May a million NRIs bloom: A windfall in tax change

WHILE INDIA IS not a "dead economy", the government clearly agrees with the universal belief that "things could be better". The tax rebate in the February Budget and rationalising goods and services tax (GST) are admission that we need a "breakout". India has the possibility of adding 0.7% to our GDP every year by providing non-resident Indians (NRIs) a home for the winter.

- Ajit Dayal Founder, Quantum Advisors

In FY21, worried about savvy Indians who were slipping off to Dubai, Singapore, and similar tax-friendly jurisdictions, the government changed the number of days an individual could spend in India to be categorised as a "non-resident". For taxation purposes the requirement to spend less than 182 days in a fiscal year in India was amended to less than 120 days. Clauses and sub-clauses with "ifs" and "buts" have resulted in many interpretations but most CAs will advise their NRI clients to spend less than 120 days in India to avoid dealing with the Indian taxation system.

Statistics suggest that since the new rule has come into play, "non-resident" Indians have not surrendered their lifestyle in Dubai or Singapore. In fact, these NRIs have spent less time and—by extension—are spending less money in India: a loss to our GDP. NRIs now spend those extra 60 days in the tax havens of Dubai and Singapore which are experiencing booms as "twin commercial cities" of India. With a more welcoming income tax policy, the "not required Indians" could help the government deliver a "new resurgent India".