New Income Tax Bill: NRIs Earning More than ₹15 Lakh in India to be Taxed

The upcoming Income Tax bill is expected to propose some rejigs directly impacting Non-Resident Indians (NRIs).

As per the Economic Times, Non-Resident Indians (NRIs) earning ₹15 lakh or more in India will be classified as ‘residents’ for tax purposes. The move aims to put a lid on tax loopholes and prevent NRIs from misusing their residential status for tax avoidance.

The bill has proposed a revamped framework for determining tax residency for NRIs. An individual will be considered a resident for taxation purposes if they spend at least 182 days in India in a tax year or if they are in India for 60 days or more in a tax year and have collectively stayed in the country for 365 days or more in the preceding four years.

However, Indian citizens who leave India as crew members of an Indian ship or for employment abroad will not be considered under the 60-day rule. Similarly, NRIs visiting India will be exempt from this condition. If similar visitors earn more than ₹15 lakh (excluding foreign-sourced income), the 60-day rule will be extended to 120 days.

Notably, tax laws in India are based on physical presence rather than citizenship. Currently, NRIs are taxed only on income sourced from India, while their global income largely remains untaxed. Previously, several concerns have been brought to light with respect to individuals taking advantage of their NRI status to avoid taxes while earning substantial income in India. The proposed move will curb tax evasion and ensure fair taxation.