By Sajeev K Peter

KUWAIT: New taxation proposals in the 2020 Indian budget, presented by Finance Minister Nirmala Sitharaman, yesterday sent jitters across the Indian expat community in Kuwait, as the government's new taxation proposals seek to bring the vast Indian diaspora under the ambit of an expanding tax net.

According to the new budget proposals, a non-resident Indian (NRI) who is not taxed in a foreign country will become taxable in India. Currently, NRIs are not taxed in India, but the new income tax rules will have serious implications for many NRIs working and living in the Gulf region, which is considered as a tax haven for both citizens and residents.

According to the new budget proposals, an Indian citizen who is not liable to pay tax in any other country or territory shall be deemed to be a resident in India and their worldwide income will be taxed. The amendment will take effect from April 1, 2020 and will accordingly apply to the assessment year 2020-21 and subsequent years. "The new taxation proposal is a matter of serious concern for every Indian expat in the Gulf region. Under the garb of slashing taxes for NRIs, in fact, the minister is bringing them under the ambit of tax net now," said Ashok Mitra, a banking professional in Kuwait.

At the same time, the government has proposed some conditional exemptions to NRIs from filing income tax returns. The minister, in her long budget speech, said the government wanted to amend residency provisions to prevent tax abuse by some NRIs. According to previous provisions, if an Indian spent over 165 days in India a year, they were liable to pay tax in India. Now, this has been reduced to 120 days.

"Instances have come to our notice where the period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year is being misused. Individuals who are actually carrying out substantial economic activities from India manage their period of stay in India so as to remain a non-resident in perpetuity and not be required to declare their global income in India," the document stated.

"The budget is quite disappointing for people like us. We don't know if the new tax rules are really going to affect people from the low-income category in Kuwait. If so, it is quite disturbing news. We need more clarity on the government's proposal before making any further comment," said Abdullah Khaled, a finance company executive.