NRI tax time bomb to blast after September 30

Muscut : September 30 is the deadline for non-resident Indians (NRIs) to declare their Indian assets, ahead of new rules aimed at targeting black money.

After September 30, non-resident Indians will have to pay tax on income generated in India.

The new Income Declaration Scheme (IDS) 2016, states that each NRI has to verify the sources of income for all investments made in India.

“If the source is not clear, NRI may come under the purview of Income Tax Act. If the NRI cannot link the source of investment, it will be considered as undisclosed income and return to be filed under Income Declaration Scheme (IDS) 2016,” the report added.

The IDS scheme 2016, launched by India’s Income Tax Department, provides an opportunity to citizens who have not paid full taxes in the past to come forward and declare undisclosed income and pay surcharges and a penalty.

Jose Chacko, an Indian financial expert in Muscat, said the Indian government aims to widen its tax base which will eventually lead to more social spend or even lower tax rates in future.

“As advertised by the Income Tax Department, “The undisclosed income is a time bomb. Defuse the tension. Declare your undisclosed income under Income Declaration Scheme 2016. Declaration should be made before September 30, 2016 in Form No.1. Tax, surcharge and penalty have to be paid by November 30, 2016,” Jose added.

The declarant has to pay 45 per cent as tax on undisclosed income. This consists of tax at the rate of 30 per cent and surcharge at the rate of 7.5 per cent and penalty at the rate of 7.5 per cent of undisclosed income.

“Benefits of declaration includes no wealth tax on assets declared, no scrutiny or enquiry under Income Tax Act or Wealth Tax Act on the declaration, immunity from prosecution under Income Tax Act and Wealth Tax Act on the declaration.” Jose said.