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# Time Limits for Filing I.T Returns

a) Belated Return: It has been proposed to prepone the due date of filing belated return of income to 31st December from the earlier time of 31st March of the next year, effectively reducing the window for filing the belated return of income by 3 month

# Safe Harbour Rule by way of amendment in Special provision for full value of consideration for transfer of Assets:

a) (i) The transfer of residential unit takes place during the period from 12 November, 2020 to 30 June, 2021. (ii) The transfer is by way of first time allotment of the residential unit to any person. (iii) The consideration received or accruing as a result of such transfer doesn’t exceed INR 2 crore.

b) An amendment has been proposed to increase the safe harbour limit from 10% to 20% whereby, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%. The above amendments are proposed to be effective from 1 April 2021. The proposed amendment is in line with the announcement made earlier by the honourable F.M. It will bring some relief to real estate industry.

# TDS on payment of rent by certain individuals or Hindu undivided family (HUF):

It is mandatory for any person, i.e. individuals/HUF, who is not liable to audit, to deduct taxes for rent paid to a resident, exceeding INR 50,000 per month. If PAN is not furnished by the payee, the withholding tax rate would be 20 per cent or the rate in force, whichever is higher. It is now proposed to amend the existing Section to include the newly inserted section, providing for higher rate for TDS for the Non-filers of income-tax return. The amendment is proposed to be effective from 1July 2021.

# Deduction of tax in case of specified senior citizen and Relaxation from furnishing/filing of return of income to a senior citizen of age of 75 years:

This Section is proposed to be inserted which provides for relaxation from furnishing / filing of return of income to a senior citizen of age of 75 years in the year in which tax has been deducted by the specified bank after giving effect to the deduction allowable under Chapter VI-A of the Act and rebate under Section 87A. It may be noted that such Senior citizens need to satisfy the below requirements for applicability of the said Section: i. Resident in India ii. Aged 75 years or more during anytime during the previous year. iii. He has No income other than pension and interest income from the same specified bank in which he is receiving his pension income. iv. Furnishes a declaration to the specified bank containing particulars, in such form and verified in such manner, as may be prescribed The above amendment is proposed to be effective from 1 April 2021. This new Section applies only to senior citizens who are having income in the nature of pension, and has no other income except the income of the nature of interest, received or receivable from any account maintained by such individual in the same specified bank, in which he is receiving his pension income. That means, if the senior citizen earns interest income from any other bank/banks, this Section shall not apply. Further, if the senior citizen has refund due, he/she will have to file a return of income. The object of the government to reduce compliance burden on the specified senior citizens seems laudable, the requirements that they should be earning only interest income apart from pension income from only bank seems unpractical and unrealistic and hardly some people will be able to take benefit.

# Taxation of proceeds of high premium Unit Linked Insurance Policy (ULIP):

a) Tax Exemption available for the sum received under a life insurance policy, including the sum allocated by way of bonus on such policy in respect of which the premium payable for any of the years during the terms of the policy does not exceed ten percent of the actual capital sum assured.

b) The proposed exemption shall not apply with respect to any unit linked insurance policy (ULIP) issued on or after 1 February 2021, if the amount of premium payable for any of the previous years during the term of the policy exceeds INR 2,50,000

c) If premium is payable by a person for more than one ULIPs, issued on or after 1 February 2021, exemption shall be available only to those insurances policies where the aggregate amount of premium does not exceed INR 2,50,000 in any of the previous years during the term of any of the policies.

# Meaning of the term ‘liable to tax’:

The term ´liable to tax´ has been defined by inserting a new clause. The term ´liable to tax´ in relation to a person means that there is a liability of tax on such person under the law for the time being in force of any country and shall include a case where subsequent to imposition of such tax liability, an exemption has been provided. The amendment is proposed to be effective from 1 April 2021.

It may be noted that the Income Tax Act presently does not define the term ‘liable to tax’ although the same is widely used in various provisions like determination of residential status under Double Tax Avoidance Agreements (DTAAs/Tax Treaties). Various tax treaties provide that in case a term is undefined in a tax treaty, then reference should be made under the domestic law. Hence, this amendment would impact the interpretation of various DTAAs.

# Concept of Deemed Residency Rule will put NRIs in Tax Trouble:

According to a change in the tax statute that become effective from the assessment year beginning April1, 2021, Indians residing overseas and earnings Rs15 lakh and above from domestic sources such as fixed deposits, dividends, and rents from India will have to pay tax on what they earn outside if that global income is not taxed in any other country.

Revenue Secretary Ajay Bhushan Pandey said in a post budget interaction with media

“Indians working in Middle East as well as those in Merchant Navy shall not be taxed using the New Provision. Somebody who is a citizen of India and sitting in a tax haven and not paying taxes then he has to pay tax. By issuing clarification, we have kept them (workers in the Middle East) out. Same for merchant navy because their income is also not arising out of India. The new provision was brought in because people were taking advantage of the existing one. These are the anti-abuse provisions, and not to inconvenience any genuine persons”

Finance Minister Nirmala Sitharaman said in post budget interaction with media

“What we are doing now is that the income of an NRI generated in India will be taxed here. If he’s earning something in a jurisdiction where there is no tax, why will I include that into mine that has been generated there. Indian earnings of NRIs such as rental income from property in the country is what is intended to be taxed by way of the new provision. Whereas if you have a property here and you have rent out of it, but because you are living there, you carry this rent into your income there and pay no tax there, pay no tax here. Since the property is in India, I have got a sovereign right to tax in India. I am not taxing what you’re earning in Dubai but that property which is giving you rent here, you may be an NRI, you may be living there but that is revenue being generated here for you. So, that’s the issue. ”

Hence as per my view the new deeming provision for residency shall not apply to the seafarers working in Merchant Navy.




The Budget 2020 has given a red-eyed attention towards the NRIs, where NRIs have been badly affected due to huge changes in both terms Residential Status as well as their Tax Liability on Global Income. This budget has brought all the “Residents” and “Deemed to be Residents” under one tax regime.

Change in Residential Status

The Budget has enhanced the time period to complete Non-Residential status from 184 days to 246 days outside India.

The Budget has also changed the number of years required for being resident by an individual to qualify as “Ordinarily Resident” from at least three years currently to at least Five years out of the previous 10 years. This would make the “Not Ordinarily” resident an “Ordinarily Resident” if he/she was resident individual in Five years out of the 10 previous years.

Tax on Global Income

The Budget has introduced very important terms “Deemed to be Resident” and “Tax Liability” where any Individual who are Citizen of India not liable to taxed or pay tax any country or territory by reason of his domicile or residence or any other criteria of similar nature shall be Deemed to be Resident in India and their Global income will be taxed as per new tax regime.

Paper Publication
The Telegraph, Dated: Febraury 04, 2020

“Terming the Budget 2020 proposal to tax NRIs in India as ”draconian”, maritime unions on Monday said they will call on Nirmala Sitharaman to express their concerns. Countries like Philippines and Ukraine compete with India for a global share of seafarers, but they do not levy high income taxes, they said.”

PTI, Dated: Febraury 02, 2020

“Revenue Secretary Ajay Bhushan Pandey said Indians working in the Middle East, as well as those in Merchant Navy, will not be taxed using the new provision.”

“Somebody who is a citizen of India and sitting in a tax haven and not paying taxes then he has to pay tax," he said. "By issuing clarification, we have kept them (workers in the Middle East) out. Same for merchant navy because their income is also not arising out of India.”

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