Direct Tax code- removal of RNOR status

[nodegree]

Did they already unveil the new income tax bill? AFAIK they haven't done yet..

[nodegree]

Looks like a Draft of the bill went live today and it seems to keep all existing provisions of RNOR. Still early to see if there are any gotchas but so far nothing seems to change taxation wise for NRIs and RNORs. NRI rules also unchanged (i.e. less than 182 days in India if Ind Citizen on employment abroad or Person of Indian Origin with a foreign residence).

Here's a draft copy
https://drive.google.com/file/d/1OVc5BE ... view?pli=1

Thank goodness for coalition governments.

[wd40]

Looks like a Draft of the bill went live today and it seems to keep all existing provisions of RNOR. Still early to see if there are any gotchas but so far nothing seems to change taxation wise for NRIs and RNORs. NRI rules also unchanged (i.e. less than 182 days in India if Ind Citizen on employment abroad or Person of Indian Origin with a foreign residence).

Here's a draft copy
https://drive.google.com/file/d/1OVc5BE ... view?pli=1

Thank goodness for coalition governments.

Just came to post the same thing here

https://economictimes.indiatimes.com/nr ... 204594.cms

[DILIPDE]

I think, keeping RNOR status is good move. It will help returning NRI (particularly those are living overseas for a long time) to adjust before filling tax return in India.

[wd40]

I think, keeping RNOR status is good move. It will help returning NRI (particularly those are living overseas for a long time) to adjust before filling tax return in India.

It was all silly speculation by the CA community in India. I never believed that it will be removed.

[old-spice2]

It was all silly speculation by the CA community in India. I never believed that it will be removed.

But why have RNOR, special int rate and tax free status for NRO/NRE account? Other countries don't give such rebates (ex USA). America even taxes its citizens when they live outside.

[wd40]

It was all silly speculation by the CA community in India. I never believed that it will be removed.

But why have RNOR, special int rate and tax free status for NRO/NRE account? Other countries don't give such rebates (ex USA). America even taxes its citizens when they live outside.

Until about 10 years ago, India was really dollar starved. Raghuram Rajan had to liberate NRE FD rates, before 2014, NRE FD rates were capped to only 3% I think.

So when India was hit with the fragile five status and rupee was plunging, RBI had to bring Innovative stuff like the fcnr B with some derivative product etc.

RNOR is probably much older than that and I think it was designed to ease the transition of long term NRIs returning back to India and encourage them to bring their monies into India in a gradual manner.

[nodegree]

It was all silly speculation by the CA community in India. I never believed that it will be removed.

But why have RNOR, special int rate and tax free status for NRO/NRE account? Other countries don't give such rebates (ex USA). America even taxes its citizens when they live outside.

US does give NRAs (Non-Resident Aliens) relief from US taxation of their foreign assets the first year they become resident (or even second year depending on how they elect their first year resident status). I think two years of RNOR is a reasonable time frame considering how big the Indian diaspora is abroad (it used to be 6 years before the 90s).

[SAPPORO]

It was all silly speculation by the CA community in India. I never believed that it will be removed.

But why have RNOR, special int rate and tax free status for NRO/NRE account? Other countries don't give such rebates (ex USA). America even taxes its citizens when they live outside.

There is an annual foreign income exclusion of a hefty $127K on earned income for US citizens. I guess USC Desis that R2Ied and working in India use that tax break presumably designed for diplomats stationed overseas.

[nodegree]

It was all silly speculation by the CA community in India. I never believed that it will be removed.

But why have RNOR, special int rate and tax free status for NRO/NRE account? Other countries don't give such rebates (ex USA). America even taxes its citizens when they live outside.

There is an annual foreign income exclusion of a hefty $127K on earned income for US citizens. I guess USC Desis that R2Ied and working in India use that tax break presumably designed for diplomats stationed overseas.

AFAIK Foreign Earned Income Exclusion (FEIE) and Foreign Housing Deduction don't apply to US Govt Employees stationed abroad (like diplomats and state dept officials). It really is designed to relieve tax burden on US Citizens living and working abroad (congress even tied it to inflation in the 80s, decades after being stuck on a fixed amount since the 1920s).