NRIs To Be Taxed On Income In India Only: Sitharaman

Finance Minister Nirmala Sitharaman on Sunday clarified that NRIs will be taxed only on incomes generated in India and not on their global income.

“What we are doing now is that the income of an NRI generated in India is taxed here. If he’s earning something in a jurisdiction where there is no tax, why will I include that into mine that has been generated there,” Sitharaman said.

“Whereas if you have a property here and you have a rent out of it, but because you are living there, you carry this rent into your income there and pay no tax there, pay no tax here … since the property is in India, I have got a sovereign right to tax,” she added.

If someone is working in Dubai and has a property in India that is generating rent, the person has to pay tax on the rent generated here and not on his income in Dubai.

The bill also proposed that an Indian citizen shall be deemed to be a resident in India, if he is not liable to be taxed in any country or jurisdiction. This would prevent Indian citizens from shifting their stay in low or no tax regions to avoid taxes.

“The new provision is not intended to include in the 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 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,” a statement from the Finance Ministry read.