:

3. Residence-Based Taxation

A significant shift under the DTC is taxing Indian residents on their global income. This change aligns India’s tax framework with international practices, simplifying compliance for individuals with overseas earnings.

[1] Does it mean that the social security will be taxed in India after ROR, currently India does not tax SS.

Any comments?

Global income was always taxable in India, except during RNOR period.

SSA income was already taxable in India for ROR:
https://www.livemint.com/money/personal ... 65433.html

In that article

. For example, any benefit received from the US Social Security Authorities is taxable only in the US and exempt from Indian income tax as per the DTAA between India and the US

.

Yes. DTAA between India ans US has to be looked into closely and may provide some exemptions like the one pointed here. So whatever "simplification" India is planning does not/can not override DTAA between India and US.

[satish1961]

DIRECT TAX CODE ALSO SAYS:

3. Residence-Based Taxation

A significant shift under the DTC is taxing Indian residents on their global income. This change aligns India’s tax framework with international practices, simplifying compliance for individuals with overseas earnings.

[1] Does it mean that the social security will be taxed in India after ROR, currently India does not tax SS.

Any comments?

Global income was always taxable in India, except during RNOR period.

SSA income was already taxable in India for ROR:
https://www.livemint.com/money/personal ... 65433.html

If it's already there, I am not sure why it's listed as one of the "simplifications" to align with the international practices! Are they widening the net with this?

USCs are liable for taxations on global income in the strictest terms, no matter where they live and granted, they do get foreign earned income exclusion and DTAA tax credits. For example, H1B workers from India are not taxed by India and not sure if they are going to be taxed going forward with this change.

devil is in details! Yes it does sound like India is eyeing to tax its citizens of global income (along with providing them some sort of "foreign earned income exclusion" ) (just like USA does) irrespective of their residency. I do not think, Modi has enough votes to get this done. Removing RNOR state (in name of simplifying the process) may be the one of main intention of DTC 2025

[SAPPORO]

Global income was always taxable in India, except during RNOR period.

SSA income was already taxable in India for ROR:
https://www.livemint.com/money/personal ... 65433.html

If it's already there, I am not sure why it's listed as one of the "simplifications" to align with the international practices! Are they widening the net with this?

USCs are liable for taxations on global income in the strictest terms, no matter where they live and granted, they do get foreign earned income exclusion and DTAA tax credits. For example, H1B workers from India are not taxed by India and not sure if they are going to be taxed going forward with this change.

devil is in details! Yes it does sound like India is eyeing to tax its citizens of global income (along with providing them some sort of "foreign earned income exclusion" ) (just like USA does) irrespective of their residency. I do not think, Modi has enough votes to get this done. Removing RNOR state (in name of simplifying the process) may be the one of main intention of DTC 2025

Based on my research, in addition to removing RNOR status
"Under the new rules, individuals spending more than 120 days in India (instead of 182) will be considered residents, thereby improving tax compliance."

https://www.dailyexcelsior.com/key-high ... code-2025/

"The DTC redefines the concept of tax residency for individuals, particularly targeting non-resident Indians (NRIs) and individuals who frequently travel abroad. This aims to ensure a fair tax contribution from individuals who maintain economic ties to India while spending significant time outside the country"

https://insight.accovet.com/direct-tax- ... %20country.

[nodegree]

For what it's worth, these are all speculations from various people and GoI hasn't even unveiled a draft yet. Considering how they still allow people to file taxes under the 'old regime' I highly doubt it'll be a single switch to Direct Tax code next year even if the bill gets passed in both houses. We'll see what Nirmala Tai unveils on Feb 01.

[DILIPDE]

It seems that the
benefit received from the US Social Security Authorities is taxable only in the US and exempt from Indian income tax as per the DTAA between India and the US.

[DILIPDE]

I also hope so. Since, one proposal is that the long-term capital gain tax will be taxed at person's tax slab rate except 1.25 lacs earning. It means that those are at 30-35 % tax bracket need to pay much higher tax. It seems that the stock market might have some negative impact for this.

[wd40]

For what it's worth, these are all speculations from various people and GoI hasn't even unveiled a draft yet. Considering how they still allow people to file taxes under the 'old regime' I highly doubt it'll be a single switch to Direct Tax code next year even if the bill gets passed in both houses. We'll see what Nirmala Tai unveils on Feb 01.

Yes, thats why I also think. I just need 1 year(Fy 25-16) to be RNOR, because I will be in Singapore for Apr and May 2025 and I dont want to pay income tax on that Singapore income. Also I want to bring back my accumulated employer PF of about 1.6Cr without getting taxed in India.

[old-spice2]

Yes, thats why I also think. I just need 1 year(Fy 25-16) to be RNOR, because I will be in Singapore for Apr and May 2025 and I dont want to pay income tax on that Singapore income. Also I want to bring back my accumulated employer PF of about 1.6Cr without getting taxed in India.

You will not be taxed on principal amount you bring from overseas. If you declare I got 1.6Cr savings from Singapore, you will be taxed only on the income that amount generates in future. That law is common in all the countries except may be Dubai/Saudi.