Only days spent in India to decide NRI tax status: ITAT

Only days spent in India to decide NRI tax status: ITAT 

16.03.2025

Mumbai : Mumbai Income Tax Appellate Tribunal (ITAT) has ruled in favour of an individual who claimed his tax residential status to be that of a ‘non-resident’ as he had spent 210 days on work abroad, reports Lubna Kably. 

As India does not tax overseas income in the hands of a non-resident, M Gulati did not disclose his overseas income of Rs 1.2 crore for FY 2015-16. He contended he had spent less than 182 days in India and was a non-resident. But I-T claimed that of the 210 days, he’d spent 28 days looking for work, and hence a tax resident of India. ITAT made it clear an individual’s tax residential status must be determined solely by the number of days spent in India. 

The ITAT rejected the contention of I-T dept, which had recomputed Gulati’s stay outside India as it partly comprised of days spent jobhunting. ITAT order provides clarity on the tax treatment of individuals who split their time between employment and job search abroad. It reinforces that any period spent outside India for employment or in search of job should be counted towards non-resident status determination. The decision will benefit expatriates who go overseas in search of a job and gain employment. 

A person who is a tax resident of India has to pay tax on his global income. A nonresident does not pay tax in India on his/her overseas income but only on income that accrues or arises in India (eg: rent from property in India, bank interest, etc). Number of days stayed in India determines tax residency. 

Under provisions of I-T Act, viz: Explanation 1 to Section 6(1), if an individual leaves India for ‘purpose of employment’ overseas, he/ she will qualify as a tax resident only if stay ‘in India’ is for 182 days or more in a year. From FY 2020-21, the period was reduced to 120 days or more for individuals whose income (other than foreign sources) exceeds Rs 15 lakh. The I-T officer noted Gulati had spent 210 days outside India in the relevant AY (2016-17), of which 28 days were in search of job. 

He held that only days of actual employment could be considered. Thus, based on a revised calculation, he held that Gulati had spent more than 182 days in India and was hence a tax resident. Consequently, the overseas salary of Rs 86.2 lakh and interest income of Rs 2.8 lakh would be taxable in India. The Appellate Commissioner upheld the stand of the I-T officer by holding that during the 28-day period, the taxpayer had not received any salary and the adjustment in days was correctly made. However, ITAT relying on judicial precedents disagreed and overruled the I-T department’s stand. The tax tribunal held seeking employment abroad also qualifies as a legitimate purpose under Explanation 1 to section

Old vs new tax regime: Which is better for you? A comparison after Union Budget 2025

Old vs new tax regime: Which is better for you? A comparison after Union Budget 2025

By HT News Desk

Feb 03, 2025 01:55 AM IST

Under the proposed Union Budget 2025, a ₹60,000 rebate applies to incomes up to ₹12 lakh, enhancing the attractiveness of the new tax regime.

Old vs new tax regime: The income tax slabs proposed in the Union Budget 2025 under the new tax regime include a ₹60,000 rebate for income up to ₹12 lakh

( ₹12.75 lakh for salaried individuals) under Section 87A.Budget 2025 offers ₹60,000 rebate for incomes up to ₹12 lakh under new tax regime. (Representational image)(REUTERS)

This makes the old tax regime, which has 5 per cent, 20 per cent, and 30 per cent slabs and allows deductions for tax-saving investments, less attractive in comparison.

Big Tax Relief in Budget 2025: No Tax for Incomes Up to ₹12 Lakh! 👉 Explore the Impact!

According to a report by The Times of India, the finance ministry has consistently supported the idea of separating investment and savings schemes from income tax liabilities, allowing taxpayers to make independent choices based on their own benefits.

The new tax regime offers more benefits than the old one for incomes up to ₹12 lakh ( ₹12.75 lakh for salaried individuals), even when utilising the full deductions and exemptions of ₹5,75,000 and 30 per cent of salary as house rent allowance.

However, it’s unlikely for someone earning ₹12.75 lakh to invest in tax-saving schemes, claim house rent allowance ( ₹3,82,500), and take the standard deduction, adding up to ₹9,57,000, The Economic Times reported.

Know details of differences between old and new tax regimes:The new tax regime results in higher taxes after ₹12 lakh income. Staying with the old tax regime is beneficial only if the taxpayer invests ₹5.25 lakh in tax-saving schemes.

For people earning ₹13.75 lakh without HRA, the old tax system has a lower tax of ₹57,500 compared to ₹75,000 under the new system. This is also true for income up to ₹15.75 lakh, but it requires investing ₹5.25 lakh in savings schemes. Even with HRA, the old system is better.

For people earning ₹20 lakh ( ₹20.75 lakh for salaried ones), the new tax regime is better than the old one. Even after investing ₹5.25 lakh in savings schemes, the old system would require ₹2.4 lakh in tax, while the new system would only require ₹2 lakh, with no deductions allowed.

Quoting experts, The Financial Express reported that for people earning above ₹24.75 lakh, the new tax regime is beneficial only if their total deductions and exemptions excluding the standard deduction are under ₹8 lakh.

Under the new tax regime, a taxpayer with an income of ₹24 lakh will save ₹60,000. In the old regime, after investing ₹5.25 lakh in savings schemes, the tax would be ₹3.60 lakh, compared to ₹3 lakh under the new regime.

Budget gives broadband boost to edu spectrum

 Budget gives broadband boost to edu spectrum 

TEAM TOI 02.02.2025

Finance minister Nirmala Sitharaman announced a significant increase in allocation for the education sector, focusing on last-mile broadband connectivity in rural schools that were worst hit by insufficient internet coverage during Covid. Infrastructure expansion for IITs, medical education and AI in learning were also among the Budget highlights. 

The digital push is expected to boost broadband connectivity at all govt secondary schools and primary health centres in rural areas. Five of the newer IITs — in Jammu, Bhilai, Dharwad, Palakkad and Tirupati — would be expanded to accommodate 6,500 more students over the next five years. And, ahead of the Bihar assembly polls scheduled later this year, IIT-Patna is set to receive funds for enhanced infrastructure, including hostels.

 “The total number of students in 23 IITs has doubled in the past decade from 65,000 to 1.4 lakh,” said FM Sitharaman. The IIT budget has increased to Rs 11,349 crore from Rs 10,467 crore. To strengthen research, 10,000 fellowships for technology research in IITs and IISc will be provided over five years. Five national centres for excellence (CoEs) in skilling will also be set up, along with 50,000 Atal Tinkering Labs in govt schools to pro mote scientific curiosity. A CoE in AI for education will also be established with a Rs 500-crore outlay. Sitharaman said the edu cation ministry will get Rs 1.3 lakh crore, up from Rs 1.1 lakh crore in 2024-25. Of this, Rs 50,067 crore is for higher education and Rs 78,572 crore for school education. Education minister Dharmendra Pradhan called the Budget a “leapfrogging moment” for the sector.

“With poor, youth, farmers and women as the pillars, this Budget will accelerate spending, spur growth and nurture research, innovation, entrepreneurship,” he said. While allocations for UGC, NCERT and IIMs have increased, funding for IISERs and World Class Institutions has seen cuts.

FM charitable to trusts; registration tenure is doubled

FM charitable to trusts; registration tenure is doubled 

TEAM TOI 02.02.2025

For the first time in years, the Budget provisions have made life easier for charitable trusts and institutions. For instance, the period of validity of registration of a trust (registration is essential to claim tax exemption) has been extended from the current five years to 10 years. However, this applies only to smaller trusts with income below Rs 5 crore. Second, minor errors in the registration application will not result in deregistration of the trust. This is a significant development as deregistration meant that the fair market value of the assets of a trust becomes chargeable to tax. In Metro cities, trusts such as those engaged in education or medical have significant assets like land or buildings, and an ‘exit tax’ on deregistration was suicidal. 

But reading between the lines is crucial. Gautam Nayak, tax partner at CNK & Associates, states, “When trusts have income (before exemption) of less than Rs 5 crore in each of the two years preceding the year of making application for renewal, registration will be granted for 10 years. This will apply to cases where application is made after March 31, 2025, and will not apply to provisional registration of new trusts, where registration is granted for 3 years. Small trusts whose approval was valid till Mar 31, 2026, will still have to make an application for renewal by Sept 30, 2025, but the renewal granted to them will then be for 10 years.” He adds that trusts would have to reapply every five years for approval under 80G. Only if the trust is approved can donors get a tax benefit (albeit under the old regime). “The reason for cancellation of a registration by the commissioner would now only be in a case of false or incorrect information – the mere fact that the application was incomplete cannot be a ground for cancellation (which has significant adverse consequences of a heavy tax liability on the fair market value of assets of the trust),” adds Nayak.

Currently, a benefit provided to ‘specified persons’ by charitable trusts can result in loss of exemption to the extent of the benefit provided. The list of specified persons included a substantial contributor (a person who had made aggregate donations of more than Rs 50,000 

since the inception of the trust), his relatives and concerns in which he held a substantial interest. “This ridiculously low limit of Rs 50,000 had remained unchanged for 40 years since 1985, and trusts found it impossible to identify or obtain details of such donors, their relatives and concerns. The limit is now being changed to Rs 1 lakh for donations during the year, or aggregate of Rs 10 lakh since inception. Further, relatives or concerns of such donors are excluded from the list of specified persons. While this will provide much-needed relief to trusts in maintaining records, the retention of period of aggregation of donations from inception of the trust will still be problematic for trusts which are several decades old,” concludes Nayak

In nil-tax bracket? Why a raise won’t help you much

In nil-tax bracket? Why a raise won’t help you much 

TEAM TOI 02.02.2025 

The Budget announcement that an annual income of Rs 12 lakh will not be taxed has been met with cheer. For salaried employees, this nil tax limit will be Rs 12.75 lakh per annum, after taking into account standard deduction of Rs 75,000. 

But what if there is an increment around the corner for your fine performance at work that pushes you into a higher tax slab? 

Suppose, your boss gives you a 10% hike on Rs 12.75 lakh, to, say, about Rs 14 lakh a year? 

The tax department could then take away Rs 82,000. This would leave you with Rs 13.18 lakh in hand — still a small hike, but nothing to jump about. If your bosses are even more impressed (you might want to pray they are not) and you get a 20% hike on Rs 12.75 lakh, to, say, about Rs 15.3 lakh, this could mean that you might be shelling out tax of about Rs 1.02 lakh, leaving you a less exciting Rs 14.27 lakh in hand. This could mean you could end up with less in the pocket than you first thought.

Nirmala Bats For Middle Order To Revive India’s Spend Force

Nirmala Bats For Middle Order To Revive India’s Spend Force 

Zero-Tax Party For Those In ₹12-Lakh Slab, Gain-Changing Relief Cheers Others Too

TEAM TOI On Budget-eve, PM Modi invoked Goddess Lakshmi, and a day later, Indian taxpayers got a Diwali bonus in Feb. With Finance Minister Nirmala Sitharaman announcing revised tax slabs and rates under the new regime, the biggest bonanza is for those whose income is up to Rs 12 lakh (Rs 12.75 lakh for salaried taxpayers as they get a standard deduction of Rs 75,000) as their liability will become nil under the new proposed income tax regime.

However, income such as capital gains are excluded and will be taxed at separate short and long-term rates. So how did the FM reach this magic zero-tax figure? 

This was thanks to an increase in tax rebate to Rs 60,000 from the present level of Rs 25,000. Under the new regime, the tax liability on income of Rs 12 lakh and Rs 12.75 lakh for salaried persons is Rs 60,000 which is waived off due to rebate of up to Rs 60,000. Ergo, nil tax. But what if you earn more than Rs 12 lakh? If your taxable income is even a rupee more, you will not get the benefit of rebate but will have to pay taxes as per slab rates un der the new tax regime. But because of a rejig of tax slabs and standard deduction of Rs 75,000 under the new regime, everyone stands to gain. As per the rejig, for people earning over Rs 12 lakh per annum, there will be nil tax for income up to Rs 4 lakh, 5 per cent for income between Rs 4 and 8 lakh, 10 per cent for Rs 8-12 lakh, and 15 per cent for Rs 12-16 lakh. A 20% income-tax will be levied on income between 16 and 20 lakh, 25 per cent on 20-24 lakh and 30 per cent above 24 lakh per annum. How much you save will depend on your income level (see chart). The maximum benefit of Rs 1.1 lakh will accrue at an income level of Rs 24 lakh, where the tax liability under the proposed scheme would be Rs 3 lakh as against Rs 4.1 under the existing new scheme. Beyond the income level of Rs 24 lakh, the tax rates remained unchanged at 30%, so the benefit will remain at Rs 1.1 lakh. Earlier, the limit of income for nil tax payment was Rs 7 lakh.

By increasing this limit to Rs 12 lakh, around 1 crore as-sessees who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000 will be now paying nil tax. The provision will cost the exchequer revenue loss of Rs 1 lakh crore. 

For those under the old regime — used usually by those who have home loans or HRA deductions — there is no change in either rates or slabs. To come back to a point that often causes confusion, what happens to those with taxable incomes of just over Rs 12 lakh? In such cases, the taxpayer will get marginal relief to ensure that those earning just over Rs 12 lakh don't end up with post-tax incomes lower than those earning Rs 12 lakh. For instance, an individual has a taxable income of Rs 12.10 lakh. Without marginal relief, their tax liability would be 61,500 calculated as per tax slabs. However, with marginal relief in place, this taxpayer owes just 10,000. But there’s a cap — marginal relief is only admissible for incomes up to approximately 12.75 lakh. Beyond this, regular tax slabs apply.

90,000 salaried individuals withdraw Rs 1,070 cr worth wrongful tax deduction claims

90,000 salaried individuals withdraw Rs 1,070 cr worth wrongful tax deduction claims 

ECONOMIC TIMES PTI 16.01.2025

Around 90,000 employees from PSUs and private sectors have withdrawn false tax deductions claims amounting to Rs 1,070 crore as of December 31, 2024, due to incorrect ITR lings. After investigations, the Income Tax Department discovered widespread mismatches in claimed deductions. Outreach programs are being launched to promote voluntary tax compliance and awareness among employers.

 As many as 90,000 salaried individuals, both from PSUs and the private sector, have withdrawn wrongful tax deductions claims totalling Rs 1,070 crore as of December 31, 2024, government sources said on Thursday. During various search & seizure and survey operations conducted by Income Ta Department, it has come to notice that various individuals are claiming incorrect deductions, under sections 80C, 80D, 80E, 80G, 80GGB, 80GGC, in their ITRs, leading to reduction of tax payable to the government. During investigation, it was revealed that such individuals are employees of organisations operating in diverse fields including PSUs, big corporations, MNCs, LLPs, Private Ltd Companies, etc, sources said. Also, most of them who claimed wrongful deductions were working in the same company.

Analysis of the information with the department showed that there is a vast mismatch between total deductions under section 80GGB/80GGC claimed by taxpayers in their ITRs as against the total receipts shown by the donees in their ITRs. Similarly, deductions claimed under sections 80C, 80E, 80G also appear to be suspicious in nature, sources said. 

They said, a list of common employers (TDS deductors) has been identied and tax department would be reaching out to as many persons as possible who are suspected to have claimed bogus deductions under section 80E, 80G, 80GGA, 80GGC and other deductions. "Further, verication has revealed that certain unscrupulous elements have misguided taxpayers for claim of incorrect

Sources said the department has been conducting outreach programmes with employers to spread awareness about the consequences of claiming incorrect deductions in the ITRs and corrective measures which can be taken by the taxpayers to rectify the errors of omission or commission. 

"Till 31st December, 2024, approximately 90,000 taxpayers have withdrawn incorrect claim of deductions amounting to Rs 1,070 crore approx in their ITRs and have paid additional taxes," a source said. 

As per the provisions of Income-ta Act, 1961, taxpayers can file updated returns on payment of some additional tax rectifying the errors within two years from the end of the relevant assessment year, for AY 2022-23 to 2024-25. In order to intensify the eorts of the department of promoting voluntary ta compliance and reducing litigation, outreach programme with employers is being launched, sources added.

No need to apply, you will get eversion of PAN in mail ID PAN 2.0

No need to apply, you will get eversion of PAN in mail ID PAN 2.0 

TIMES NEWS NETWORK 27.11.2024

New Delhi : Your existing PAN card will remain valid under PAN 2.0 project and you will automatically receive an electronic version of the card in your mail ID, without having to apply for it. Those seeking a physical card, however, will have to apply and pay Rs 50 for it if they live within the country, the tax department said on Tuesday.

 “If existing PAN holders want to make any correction/updation of their existing PAN details such as email, mobile or address or demographic details such as name, date of birth etc, they can do so at free of cost after the PAN 2.0 Project commences. Till the time the PAN 2.0 project is rolledout, the PAN holders can avail the Aadhaar based online facility for updation/correction of email, mobile and address free-of-cost,” the Central Board of Direct taxes said in a set of FAQs released a day after the cabinet committee on economic affairs (CCEA) cleared a Rs 1,400 crore project. 

The department also said QR codes will be part of the project, but the feature has already been rolled out, which helps in validating PAN and other details. The upgradation project will also see all PAN and TAN related services, currently hosted on three different portals (e-filing portal, UTIITSL and Protean e Gov), move to the income tax department portal and will provide end-toend services — from application to allotment, online validation, linking with Aadhaar and updation. The entire process will be paperless, CBDT said. In line with the Budget 2023 announcement, govt has decided to make PAN the “common business identifier” for all digital systems of specified govt agencies. Although it is illegal to have more than one PAN, there are several entities and individuals, who violate the law and govt is hoping that once the project is rolled out, it will be easier to check such instances. Currently there is a database of 78 crore PANs and 73.3 lakh TANs in the country.

Allowances you can claim under new tax regime to reduce your taxable income

 Allowances you can claim under new tax regime to reduce your taxable income

Under the new income tax regime in India, several tax-free allowances can be claimed to reduce your taxable income. Here's a breakdown of some key allowances:

Submitting Form 12BB to your employer on time can significantly reduce TDS for the majority of the year. Photo: Shutterstock

Sunainaa ChadhaNEW DELHI

3 min read Last Updated : Mar 19 2024 | 11:02 AM IST

The government introduced the new tax regime to streamline the process of filing taxes, aiming to make it more straightforward for taxpayers. The main goal was to simplify the tax filing experience by eliminating the need for taxpayers to navigate through numerous deductions and exemptions to decrease their taxable income. Instead, the focus shifted to offering reduced tax rates. In this overhaul, deductions for expenses such as rent, travel, medical, certain allowances, and interest on loans for self-occupied properties were scaled back. Nonetheless, even under this new system, taxpayers have the ability to claim certain exemptions:
 Here's a breakdown of some key allowances as per Shilpi Jain, Partner, Ved Jain and Associates*

Standard Deduction: This replaces several deductions previously available under the old regime. In the new regime, a standard deduction of Rs. 50,000 is offered to all taxpayers, regardless of their income level.

Retirement Benefits: Both gratuity and leave encashment received upon retirement remain non-taxable.

Employer Contributions to NPS/PF: Contributions made by the employer towards NPS (National Pension System) or PF (Provident Fund) are not taxed under the new regime. While the old regime allowed tax exemptions on employee contributions under Section 80C, these are not deductible under the new system.

 Long-Term Capital Gains (LTCG): Taxpayers can still avail themselves of the deduction on long-term capital gains from the sale of equity shares or equity-oriented mutual funds, up to a limit of Rs 1 lakh, under the new regime.

Jain explains this with the following example:

Annual Salary: Rs 8,00,000
Employer's Contribution to NPS: Rs 40,000
Gratuity Received on Retirement: Rs 2,00,000
Leave Encashment on Retirement:Rs 1,50,000
Long-Term Capital Gains from Equity Shares: Rs 1,20,000
Total Income earned : Rs 13,10,000
Deductions from this income
Standard Deduction : Rs 50,000
Gratuity : Rs 2,00,000
Leave Encashment: Rs 1,50,000
LTCG : Rs 1,00,000
Employer's contribution to NPS : Rs 40,000
Total deductions : Rs 5,40,000
Net Taxable Income : Rs 7,70,000
Under New tax regime, you can also claim tax exemption for the following, as per ClearTax:

Transport allowances in case of a specially-abled person.
Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment.
Any compensation received to meet the cost of travel on tour or transfer.
Daily allowance received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty.
Perquisites for official purposes
Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA)
Interest on Home Loan on let-out property (Section 24)
Gifts up to Rs 50,000
Deduction for additional employee cost (Section 80JJA)