Explained | Impact of new Income Tax Bill, 2025 on NRIs

Union Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025, in the Lok Sabha on Thursday. The primary objective of new Bill is to simplify the tax laws, ensuring they are more transparent and easier to interpret.

The new Bill, which will now be sent to the Select Committee of the Lower House for Parliamentary scrutiny, proposes a slew of changes which will have a significant impact on the Non-Resident Indians (NRIs).

Let us take a look at some of them:

The new Income Tax Bill proposes revised framework for taxability of Non-Resident Indians (NRIs). Under the new changes, the NRIs, particularly those who earn Rs 15 lakh or more in India and not paying any tax elsewhere, will be classified as "residents" for tax purposes.

NRIs are currently taxed only on their Indian-sourced income. This moves aims to make them liable to pay taxes on their income earned in India and prevent loopholes on claiming tax benefits under NRI status.

As per the new Bill, the dividend income for non-residents will be taxed at 20 per cent and the dividends from units in an International Financial Services Centre (IFSC) will be taxed at 10 per cent.

NRIs can now apply for an advance ruling to determine their tax liabilities before any transactions with Indian residents.

Any taxable income received by a non-resident in India will now be subject to tax deducted at source (TDS).

Upon leaving the country, any non-resident will have to submit their Permanent Account Number (PAN), purpose of travel, and expected duration of stay abroad and in the absence of this a certificate prescribed shall be submitted to the authorities.