India has gone through centuries of foreigners producing for exportation of liquid able assets that should stay domestic for economical growth. Just recently, India has passed a finance bill which will tax currency leaving the country as a measure for keeping tracking history. Legal Issues Involved. There once was a time when foreigners came to India for financial gain but now Indian nationals migrate to other countries for the intention of sending money back to India.
Legal Issues Involved:
Every country wants income generated in-house to circulate domestically but sometimes that is not the case; some NRI’s still sell land in India and those monetary proceeds are solely used for purposes outside of India, and that money may never return. Hence the intention of 2020 Finance Bill; whether it is for prevention of money laundering, promote to keep the money circulating domestically or to simply have records for future purposes.
News Article Facts:
Under the LRS (Liberalised Remittance Scheme), there is 1.5 billion USD (10,700 Crore INR) leaving the country on a monthly basis and not necessarily illegally. Each Indian can send 250,000 USD abroad annually. The government wants to know exactly where it is going and a 5% Tax will apply, namely; TCS (Tax Collection At source) to people sending money abroad for any reason (education, travel, purchase of immovable property, investment in equity/debt, gift/donation, maintenance for relatives and/or medical treatment). The TDS (Tax Deduction At source) will return the 5% if the money is sent to the own person’s account abroad but not to overseas tour operators of NRIs; only from person to self offshore accounts. TCS is additional taxes that applied to the seller and are recovered by a buyer in transactions upon filing Income Tax during the end of the fiscal year. The TCS will be added to the sale amount and transferred to the government account.
Legal Point of View:
The Finance Bill 2020 includes the TCS; a provision proposed by the RBI (Reserve Bank of India) which was passed and amended into LRS. The previous LRS; the government of India applied a 1% TCS on the money sent abroad for imported expensive foreign vehicles and this TCS was also adjusted against the buyer’s income tax liability. The 5% applied to the 1.5 Billion USD will generate 75 million USD in advance for the government of India. The Finance Bill 2020 is available online and fully transparent for thorough examination by anyone, it includes the LRS clauses.
Specifically: Clause 93 of the Finance Bill, 2020 proposes amendments Section 206C of the Direct Taxes in the Income Tax Act 1961. LRS matter also amends many other sections as well.
This amendment is a vital step in securing assets in India. It may be unorthodox to compare a communist society to a democratic one but China has restricted foreign companies from exporting 90% of profits out of the China. One of the many factors that helped China rise to power and make domestic progress economically. This method has forced Chinese citizens to manufacture products in-house and many citizens of China have rise out of poverty.
For case specific advice/details contact TOP/BEST/EXPERT immigration Lawyers of Chandigarh, Mohali and Panchkula Tri-City Area.
More on 99888-17966