Understanding Tax Residency in India

While commonly referred to as non-resident Indians (NRIs), the classification under tax laws is based on the number of days spent in India. Residents are taxed on their global income, whereas non-residents are only taxed on income earned within India.

Proposed Measures for Easier Compliance

Experts suggest introducing measures in Budget 2025 to simplify tax compliance for non-resident taxpayers. Key among these is setting thresholds for obtaining a Tax Residency Certificate (TRC), which is currently required regardless of income size or nature, creating unnecessary hardship.

Relaxing Norms for Form 10F

Current requirements for non-residents to electronically file Form 10F and provide a TRC for the entire financial year pose challenges. Suggestions include allowing previous years' TRCs and providing the current year's TRC at a later date to ease the process.

Easing Procedural Challenges

Non-residents face difficulties in making tax payments and completing the e-verification process due to restrictions on bank accounts and verification methods. Proposals include allowing tax payments from overseas accounts and extending e-verification to foreign mobile numbers and emails.

Addressing Refund Issues

Non-residents, especially foreign nationals, often face delays in receiving tax refunds due to the requirement of pre-validated Indian bank accounts. Suggestions include considering foreign bank accounts for refunds to alleviate these issues.