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Do NRIs in Oman need to pay income tax in India? Finance Ministry issues clarification

Muscat: In what could be a relief to Indians living in Oman, the government has clarified on the new taxation regulation for NRIs proposed in the 2020 budget.

In a statement issued on Sunday, the Finance Ministry clarified that Indians in Oman and other overseas countries do not have to pay income taxes to the Indian government, unless they work for the overseas office of an Indian company.

On Saturday, the Union Budget 2020 proposed to tax Indians who are not tax residents in India but are neither tax residents in any other countries. The budget proposes changes in the income tax law to make such individuals deemed tax residents of India. This has shocked thousands of Indians living in countries like Oman, UAE and Saudi Arabia.

However, on Sunday, the Finance Ministry refuted the proposal and clarified that the NRIs will be taxed only on Indian income, not on foreign income.

“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 government said in a statement.

The government added, the new provision was not intended to include bonafide Indian workers in tax net who were working in other countries.

“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,” government added.

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