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NRIs in the US: Can the India-US tax treaty help you save more on your investments? The taxation landscape for Non-Resident Indians (NRIs) in the US involves navigating complex Indian tax laws and understanding their residential status implications. Section 6 of the Income-tax Act, 1961, classifies individuals as Ordinarily Resident, Not Ordinarily Resident, or Non-Resident (NR) based on specific criteria. For NR taxpayers, Indian taxation is generally limited to income earned or received within the country, such as interest from bank accounts/deposits and dividends from Indian investments like shares and mutual funds. Tax rates vary depending on the Income-tax Act provisions and double taxation avoidance agreements. An individual employed in the US would typically qualify as a Non-Resident in India but a Resident in the US. Interest income from Indian sources is subject to taxation in India at slab rates, potentially reaching 42.744% under the old tax regime. However, the India-US tax treaty offers relief by taxing such income at a lower rate of 15%, providing significant advantages for the taxpayer. To leverage the benefits of the tax treaty, NR taxpayers must obtain a Tax Residency Certificate (TRC) from US tax authorities and file Form 10F for income exemption. Similarly, dividend income from Indian investments may face taxation at 20% in India or 25% under the tax treaty, necessitating careful consideration by the taxpayer. For NRIs holding mutual fund units or shares of Indian companies, dividend income is typically taxed at 20% in India without any Act-provided deductions. However, under the India-US tax treaty, dividends may be subject to a higher tax rate of 25%. Hence, taxpayers may choose to offer dividend income for taxation in India at the local tax rate of 20% if it proves more advantageous. Annual assessment of residential status is crucial for NR taxpayers to ensure accurate income reporting. Forms like AIS and TIS from Indian tax authorities facilitate this process by detailing financial transactions. However, cross-referencing with personal records is essential to prevent errors or omissions in income reporting and mitigate potential queries from tax authorities. Selecting the appropriate Return of Income (ROI) form is equally important for NR taxpayers. Forms like ITR-1 and ITR-4 are unsuitable for those classified as NR under Section 6. Careful consideration of reportable income and assets is necessary, taking into account distinctions from ordinarily resident taxpayers under the Act and relevant tax treaties.

The Income Tax Department has successfully recovered Rs 73,500 crore in pending dues for the financial year 2023-24 up to March 15, according to a report by The Economic Times. This recovery marks a substantial increase compared to the previous financial year’s collection of over Rs 52,000 crore. Of the total recovered amount, corporate tax dues amounted to Rs 56,000 crore, while personal income tax constituted Rs 16,500 crore. Additionally, undisclosed income from foreign assets accounted for Rs 50 crore. This accomplishment comes as part of a focused recovery plan aimed at enhancing the collection of outstanding tax arrears. While providing year-wise details of outstanding dues is challenging, the collection has seen a notable increase. It averaged eight per cent of the annual outstanding until 2021-22, rose to 10.78 per cent in 2022-23, and has reached approximately 17 per cent in the current financial year. Pending tax arrears, which surpassed Rs 21.94 trillion as of January 31, 2023, from Rs 15 trillion in April 2021, have been a primary concern for the tax department. Efforts are underway to update the database to ensure accuracy, particularly in cases where taxes were paid but not reflected in the system. These actions align with the department’s commitment to enhancing taxpayer services and maintaining the integrity of the taxation regime. In an interview with PTI ahead of the Interim Budget 2024-25, Revenue Secretary Sanjay Malhotra highlighted the continuity in the taxation regime. He noted the substantial buoyancy in personal income tax, attributing it to the benefits provided to taxpayers in recent years. Malhotra emphasised the government’s commitment to improving taxpayer services, focusing on rationalisation, simplification, and trust-based taxation. Addressing the non-extension of the concessional tax regime for corporates beyond March 31, 2024, he clarified that companies were given ample time to avail of the benefits and that the existing taxation rate of 22 per cent for corporates is reasonable considering the size of the economy. “In light of these factors, it was decided that the concessional tax regime should sunset as planned,” Malhotra concluded. First Published: <!-- -->Mar 19 2024 | 9:47 AM<!-- --> <!-- -->IST Source link

New Tax Regime in India 2024 The financial year 2024-25 in India has seen some significant changes in the income tax regime. The Ministry of Finance has clarified that there is no new change in the tax regime from April 1, 2024. The new tax regime under section 115BAC (1A) was introduced in the Finance Act 2023. Key Changes in the Tax Slabs The revised tax slab applies to the new tax regime. The changes from April 1, 2024, are highlighted below: ₹0 to ₹3,00,000: 0% ₹3,00,001 to ₹6,00,000: 5% ₹6,00,001 to ₹9,00,000: 10% ₹9,00,001 to ₹12,00,000: 15% ₹12,00,001 to ₹15,00,001: 20% Above ₹15,00,000: 30% Advantages of the New Tax Regime The new tax regime offers several advantages to taxpayers: Taxpayers need not maintain a track record of travel tickets and rent receipts The income tax rule changes aim to simplify tax planning. The basic exemption limit has been elevated from Rs.2.5 lakhs to Rs.3 lakhs. The highest tax rate, i.e., 30%, will be imposed on income exceeding Rs.15 lakhs. Changes in the Surcharge Rate The implementation of the new tax regime leads to a reduction in the surcharge rate from 37% to 25%. This is applicable for individuals with income exceeding Rs.5 Crores. Change in the Rebate Limit The introduction of the new tax regime has increased the rebate limit. As per the old tax regime, the applicable rebate limit is Rs.12,500 for incomes up to Rs.5 lakhs. However, under the new tax regime, this rebate limit has increased to Rs.25,000 if the taxable income is less than or equal to Rs.7 lakhs. In conclusion, the new tax regime in India for the financial year 2024-25 aims to simplify the tax system and provide relief to taxpayers. It is important for taxpayers to understand these changes and plan their taxes accordingly.

I-T Dept’s faceless tax assessment facility enabling faster grievance redressal: FM The Central Processing Center is located in Bengaluru, which drives the faceless assessment of the income tax system in the entire country The faceless tax assessment facility of the Income Tax Department is resulting in faster redressal of taxpayers’ grievances, which is a big step towards ease of doing business, finance minister Nirmala Sitharaman said on Wednesday. “The faceless assessment system was brought in so that discretion of an officer does not impact taxpayers. Taxpayers have found great relief and the redressal of grievances is faster. It’s a very big step in ease of doing business and taxpayer convenience,” Sitharaman said at the foundation stone laying ceremony of the Central Board of Direct Taxes (CBDT) residential quarters building in Bengaluru. The Faceless Assessment Scheme was introduced by the Government of India to facilitate digital processing of income tax returns without any physical interface between the taxpayer and the tax officer. Under this scheme, the Central Board of Direct Taxes (CBDT) established the Faceless Assessment Scheme for Income Tax. This scheme aims to promote transparency, efficiency, and accountability in the assessment process while reducing taxpayer grievances and corruption. The grievance redressal mechanism aims to provide taxpayers with accessible and timely solutions to their concerns, thereby enhancing trust and compliance in the taxation system. The Central Processing Center (CPC) is a key component of this scheme. It operates as the digital hub for processing income tax returns and conducting assessments in a faceless manner. https://lnkd.in/g69BcXxa

Income Tax rules introduced in 2023 that will impact you this year-- Revised Tax Slab: To make the new tax regime more attractive, adjustments were made to the income tax slabs within this framework. No tax on income up to Rs 3 lakh 5% for income between Rs 3 lakh and Rs 6 lakh 10% for income from Rs 6 lakh to Rs 9 lakh 15% for income from Rs 9 lakh to Rs 12 lakh 20% for income from Rs 12 lakh to Rs 15 lakh 30% for income exceeding Rs 15 lakh Tax exemption limit in the new tax regime: The tax exemption limit has been increased in the new tax regime. People adopting the new tax system will get tax exemption on income of up to Rs 3 lakh, which till now was available only up to Rs 2.5 lakh. That means tax exemption on additional Rs 50 thousand will be available from this year. New tax regime becomes default: The new tax regime has been made the default regime. That is, while filing an ITR, it will by default show the new tax regime. If you want to go with the old tax system, you will have to select it manually. Increase in tax rebate: Under Section 87A of the Income Tax Act, the rebate limit has been increased from Rs 12,500 to Rs 25,000 in the new tax regime. Standard deduction of Rs 50 thousand: Till last year, employees and pensioners paying income tax used to get tax deductions of Rs 50 thousand only under the old tax system. From this year, employees and pensioners who choose the new tax regime will also get a standard deduction of Rs 50 thousand

#Taxsystem #india 🔶The tax system in India underwent changes in the Budget 2023 to make it more attractive for individuals. 🔶The new income tax regime for FY 2023-24 (AY 2024-25) has been simplified, and there are now five income tax slabs under the new tax regime. 🔶The basic exemption limit has been increased to Rs. 3 lakh from the previous Rs. 2.5 lakh, and the rebate under Section 87A has been enhanced to Rs. 7 lakh from the previous Rs. 5 lakh. Under the new income tax regime, the income tax slabs are as follows: ▶Up to Rs. 3 lakh - 0% tax rate ▶Rs. 3 lakh to Rs. 6 lakh - 5% ▶Rs. 6 lakh to Rs. 9 lakh - 10% ▶Rs. 9 lakh to Rs. 12 lakh - 15% ▶Rs. 12 lakh to Rs. 15 lakh - 20% ▶Above Rs. 15 lakh - 30% 🔘Individuals with an income up to Rs. 7 lakh in the new tax regime will not pay any taxes due to the tax rebate under Section 87A. 🔘Additionally, the new tax regime becomes the default option, but individuals have the option to continue with the old income tax regime if they prefer. 🔘The surcharge for the highest income tax rate has been reduced from 37% to 25% under the new tax regime. 🔘For income earned in the FY 2023-24 (April 1, 2023, to March 31, 2024), the new income tax slabs apply. However, for income tax return filing for FY 2022-23 (AY 2023-24), the old income tax slabs under the new tax regime will be applicable. 🔘 The old tax regime, which was applicable till FY 2022-23, allowed individuals to claim various tax deductions and exemptions, including HRA, LTA, and deductions under Section 80C. However, under the new tax regime, individuals forego these deductions and exemptions but get reduced tax rates. For individuals above the age of 60, the income tax slabs differ under the old tax regime, with specific exemption limits based on their age. However, the new tax regime applies the same tax rates for all age groups. The surcharge rates for FY 2023-24 are as follows: ◼10% of Income Tax for income above Rs. 50 lakh ◼15% of Income Tax for income above Rs. 1 crore ◼25% of Income Tax for income above Rs. 2 crore ◼37% of Income Tax for income above Rs. 5 crore 🔘It is important to note that the surcharge is not levied for certain specific types of income, and the maximum rate of surcharge is capped at 15% for relevant cases. Overall, the tax system in India has undergone significant changes to simplify and streamline the income tax slabs and rates, providing more options for taxpayers to choose between the old and new tax regimes based on their financial preferences and situations. Disclaimer: It is general info Source credited: Respective author if you like further more content like this comment "yes" #incometax #tax #indiantax #gst

#Taxsystem #india The tax system in India underwent changes in the Budget 2023 to make it more attractive for individuals. The new income tax regime for FY 2023-24 (AY 2024-25) has been simplified, and there are now five income tax slabs under the new tax regime. The basic exemption limit has been increased to Rs. 3 lakh from the previous Rs. 2.5 lakh, and the rebate under Section 87A has been enhanced to Rs. 7 lakh from the previous Rs. 5 lakh. Under the new income tax regime, the income tax slabs are as follows: Up to Rs. 3 lakh - 0% tax rate Rs. 3 lakh to Rs. 6 lakh - 5% Rs. 6 lakh to Rs. 9 lakh - 10% Rs. 9 lakh to Rs. 12 lakh - 15% Rs. 12 lakh to Rs. 15 lakh - 20% Above Rs. 15 lakh - 30% Individuals with an income up to Rs. 7 lakh in the new tax regime will not pay any taxes due to the tax rebate under Section 87A. Additionally, the new tax regime becomes the default option, but individuals have the option to continue with the old income tax regime if they prefer. The surcharge for the highest income tax rate has been reduced from 37% to 25% under the new tax regime. For income earned in the FY 2023-24 (April 1, 2023, to March 31, 2024), the new income tax slabs apply. However, for income tax return filing for FY 2022-23 (AY 2023-24), the old income tax slabs under the new tax regime will be applicable. The old tax regime, which was applicable till FY 2022-23, allowed individuals to claim various tax deductions and exemptions, including HRA, LTA, and deductions under Section 80C. However, under the new tax regime, individuals forego these deductions and exemptions but get reduced tax rates. For individuals above the age of 60, the income tax slabs differ under the old tax regime, with specific exemption limits based on their age. However, the new tax regime applies the same tax rates for all age groups. The surcharge rates for FY 2023-24 are as follows: 10% of Income Tax for income above Rs. 50 lakh 15% of Income Tax for income above Rs. 1 crore 25% of Income Tax for income above Rs. 2 crore 37% of Income Tax for income above Rs. 5 crore It is important to note that the surcharge is not levied for certain specific types of income, and the maximum rate of surcharge is capped at 15% for relevant cases. Overall, the tax system in India has undergone significant changes to simplify and streamline the income tax slabs and rates, providing more options for taxpayers to choose between the old and new tax regimes based on their financial preferences and situations. Please note: It is general info Source credited: Respective author #incometax #tax #indiantax #gst

Tax-free perks under New Tax Regime 🧐 New Tax Regime Benefits: On April 1, 2020 (FY 2020-21), the Government of India introduced a new optional tax rate scheme for individuals and HUF. Section 115 BAC was added to the Income Tax Act of 1961. The New Tax Regime mandates lower tax rates for individual taxpayers and HUFs who do not claim certain tax deductions or exemptions available in the old regime. Based on amendments proposed in Union Budget 2023, the new tax regime has become the default regime. This means taxpayers have to opt for the old tax regime if they wish to utilise its benefits. If they don’t opt for the old regime, the new regime will apply by default. However, those who opt for the new regime cannot claim different exemptions and deductions such as HRA, LTA, 80C, 80D and so on. Under the new tax regime, there have been several changes to income tax slabs, deductions and exemptions. Let’s explore some key points: Check out my latest post 👇 https://lnkd.in/dR3a2Ent

NEW TAX REGIME 1️⃣.The income tax laws under the new tax regime were revised with effect from April 1, 2023, and have been kept unchanged for the current FY, 2024–25 (April 1, 2024–March 31, 2025). 2️⃣.In Budget 2023, a tax rebate on an income up to ₹7 lakhs was introduced under the new tax regime. This means that taxpayers with an income of up to ₹7 lakhs will not have to pay any tax at all if they opt for the new tax regime. 3️⃣.Also, a Rs 50,000 standard deduction was introduced under the new tax regime. Therefore, a taxpayer with an income up to Rs 7.5 lakh will pay zero tax if he opts for the ok tax regime. 4️⃣.In the 2023–24 budget announcement, the rebate under Section 87A has been hiked to Rs. 25000 for taxable income up to Rs. 7 lakh under the new tax regime. 5️⃣.The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh to make the new tax regime more attractive. Also, the highest tax rate of 30% will be levied above Rs 15 lakh income. 6️⃣.The new tax regime offers lower tax rates and fewer deductions. This eliminates the need to invest in tax-saving schemes and insurance plans, which may not align with your financial goals. 7️⃣.Reduction in the surcharge on annual income above Rs 5 crore from 37% to 25% under the new regime. Currently, the highest tax rate is 42.74%, which would slash the maximum tax rate to 39% after this reduction. 8️⃣.Implementing a new tax regime requires careful planning, stakeholder consultations, and effective communication to ensure a smooth transition and compliance. 9️⃣.Governments typically engage with taxpayers, businesses, and other stakeholders to gather feedback and address concerns before finalizing and implementing the new tax rules.

TAX IN INDIA To run a nation judiciously, the government needs to collect tax from the eligible citizens; What is Tax and its Types? A tax is a mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure Types of Taxes Direct Tax Eg.The general examples of this type of tax in India are Income Tax and Wealth Tax Indirect Tax The indirect tax payment is received by the government from the seller of goods/services Recent Reforms in Taxes In the year 2017, the government introduced the Goods and Services Tax (GST) which is considered the most revolutionary tax reform in independent India to date After the introduction of GST, a higher percentage of assessees was brought under the taxation umbrella and it took a toll on evaders as escaping from paying taxes became tougher What is Income Tax? The most common type of tax that eligible citizens have to pay to the government Income Tax Assessee Any individual who is liable to file taxes and fall in the payable income tax slab is an income tax assessee. An individual who is having a regular income is exempted from paying tax if his/her included annual income is below the threshold level determined by the government from time to time or income from exempted sources such as agriculture Tax Slab Rates 1. Up to Rs. 3,00,000 NIL 2. Rs. 300,000 to Rs. 6,00,000 5% on income which exceeds Rs 3,00,000 3. Rs. 6,00,000 to Rs. 900,000 Rs 15,000 + 10% on income more than Rs 6,00,000 4. Rs. 9,00,000 to Rs. 12,00,000 Rs 45,000 + 15% on income more than Rs 9,00,000 5. Rs. 12,00,000 to Rs. 1500,000 Rs 90,000 + 20% on income more than Rs 12,00,000 6. Above Rs. 15,00,000 Rs 150,000 + 30% on income more than Rs 15,00,000 Income Tax Deductions such as ELSS, Mutual Funds, PPF, EPF, tax saver fixed deposits, and others that can be used to reduce the income tax payable by the individual. Tax Deducted at Source short for Tax Deducted at Source is considered one of the most common ways of deducting tax by the government from any salaried individual. Other cases of TDS can be seen in the case of interest provided on fixed deposits. However, in this case, also, the tax assessee can get a refund after filing the Income Tax Return (ITR). Tax Evasion Laws and Implications Various acts related to taxation have been framed by the Government of India and every citizen is liable to comply with these rules, failing which strict actions may be taken against them. Some of the sections of the taxation laws and penalties imposed for non-compliance are: Section 140A (1): Section 271 (C): Section 142 (1) and 143 (2) Paying taxes is an integral part of all the citizens’ life and it helps in the upliftment of every section of the country by providing proper services and provisions