FM proposes separate ITR form for expats

Some of the disclosures in the ITR form, under review at present, increases procedural hassles for expats

After the new income-tax returns (ITR) forms came under criticism from both tax experts and industry players for seeking too many unnecessary details, the finance ministry is contemplating a separate ITR for expatriates.

In a meeting held last Friday, Finance Minister Arun Jaitley proposed that there should be a separate form for expats. "He has called for data and statistics of the number of tax paying expatriates who are classified as residents,” said a tax expert close to the development.

The separate ITR form for foreign nationals is expected to drop details such as dates of opening of foreign bank accounts, it may give relief to trust settlors, who were asked to reveal names of beneficiaries and trustees, and the government may list out things that the expat needs to include in the schedule that deals with capital assets.

The form is also expected to have annexure for each module to make it simple. This means, the taxpayer will need to only tick the relevant schedules and provide details in the following annexure.

Some of the disclosures in the ITR form, under review at present, increases procedural hassles for expats. For example, those working in the senior management of a company may have bank accounts for over 15 – 20 years.

Asking them to get the account opening date can be cumbersome and also unnecessary feel tax experts. Trust settlors could be put under non-disclosure contracts signed back in their country.

“The new document is designed with the intention of making it tough for people to hoard black money abroad and catch offenders. Most expats come to India for two- to five-year period. They naturally have assets and bank accounts back home. They don’t need to be subjected to the same disclosures as citizens here,” said Suresh Surana, founder, RSM Astute Consulting Group.

Foreign nationals working in India are classified as resident and ordinarily resident (ROR) for Income Tax purpose once they spend a stipulated time in the country. This include a person continually staying for two years or more (730 days).

He will be taxed just like any other citizen, and will need to include the global income. If this condition is not met the Income Tax department looks at a stay of 365 days in the country in four financial years or for 730 days in seven years.

Those who don’t qualify for the above norms are classified as resident but not ordinarily resident (RNOR). In this case, the person is taxed for income in India only.

Kuldip Kumar, partner and leader personal tax, PwC India said that many a times the wife of a foreign national needs to pay income tax in India after the couple becomes ordinarily residents. “Though she may not be earning here but have income outside India, and the spouse is also subjected to Income tax."

Recently, India Inc met the finance minister to express their concerns about the new ITR forms. These included representative of various industry associations such as Assocham, CII, Ficci and PHDCCI. While they made a strong pitch for simpler income-tax return forms sans any cumbersome disclosures at the review meeting for all citizens, many of them also expressed concern on the disclosures that a foreign national needs to make. Revenue secretary Shaktikanta Das had said the government will reconsider the new ITR forms to make it simple.