Watch: New Indian Tax Bill 2025 And Its Impact On NRIs
RNOR status confirmed safe in Tax Bill 2025! Learn the ₹15 Lakh deemed resident rule, ₹10 Lakh foreign asset penalties & 120-day test. Plan your return now.
The full write-up, with the numbers and the links.
Chapters
- 0:00 Introduction
- 4:07 Foreign Assets Reporting
- 5:13 Tax rates for NRIs
Transcript
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0:06 Hey there, welcome back to this return. In today's video, we are going to dive into Indian tax bill 2025, which is still a bill and it's expected to be effective starting April 1st, 2026. Let's dive into the changes in the bill that would directly impact non-resident Indians. Whether you're planning to invest or planning to move back to India or just curious about the new tax landscape, this video is your go-to guide. The Indian tax bill 2025 was slated in February 2025 and its aim to simplify and encourage compliance. So let's dive into the changes that impacts NRIs. First tax residency rules. Great news. The criteria for the tax residency is unchanged with few
1:06 Clarifications. There has been lot of speculation whether RN status might be removed. The bill does not alter tax residency definitions. We still have three tax residency states. non-resident, resident but not ordinary resident and president. Second, also ahead of the bill, there were reports suggesting NRIs who are earning 15 lakhs or more in India while not paying taxes elsewhere would be classified as residents instead of RN. This is a big deal. But however the proposed changes in the bill such individuals will still be classified as RN for a tax purpose and won't be taxed on the global income.
2:05 So let's take an example. Raj who is an Indian citizen working in Dubai where he does not have to pay income tax and earn 17 lakhs in India even though he never visited India. The speculation was that he would be considered as a resident of India and have to pay taxes on the global income. However, with the clarification from the new tax bill, the person would be considered as an RNR because Raj earned more than 15 lakhs and he has not been paying tax elsewhere. So, he would be considered as an RNR and he does not have to pay taxes on the global income but only the taxes for the money earned in India. So now let's understand the clarification part. So a person is considered a resident for tax purpose if the person stay in India for 182 days or
3:05 More during the financial year or the person stays for 60 days or more in a financial year and 365 days in the prior preceding four years. The clarification is if there is an Indian citizen or a person of Indian origin who earns more than 15 lakhs per year in India, they time is extended from 60 days to 120 days. So if they're staying for more than 120 days or more in India and earn more than 15 lakhs of India then they would be considered as deemed residents. So and then they can decide whether it's an RNR or residence based on the different criteria. Please note this 15 lakhs includes sources income from all sources rent dividends capital gains from everything. Now let's talk about foreign
Read the full transcript (5 more sections)
4:07 Asset reporting requirements. The bill does not introduce new provisions for foreign asset reporting but maintain existing requirements under the Indian tax law emphasizing the compliance to avoid penalities. If one becomes a tax resident of India, they are obligated to disclose foreign income, foreign assets as a mandatory. So if you have a foreign bank account and investments whether it's stocks, mutual funds, immovable properties and even financial interest in the foreign entities, you should disclose that when you become a tax resident of India. Failure to report these could lead to penalties such as 10 lakhs fine under lak money act and also potential prosecutions. So please be very mindful about these reporting requirements and comply when you have a
5:08 Foreign income or a foreign assets and disclose that in your tax returns. Next, the tax rates for NRIs.
5:16 The bill specifies the tax rates for various types of NRI income and there are no major changes from the previous rate as per the details in the bill. Let's look at some of the key rates. First dividends other than IFSC center unit and its rate tax rate at 20%. Interest from infrastructure debt fund 5%. Long-term capital gains from securities 1.5% if it exceeds 1 lakh 255,000 threshold. Mutual funds purchased through foreign currency tax at 20%. These rates are consistent with the previous years and ensuring continuity for NRIs.
6:01 So in summary, the new tax bill aims to simplify and encourages more compliance and it also tries to bring something called a unified tax year trying to remove the current terms such as assessment year prior years to bring simplification and clarity. Also the compliance is expected to be easier with less number of sections, chapters and so on and it encourages the compliance. So please work with a tax professional to understand these residency changes, optimize the tax planning and also ensure timely reporting of your foreign assets to avoid penalities. This analysis is based on our current understanding of the bill and final impacts may depend on any changes and the implementation details. We hope if you like this video, please feel free to
7:02 Share, like and provide your feedback in the comment section below. We also have a thriving WhatsApp community where we have people who are interested to return back to India where they can network with other like-minded people, get their questions answered. Feel free to join this WhatsApp community and the link will be in the description below. Thanks and have a great
