Kolkata Income Tax Tribunal has set a precedent that may increase the tax collection of Indian Government. This judgment will clear the way for the tax department to tax 1 lakh Indians who have not been paying income tax in India so far, enjoying the status of Non-Resident Indians (NRIs) .If you work on ships and don't pay tax in India, this story may concern you.

 

There are certain guidelines to determine the residential status of an Individual. According to the tax department, a 'Non-resident Indian' is an individual who hasn't lived in India for 182 days or more during the previous year; or hasn't stayed for 60 days or more during the previous year, and 365 days or more during 4 years immediately preceding the previous year. He/she is considered an NRI for determining his/her tax liability in India. However, the second condition does not apply to Indian Citizens or the people of Indian Origin. (Read here what the Income tax department precisely says about the residential status of a citizen)

 

Since most of the seafarers (as popularly known as shippies) stay more than 182 days on ships, they don't pay tax in India. However, the Kolkata Income Tax Tribunal has governed that, any income received in Indian bank account should be treated as the income earned in India, irrespective of the residential status of ship & merchant navy personnel. What's more, the tax department wants to tax them retrospectively for the last 6 years. The only relief to those paying tax in other countries covered by the Double-Taxation Avoidance Agreement (DTAA). These agreements allow the assessee to pay the income tax in any one country.
 

PersonalFN believes, it's well within the right of the Income tax department to tax income earned in India. However, the tax department would do a lot better by providing clarity on tax policies. Having said this, PersonalFN also believes that it's a duty of citizens of India to pay their tax dues and file tax returns diligently.

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yashwantsingh24@yahoo.com Aug 05, 2016 the judgment is not acceptable because the company is earning in usd & giving us(seafarers) in rs in indian bank,its basically foreign money earned by company through us but mode of payment by co. is in irs in indian a/c.why we should pay tax on the money earned in usd & when we r nri status.

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