Dubai: NRIs with UAE resident visa not required to pay tax in India


Daijiworld Media Network - Dubai

Dubai, Feb 2: The union budget presented by finance minister Nirmala Sitharaman on Saturday February 1 has proposed to tax non-resident Indians (NRIs) who do not pay taxes in a foreign country.

Also, to be categorized as an NRI, a person has to stay aboard for at least 240 days and not 182 days as stipulated earlier.

The government’s new proposal aims to stop people from taking advantage of loopholes in the country's taxation system.

Revenue secretary Ajay Bhushan Pandey told media that earlier an Indian citizen became an NRI if he stayed out of the country for over 182 days. However, many a time, people took advantage of loopholes and stayed out of the country for the stipulated period to maintain NRI status. With this, they managed to become residents of no country. "Now one has to stay out of the country for 240 days," Pandey said.

The budget memorandum stated, "Some individuals who actually carry out substantial economic activities from India manage their period of stay in India so as to remain a non-resident in perpetuity and not be required to declare their global income in India."

However, leading tax consultants clarified that an Indian holding a resident visa in the UAE will not be taxed back home.

"You are a resident of UAE under the India-UAE Double Taxation Avoidance Agreements (DTAA) and holding a residence visa of the UAE. Therefore, you will not be covered by the law proposed in (the) budget. It may be recalled that the Double Tax Treaty UAE-India was signed in 1993," H P Ranina, a lawyer specialising in tax and exchange management laws of India was quoted by Khaleej Times.

Meanwhile, people who are not a permanent resident of any country, for example they stay a month in UAE, two months in US and a couple of months in UK and hence manage to stay out of India for 182 (now changed to 240 days) will be deemed as residents of India and their global income will be taxed.

Dixit Jain, managing director, The Tax Experts DMCC, told Khaleej Times, "Amid a lot of confusion and outrage by NRIs around the world, the simple clarification came stating that only those individuals who are staying outside India just for the purpose of maintaining 182 days in order to claim NRI status to avail the benefits will no longer be able to do that. It means individual who cannot prove his residency of one particular country and is not a tax resident of one particular country will be assumed to be a tax resident of India and his worldwide Income will be taxed in India. However, a person holding a valid residence visa with economic relevance to that country need not worry on that. He will have to pay tax only on the income earned in India and no tax on his global income."

The ambiguity over the tax structure has received a lot of flak. Naveen Sharma, head (accounting), Audit & Advisory Services Focus Group, told Khaleej Times, "A lot of Gulf-based Indians start or expand their business and it is usual that they spend a lot of time in their new business but now they will have one more headache: Worry about their NRI status because if they lose that status, their entire global income will be taxable."

Moreover, Indians working in Gulf countries visit India frequently to take care of their families and stay on for 4-6 months. Now, they have to worry about NRI status, experts said. "These are backward-looking budget proposals and will create a lot of anxiety among the hardworking Indian population in the Gulf region. This is one of the worst budget proposals in the last 30 years and the government should immediately withdraw this as it is against the interest of the hardworking Indian expats who remit billions of dollars every year to India," Sharma added.

 

CBDT issues clarification

The Central Board of Direct Taxes has issued a clarification to put to rest the confusion regarding NRIs paying tax and their residence in India.

A press release signed by the commissioner of Income Tax (Media and Technical Policy) and CBDT official spokesperson Surabhi Ahluwalia states, "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. 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.

"The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. 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," the release highlights.

"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 release states.

 

  

Top Stories

Comment on this article

  • Francis, Bengaluru

    Mon, Feb 03 2020

    As usual, the issue is with implementation, not in the rule! Banks and IT Dept (and Audit firms) need to get their act together and insist on production of Labour/Resident ID/PR/Green Cards/ and NOT just a visa stamped on the passport - which could be just a Family Visit/Tourist visa! Being aware that several countries including UK, USA, Japan, HKG provide long term multi-entry visas which in no way is proof of residence or work! Hope the finer print in the amended Rule brings this out clearly.

    DisAgree [1] Agree [1] Reply Report Abuse

  • Saldanha, Dubai

    Mon, Feb 03 2020

    First of try to get us a job done in India and then plan of taxing the NRI's . I see that all are jobless. Try to Improve India.

    DisAgree [5] Agree [8] Reply Report Abuse

  • Nikhil, Mangalore

    Mon, Feb 03 2020

    ask government for jobs

    DisAgree [1] Agree [2] Reply Report Abuse

  • John, Mangalore/Kuwait

    Mon, Feb 03 2020

    Guys you cannot do anything here after
    Power Will be with them for ever
    Next election also for them
    Because of EVM glory
    Those who migrated they are lucky
    Those who committed suicide also some what lucky
    If you want to live in India shut your mouth and a---s
    Otherwise it's left to you
    Decision is yours
    Only God can save India

    DisAgree [10] Agree [11] Reply Report Abuse

  • Indian, Mangalore

    Sun, Feb 02 2020

    Modi has lost another group of good friends. i.e NRIs. Basically, government is grabbing low hanging fruit. This measure is inconsequential to the larger challenges. I am not surprised, if government start taxing all income from abroad as well in their next budget. In democratic set up, this is what you get when you are not voting or voting for a wrong set of people. Unfortunately, there is no alterative at this moment in India for the governance.

    DisAgree [8] Agree [29] Reply Report Abuse

  • Dsouza, Mudarangadi/udupi

    Sun, Feb 02 2020

    All is well, who ever pay tax, be happy. You are giving money to Mother India,for her welfare.

    DisAgree [30] Agree [9] Reply Report Abuse

  • G Veer S, Nagpur

    Sun, Feb 02 2020

    And what are you getting back for your contribution of hard earned tax money to this Motherless India since 2014 provided you are lucky enough to be employed????.....

    DisAgree [7] Agree [30] Reply Report Abuse

  • G Veer S, Nagpur

    Sun, Feb 02 2020

    As per my understanding no tax on interest on NRE accounts in India if that person has stayed outside the country more than 240 days and with residence and work permit of other country. Rental income comes under NRO category so it is taxed in India.

    DisAgree [1] Agree [17] Reply Report Abuse

  • OSWALD VAZ, THOTTAM/ BAHRAIN

    Sun, Feb 02 2020

    People who want to avoid Tax in India as per the present scenario has to obtain a Resident Permit of any country outside India & stay there for 240 days or more
    giving the reason of Employment or Business.

    DisAgree Agree [11] Reply Report Abuse

  • Allen, Mangalore

    Sun, Feb 02 2020

    No wonder! Now we have a wonderful Govt in place elected by EVMs and the AndhBhakts!

    DisAgree [16] Agree [39] Reply Report Abuse

  • John, Mangalore/Kuwait

    Sun, Feb 02 2020

    What about people working in Kuwait?

    DisAgree [2] Agree [12] Reply Report Abuse

  • John Tauro, M'lore

    Sun, Feb 02 2020

    People working in Kuwait for Kuwaiti and foreign (Non-Indian) organisations will not be taxed.

    DisAgree [4] Agree [5] Reply Report Abuse

  • John, Mangalore/Kuwait

    Sun, Feb 02 2020

    Thanks John tauro and thanks for nirmala madam for showing mercy on people working in abroad
    At least today I can sleep peacefully

    DisAgree [2] Agree [3] Reply Report Abuse

  • Anwar, Mangaluru

    Sun, Feb 02 2020

    Thanks to Modiji, now NRIs are TAX mukt, HAHAHAHAH !!! #ANDHBHAKTS

    DisAgree [12] Agree [33] Reply Report Abuse

  • Ivan Fernandes, Ashoknagar / Dubai

    Sun, Feb 02 2020

    Clarification regarding Proposal in the Finance Bill 2020
    Posted On: 02 FEB 2020 4:20PM by PIB Delhi

    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. 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.

    The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. 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.

    DisAgree [1] Agree [5] Reply Report Abuse

  • Vijay, Mangalore

    Sun, Feb 02 2020

    Are they creating a register for taxpayers to make sure Free Medical treatment and beat education for Children and roads.
    Because in the last several years... We still use Inverter at Home, Still use Private care, still use SUVs and Expensive vehicles for Roads that make no sense...
    Where is all this money going...
    There is absolutely no accountability for Taxes paid. People defend the govt and others hate it...

    DisAgree [2] Agree [23] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sun, Feb 02 2020

    Setback for Nirmala Sitaraman ...

    DisAgree [13] Agree [31] Reply Report Abuse

  • Flavian, Mangaluru/Kuwait

    Sun, Feb 02 2020

    Income tax on interest income is applicable only if the annual interest income crosses 5 Lac Rupees.
    There are different slabs as per higher income. So fair enough to declare income and pay tax.

    DisAgree [1] Agree [11] Reply Report Abuse

  • Flavian, Mangaluru/Kuwait

    Sun, Feb 02 2020

    "However, leading tax consultants clarified that an Indian holding a resident visa in the UAE will not be taxed back home."
    Very good clarification and right guidelines.
    Let us hope that our FM will amend the NRI taxation proposed in (the) budget accordingly.

    DisAgree [1] Agree [7] Reply Report Abuse

  • Hussain, Abu Dhabi

    Sun, Feb 02 2020

    Incompetent GOBERment are clueless how to generate employment in India.

    DisAgree [12] Agree [31] Reply Report Abuse

  • Rajesh, MANGALURU

    Sun, Feb 02 2020

    Bottom line: You have to pay tax somewhere. Only earning not paying taxes anywhere is not possible now.

    DisAgree [21] Agree [6] Reply Report Abuse

  • I wish I was There, Bahrain

    Sun, Feb 02 2020

    Let me know, what about the NRI people in Bahrain?

    DisAgree [1] Agree [8] Reply Report Abuse

  • Rakesh Dsouza, Mangalore, Dxb

    Sun, Feb 02 2020

    incometaxindia.gov.in/pages/international-taxation/dtaa.aspx

    DisAgree [1] Agree [6] Reply Report Abuse

  • Rony Fernandes, Mangalore

    Sun, Feb 02 2020

    It’s same as like UAE or any Other countries in the world, subject to 240 plus days stay on a residence visa .

    DisAgree Agree [12] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sun, Feb 02 2020

    Everything has cashed in India ...

    DisAgree [9] Agree [23] Reply Report Abuse

  • NAVEEN, Mangalore

    Sun, Feb 02 2020

    Modi govt is not arming common people and this is affecting those who people took advantage of loopholes and stayed out of the country for the stipulated period to maintain NRI status. Jai Modiji

    DisAgree [73] Agree [12] Reply Report Abuse

  • VNR, Mangalore.

    Sun, Feb 02 2020

    @Naveen .... Common people already dead from inside .....

    In very difficult we got job in gulf... Now... that also gone..... Maro muje maro...

    DisAgree [6] Agree [30] Reply Report Abuse


Leave a Comment

Title: Dubai: NRIs with UAE resident visa not required to pay tax in India



You have 2000 characters left.

Disclaimer:

Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Daijiworld.com will not be responsible for any defamatory message posted under this article.

Please note that sending false messages to insult, defame, intimidate, mislead or deceive people or to intentionally cause public disorder is punishable under law. It is obligatory on Daijiworld to provide the IP address and other details of senders of such comments, to the authority concerned upon request.

Hence, sending offensive comments using daijiworld will be purely at your own risk, and in no way will Daijiworld.com be held responsible.