Do Middle East NRIs need to pay tax in India from April 2020?

Did the finance minister announce in budget 2020 that middle-east NRIs should pay tax in India from April 2020?

image of a portion being cut from a cake representative of taxation from NRIs

Published: February 2, 2020 at 6:20 pm

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The Finance Bill, 2020 has 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. Does this mean NRIs like those staying the in middle-east or any other country where there is no tax should pay tax in India from April 2020?

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Do Middle East NRIs need to pay tax in India from April 2020? No. Middle-east NRIs or any other NRI with no taxation in their country of residence need not pay tax in India as long as it is not from an Indian business or profession.

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The finance ministry has issued a clarification today stating:

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

They pointed out that this rule was 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”

Bonafide workers in countries with no income tax shall not be affected by this rule. The finance bill may be modified to make this stance clear.

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