The government on Sunday gave clarifications on the definition of NRI under the new Finance Bill 2020 which makes changes in the tax regime for such class.
In the 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, it said.
The clarification came on the misinterpretation of the new provision, assuming that those Indians who are bonafide workers in other countries where there is no provision of tax, especially in Middle East, will have to pay tax on their income earned there to the Indian government.
The government also said that necessary clarifications shall be incorporated in the relevant provision of the law if required.
The Finance Bill 2020 has 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.
The Bill has introduced a sub-section (1A) in section 6 of the IT Act, 1961, deeming an Indian citizen to be resident in India, if he is not liable to tax anywhere else.