The Income Tax Bill 2025 has several aspects to be considered by the Non-Resident Indians as Clauses replace Sections.
The Income-tax Bill, 2025 has been tabled in Parliament, marking a significant step toward simplifying the language and structure of the Income-tax Act, 1961. No major tax policy changes and no modifications of tax rates have been made in the Income-tax Bill, 2025. Overall, there will be 23 chapters instead of 47, and there will be 536 clauses in place of 819 sections.
The Income Tax Bill 2025 has several aspects to be considered by the Non-Resident Indians (NRIs) as Clauses replace Sections. A non-resident Indian means an individual, who is not a resident and is (i) a citizen of India; or (ii) a person of Indian origin. Here are some key Clauses for NRI’s to take note of.
Clause 5 of the Bill defines the scope of total income for a person who is a resident or a non-resident in India
Clause 60 of the Bill seeks to provide the manner for computation for allowing the deduction of head office expenditure in case of non-residents
Clause 61 of the Bill provides for special provision for the computation of income on a presumptive basis in respect of certain business activities of certain non-resident
Clause 174 of the Bill provides for avoidance of income tax by transactions resulting in the transfer of income to non-residents and also that the income arising from such transaction be deemed to be income
Clause 207 of the Bill provides special rates of taxes for non-residents on certain types of income (like dividends, interest, distributed income, income in respect of units, royalties and fees for technical services).
Clause 209 of the Bill provides for special rates of taxes for non-residents on Global Depository Receipts including income by way of interest, dividend and income on transfer of such Global Depository Receipts.
Clause 211 of the Bill provides for special rates of tax on non-residents sportsmen or sports associations with respect to certain incomes earned in India
Clause 213 of the Bill provides for the method of computing the taxable income for non-resident Indians.
Clause 214 of the Bill provides for the special rates of taxes on investment income and long terms capital gains earned by non-resident Indians.
Clause 215 of the Bill provides for the non-taxation of long term capital gains earned by non-resident Indians, if they make specific investment(s).
Clause 216 of the Bill provides for the exemption from filing of the return of income of non-resident Indians, if certain conditions are satisfied.
Clause 217 of the Bill provides for the optional grandfathering of the taxation of income from investments made by a non-resident Indian if he becomes a resident at a later year.
Clause 306 of the Bill seeks to deal with persons to act as an agent in relation to a non-resident
Clause 422 of the Bill seeks to provide for recovery of tax arrears from a non-resident from his assets
Clause 505 of the Bill provides for submission of statement a non-resident, having a liaison office in India set up as per the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999
The income-tax payable on the total income of a non-resident (not being a company) or a foreign company will be:
On Dividend – 20%
On Dividend received from a unit in an International Financial Services Centre – 10%
On Interest received from Government or an Indian concern on monies borrowed or debt incurred by Government or the Indian concern in foreign currency – 20%
On Interest received from an infrastructure debt fund – 5%
On Income received in respect of units, purchased in foreign currency, of a Mutual Fund specified in Schedule VII – 20%