The new changes to India’s Tax Residency Rules are having a huge impact on several wealthy Indians who shuffle between countries to avoid staying in India beyond stipulated time. The new changes to “deemed residency” are set to impact the way Indian Revenue Authorities tax the individuals, Indian citizens and Persons of Indian Origin (“relevant person”) who are based outside India, and their foreign subsidiaries’ income.

The Indian tax authorities have introduced two major amendments to the tax residency rules for individual taxpayers effective the fiscal year 2020-21, which started in April 2020:

• Amendment to the 182-day threshold rules: From the point of personal income tax, a relevant person whose India-sourced income is at least INR1.5 million [AED73,600] staying in India for at least 120 days will be deemed Indian Tax resident. This approach changes the fact-pattern on which country has first right to tax the individual and due to the Covid-19, many are now stuck in India due to travel restrictions. With these developments, Non-Resident Indians (NRIs) are in danger of exceeding the number of days’ presence in India and thereby being considered as resident of India for tax purposes.
• Second amendment: Indian citizens who have an India-sourced income at least INR1.5 million [AED73,600] during the relevant tax year will also be deemed residents of India if they are not liable to tax in any other country by reason of domicile or residence or any other criteria of similar nature.

Furthermore, persistent rumors indicate that inheritance tax, which was abolished in 1985, maybe reinstated forcing wealthy NRIs to restructure their assets.

Could you be severely impacted due to these changes?

If you answered yes, then this is the time to rethink your wealth and asset protection.

Through robust structuring and planning via a UAE Foundation, your family and business wealth can be highly and efficiently protected.

Foundations allow for enhanced tax saving strategies, succession planning and asset protection; providing a robust governance structure, and guardian oversight. They have a distinct legal personality that separates assets & liabilities, whilst maintaining control, and could have perpetual existence after the lifetime of the Founder. The UAE Foundation maintains Confidentiality as the Registry is not open for public inspection and make sure that your assets & income are sheltered, segregated from your estate & wealth and is fully secure.

Wincore Advisory Group can assist you and your family to articulate your objectives and principles to establish the foundation of a sound tax & succession planning, robust inter-generational wealth transfer and efficient family & business governance.