Big StoryDelhi

Clarity On Finance Bill 2020 : NRIs To Pay Taxes On Income Earned Only In India

  • Citizens who went to the Middle East as workers will not pay tax in India.
  • To get the status of Non-Resident Indian, one has to stay out of the country 245 days a year.

NEW DELHI: The government has clarified the new tax rules made for the overseas Indian citizens (NRIs) in the Finance Bill 2020 in the budget. The Finance Ministry has said that citizens will not have to pay tax on the amount earned outside the country. However, a condition has been added to it that the amount should not have been earned from any Indian business or profession. The government also said that a clarification related to it would also be added to the law if needed. The government had to give this clarification because the new rule says that Indian citizens will be taxed in India on ‘global income’.

In the Finance Bill 2020 about NRIs, it has been said that Indian income will be taxed in India on global income. This means that Indians who are not paying taxes under any other law in the world or in any country, will be taxed like other citizens of the country.

No tax on citizens working abroad

The government has said that its purpose in the new provision is not to bring people of Indian nationals who have gone abroad to actually work to tax. The government made it clear that it had no intention of collecting taxes from Indian citizens who had gone to work in the Middle East (countries like Saudi Arabia, Dubai). It would be wrong to say that those citizens are not taxed there, so they have to pay tax in India.

Changes in NRI status rules

According to official sources, the government found that some Indian citizens live in countries with low or zero tax laws to avoid tax. To prevent such people from taking advantage of the loopholes in the tax system of the country, the government has changed the provisions of NRI status. According to the current system, if an Indian citizen resides in any other country of the world more than 182 days from India, then he gets the status of Pravasi Bharatiya (Non Resident Indian).According to the new provisions, it would be necessary for non-resident, not to stay in the country for more than 120 days in a year. This means that for NRI status, one has to stay out of the country 245 days a year.

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