Budget 2020: Non-taxpaying NRIs to be taxed

“We are not in favour of FDI in education. It will try to transfer our domestic resources abroad. We should try to strengthen our own education rather than this. This is not a welcome step,” said Ashwani Mahajan, national co-convenor of the RSS affiliate, Swadeshi Jagran Manch

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"...In many cases we have found that some people are residents of no country in the world, they may be staying a certain number of days in different parts of the world. So... any Indian citizen - if he is not a resident of any country in the world - would be deemed to be resident in India, and then his worldwide income will be taxed," Revenue Secretary Ajay Bhushan Pandey said.

Budget document said that the I-T Act provides that an Indian citizen or a person of Indian origin shall be Indian resident if he is in India for 182 days in that year.

"This provision provides relaxation to an Indian citizen or a person of Indian origin allowing them to visit India for a longer duration without becoming resident of India. Instances have come to notice where the period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year is being misused.

"Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India," said the memorandum to the Budget.

Pandey said changes have been brought about in the Income Tax Act, which states that if an Indian citizen stays more than 180 days out of the country, he becomes a non-resident.

So we have made some changes there. Now, in order for him to become a non-resident he has to stay out of the country for 240 days, Pandey said.

The Budget also proposes to rework the definition of "not ordinarily resident" in India, if the individual has been a non-resident in India in 7 out of 10 previous years preceding that year. Earlier for an individual to be considered "not ordinarily resident", he/she had to be a non-resident in India in 9 out of 10 years.

Nangia Andersen Chairman Rakesh Nangia said, "Residency provisions for the purpose of taxation has been tightened, specifically for stateless persons, who are not liable to tax in any country or jurisdiction. This could impact non-resident Indians staying in countries such as UAE". 



Infrastructure players Larson & Toubro and KNR Constructions and IRB Infra to benefit:



Transport Infrastructure

FM Sitharaman unveiled plans for India’s highways and railways, proposing 1.7 trillion rupees ($23.7 billion) for transport infrastructure that includes the accelerated development of highways and plans to monetize 12 lots of highway bundles.


Budget proposals  to encourage the manufacture of mobile phones, electronic equipment, and semiconductor manufacturing as well as medical devices will be positive for companies such as Dixon Technologies, Amber Enterprises, Subros, said Vinay Pandit, Head of Institutional Equities at IndiaNivesh.



The farm and rural sectors were allocated 2.83 trillion rupees, while the agriculture credit target for next year is set at 15 trillion rupees.

Modi regime proposals to expand fisheries and create 500 fish farmer producer organizations may help Avanti Feeds, Apex Frozen Foods and Waterbase.

Budget a boost to agri sector:

The gap in cold chain infrastructure for perishable produce leads to approximately 40% post-harvest losses in India. Therefore, it is only appropriate that logistics and cold chain infrastructure was a major focus of the agricultural budget this year. 

‘Kisan Rail’ is a unique step taken by the government for connecting farmers to the market. Transportation of perishable products such as fruits and vegetables, meat, fish and dairy products are expected to be benefited from this initiative, thereby increasing trade between Indian states.

In tune with fiscal strategy

The budget announcements for financial year 2020-21 (FY21) is consistent with the fiscal strategy, which is geared towards boosting demand. And it contrasts the extremely conservative approach adopted in FY19 when spending was retracted to meet fiscal deficit target in the face of large tax revenue shortfall.

Fiscal strategy of FY21 budget appears to sustain the demand support by way of fiscal spending and a liberal approach on fiscal deficit management in the near-term, thereby enabling private consumption demand. Allowing tax incentive to sovereign wealth fund for investments in domestic infrastructure is a reflection of feeble domestic private investment cycle. The hope is that as the liberal fiscal strategy pans out over time, improvement in corporate performance will encourage them to start private investments.

Finance Minister Sitharaman's Budget 2020-21 failed to cheer Share market as the D-Street witnessed its biggest fall on the Budget Day in the past 11 years.

Questions have been raised about whether the budget done enough to revive the economy ?

In fact, this was biggest challenge before Ms Sitharaman.


Budget 2020 suffers from the likely assault of 'long on talk' and like other Budget proposals of the past - short on specifics. 

After the FM listed so many farmer-schemes, it turns out that while the FY21 budget provision is higher than the actual FY20 spending, that is only because what was spent was less than what was budgeted. 

Govt has lost a big opportunity  to clean up wasteful farm subsidies such as those on fertilizer.

There is a dichotomy, the real farm incomes rose by just 3% per annum in the first five years of the Modi government, expecting them to double requires (by 2022) an annual real income growth of 15% over the next three years! Will it happen?


In the case of the education sector, allowing FDI and ECB are welcome, but till the education policy is freed, this will help only at the margin


Telecom investors, who have invested lakhs of crore rupees have reason to be angry due to bad policy, favouring of RJio and now the AGR case; but this has little to do with the budget, it is solely in the domain of the telecom minister or the prime minister. 

If oilcos don’t invest more, this is because the rules under which they operate continue to be unfriendly and the levies too high; once again, most of these remain political decisions and the under the domain of PM Narendra Modi. 

Things that will turn out to be Expensive

Import of medical equipment
Footwear
Furniture
Walnuts
Glassware (for use in the table, kitchen, toilet, office, or decoration)
Combs, hair-slides, hairpins curling pins, curling grips
Vacuum flasks and other vacuum vessels
Food grinders (Mixers)
Shaver’s
Hairdryers
Water and immersion heaters
Ovens, cookers, cooking plates, grillers, and roasters
Coffee and tea makers


Water coolers
Refrigerators
Lamps and lighting
Toys – Tricycles, scooters, pedal-cars, dolls, and other toys
Stationery items
Wall fans
Parts of commercial vehicles
Catalytic converters
Porcelain or China ceramic, clay iron, steel, copper made tableware or kitchenware
Precious Stones and Metals (Rubies, emeralds, sapphires – imported uncut)
Headphones and Earphones
Cigarettes
Tobacco products
Protein shake

Things to go cheaper:

Customs duty on import of newsprint, lightweight coated paper halved to 5 percent.

Anti-dumping duty on purified terephthalic acid (PTA) done away with.

Exemption on customs duty for raw sugar.

Exemption on customs duty for agro-animal based products, tuna bait, skimmed milk.

Water Companies to benefit:

Shakti Pumps India Ltd. jumped the most in three-weeks after the announcement of proposals to help farmers set-up standalone solar pumps to allow them to make a living out of their barren land.

The plan to provide piped water across Indian households by 2024 -- with 3.6 trillion rupees in funding -- means Jain Irrigation Systems Ltd., KSB Ltd., Kirloskar Brothers Ltd., JK Agri Genetics Ltd., PI Industries Ltd. could benefit.

FM announced 123 billion rupees for the Clean India mission. Companies including Hindustan Unilever, ITC, Procter and Gamble, Godrej stand to gain here.

Budget 2020 has plans to sell a part stake in Life Insurance Corp. resulting in declines in shares of private insurers, which were star performers in 2019.

SBI Life Insurance Co. fell as did HDFC Life Insurance Co. and Nippon Life India Asset Management Ltd.

FM silent on infusing new capital into state-run banks for 2020-21. This is rare under the Modi government.

Shares of real estate companies like Godrej Properties, Oberoi Realty Ltd., and DLF Ltd. and Prestige Estates declined when the finance minister did not announce any specific measure for the sector.

The property sector had demanded measures to enhance credit availability for developers, an industry status and other measures that could propel sales.