 "FM proposes separate ITR form for expats")
In a meeting held last Friday, Finance Minister Arun Jaitley proposed that there should be a separate form for expats. “He has called for data and statistics of the number of tax-paying expatriates, who are classified as residents,” said a tax expert in the know of the development.
The separate ITR form for foreign nationals is expected to drop details such as the dates of opening foreign bank accounts. This could give relief to trust settlors, who were asked to reveal the names of beneficiaries and trustees, and the government might list out things that the expat needs to include in the schedule that deals with capital assets. The form is also expected to have annexure for each module to make it simple. This means the taxpayer will need to only tick the relevant schedules and provide details in the following annexure.
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Some of the disclosures in the ITR form, under review at present, increases procedural hassles for expats. For example, those working in the senior management of a company might have bank accounts for 15-20 years. Asking them to get the account opening date can be cumbersome and also unnecessary feel tax experts. Trust settlors could be put under non-disclosure contracts signed back in their country.
“The new document is designed with the intention of making it tough for people to hoard black money abroad and catch offenders. Most expats come to India for two- to five-year period. They naturally have assets and bank accounts back home. They don’t need to be subjected to the same disclosures as citizens here,” said Suresh Surana, founder, RSM Astute Consulting Group.
Foreign nationals working in India are classified as ‘resident and ordinarily resident’ for income tax purpose once they spend a stipulated time in the country. This includes a person continually staying for two years or more (730 days). He will be taxed just like any other citizen, and will need to include the global income. If this condition is not met, the income tax department looks at a stay of 365 days in the country in four financial years or for 730 days in seven years.
Those who don’t qualify for the above norms are classified as ‘resident but not ordinarily resident’. In this case, the person is taxed for income in India only.
Kuldip Kumar, partner and leader (personal tax) at PwC India, said many a times, the wife of a foreign national needs to pay income tax in India after the couple becomes ordinarily residents. “Though she may not be earning here but have income outside India, the spouse is also subjected to income tax.”
Recently, a delegation of India Inc had met the finance minister to express their concerns about the new ITR forms. The delegation included representative of various industry associations such as the Associated Chambers of Commerce of India, Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and PHD Chamber of Commerce and Industry. While they made a strong pitch for simpler income-tax return forms sans any cumbersome disclosures at the review meeting for all citizens, many of them also expressed concern on the disclosures that a foreign national needs to make. Revenue secretary Shaktikanta Das, too, had said the government would reconsider the new ITR forms to make it simple.