New Budget provision on NRIs not aimed at bonafide workers in other countries: Govt

New Delhi, February 2, 2020

The Government today clarified that a new provision in the Finance Bill, 2020, which proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction, was not intended to include in the tax net Indian citizens who are bonafide workers in other countries.

"This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India," a clarificatory statement from the Ministry of Finance said.

"In some section of the media the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.

"In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession. Necessary clarification, if required, shall be incorporated in the relevant provision of the law," the statement added.

NNN