Money earned in India by NRIs will be taxed, says Nirmala
Clarification follows letter from Kerala CM over impact on workers in West Asia
03/02/2020, PRISCILLA JEBARAJ, VIKAS DHOOT,NEW DELH
Union Finance Minister Nirmala Sitharaman on Sunday scotched fears that provisions introduced in the Budget would bring Indian workers’ income in zero tax jurisdictions, like the UAE, into the Indian tax net.
The Finance Bill has proposed three major changes to prevent tax abuse by citizens who don’t pay taxes anywhere in the world — reducing the number of days that an Indian citizen can be granted non-resident status for tax purposes from 182 to 120; citizens who don’t pay taxes anywhere will be deemed to be a resident; and the definition of ‘not ordinarily resident’ has been tightened.
“Let’s say an NRI, living in Dubai or elsewhere, is not taxed for his income there, but has some earnings through something in India for which he doesn't pay tax here. We are saying, for that income which is generated in India, pay a tax,” she said.
‘It will hurt Indians’
Alarmed by the possible implications of the new provisions, Kerala Chief Minister Pinarayi Vijayan wrote to Prime Minister Narendra Modi on Sunday, recording the State’s strong disagreement over the provision as it will hurt Indians working in the Middle East, “who toil and bring foreign exchange to the country” through remittances.
“The new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in the 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,” the Finance Ministry said in a statement.
The Ministry will incorporate a clarification, if required, into the law so that only income derived from an Indian business or profession will be taxable for such citizens, the Minister said.
Clarification follows letter from Kerala CM over impact on workers in West Asia
03/02/2020, PRISCILLA JEBARAJ, VIKAS DHOOT,NEW DELH
Union Finance Minister Nirmala Sitharaman on Sunday scotched fears that provisions introduced in the Budget would bring Indian workers’ income in zero tax jurisdictions, like the UAE, into the Indian tax net.
The Finance Bill has proposed three major changes to prevent tax abuse by citizens who don’t pay taxes anywhere in the world — reducing the number of days that an Indian citizen can be granted non-resident status for tax purposes from 182 to 120; citizens who don’t pay taxes anywhere will be deemed to be a resident; and the definition of ‘not ordinarily resident’ has been tightened.
“Let’s say an NRI, living in Dubai or elsewhere, is not taxed for his income there, but has some earnings through something in India for which he doesn't pay tax here. We are saying, for that income which is generated in India, pay a tax,” she said.
‘It will hurt Indians’
Alarmed by the possible implications of the new provisions, Kerala Chief Minister Pinarayi Vijayan wrote to Prime Minister Narendra Modi on Sunday, recording the State’s strong disagreement over the provision as it will hurt Indians working in the Middle East, “who toil and bring foreign exchange to the country” through remittances.
“The new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in the 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,” the Finance Ministry said in a statement.
The Ministry will incorporate a clarification, if required, into the law so that only income derived from an Indian business or profession will be taxable for such citizens, the Minister said.
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