The government said it doesn’t intend to tax income that bona fide workers earn overseas, allaying concerns about a budget proposal relating to non-resident Indians (NRIs) that said those who weren’t taxed in another country were liable to pay tax in India. This had caused Indians working in the Middle East to panic as many countries in the region don’t levy income tax.
The government said the provision was an “anti-abuse” one and will only apply to income that is generated locally.
“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,” the Central Board of Direct Taxes (CBDT) said in a statement on Sunday. “The new provision is not intended to include in tax net those Indian citizens who are bona fide workers in other countries.”