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Certain illustrations have also been iii. No benefit of Specific Sections
provided in Section VIII of this article. and Concessional Rate of Tax as
applicable to Non-Residents
I. Various Other Implications On becoming RNOR, various sections that
are otherwise applicable to a Non-Resident
i. TDS rates and compliances shall no longer apply to such individuals.
reduced Few sections that provide beneficial
TDS provisions in case of Non-Resident treatment in case of Non-Residents are
payees are stringent. In such cases, tax is listed below:
to be deducted at source as per Section a. Proviso 1 to Section 48 -
195 for any payments made to a Non- Computation of capital gains in
Resident that are chargeable under the Foreign Currency (subject to certain
Act. conditions)
Due to the recent amendments, there can b. Section 112(1)(c) – Concessional Tax
be a change in the residential status of rate of 10% on Long term capital
certain Individuals from “Non-Resident” gains arising from transfer of unlisted
to “Resident but Not Ordinarily Resident”. securities or shares
Consequently, payment to such Individuals
shall mean payment to a Resident. Thus, c. Tax Rates and relaxation prescribed
provisions of Section 195 will not be under Section 115 for various
attracted in such cases. Hence, such incomes such as dividend, interest,
individuals would not be required to royalty income, etc.
obtain lower withholding certificate in d. Also, relevant sections prescribed
cases of rental income, sale of property, under Chapter XIIA of the Act
etc. Also, recent reduction in TDS rates applicable to certain incomes of Non-
to provide more funds at the disposal of Residents
the taxpayers for dealing with COVID-19
pandemic shall not be applicable in case
of payments made to a Non-Resident. iv. Transfer Pricing provisions shall
continue to apply
ii. Foreign Assets and Incomes For the purpose of Transfer Pricing
Disclosure not required provisions, term Non-Resident as defined
Generally, as per Proviso 4 to Section under Section 2(30) includes resident
but not ordinary resident. Hence, any
139, every individual who is Resident change of residential status due to these
and Ordinarily Resident in India has amendments will not impact applicability
to mandatorily disclose all assets held of Transfer Pricing provisions.
outside India and foreign incomes earned
in the Return of Income.
v. No exemption to Non-Resident
It is pertinent to note that this disclosure Seafarers
requirement is not applicable to an CBDT Circular No 13/2017 has clarified
individual who is an RNOR. Thus, even if that Salary Income of Non-Resident
individuals qualify to be RNOR as per the seafarers which is received in NRE Bank
amended sections of Residential Status, account in India for services rendered
they would not have to disclose their outside India on foreign ships, shall not
foreign assets and incomes.
be included in the total income.
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