No move by Indian government to levy income tax on NRIs

Muscat: 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.
India’s Ministry of Finance, through the country’s Press Information Bureau (PIB), had issued this statement after confusion reigned over whether NRIs would see their incomes taxed.
“The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident of India, if he is not liable to be taxed in any country or jurisdiction,” said the Ministry of Finance statement. “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 bona fide workers in other countries,” added the Ministry. “In some sections 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 pay 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,” the statement went on to say. “Necessary clarification, if required, shall be incorporated in the relevant provisions of the law.”
This clarification was necessary, as many Indian nationals in Oman were confused over whether they needed to pay taxes, following Indian Finance Minister Nirmala Sitharaman’s 2020 budget speech, in which she had said that Indians who lived overseas would be taxed, if they were not taxed in their countries of residence.
“It is proposed to reduce the time of stay in India from 182 days to 120 days for an Indian citizen or person of Indian origin to become a resident in India,” she said. “Consequently, it is proposed to relax the provision of ‘resident but not ordinarily resident’ so that a resident who has been non-resident in seven out of ten previous years would be resident but not ordinarily resident. It is also proposed to provide that an Indian citizen who is not liable to tax anywhere would be deemed to be resident in India.”
The Indian Embassy in Oman also said that they had been waiting for further clarity on the perceived taxation of NRIs, and that Indian nationals in Oman were also concerned over this.
“There have been plans raised before about taxing NRIs, but that has not happened yet,” said Kumar Mahesh, an engineer in Sur. “If they were to tax us, it means less money that we can send home for our families.”
“Our families depend a lot on this money, so we were very worried when we heard of this news, particularly since it was not clear,” he added.
Amina Momin, who works as an educator in Muscat, said, “There is no clarity on who qualifies for this tax, nor do we know how much we will be charged. If so, who will make sure we actually pay this income tax, because there might be those who choose to wriggle out of this. My biggest concern was how this would impact our savings.”
Mukund Manohar, an audit and financial governance professional working in Oman, explained, “Indians working in Oman are considered residents of Oman under the Oman India Double Taxation Avoidance Agreement signed in 1997. We will therefore not be affected by the law proposed in the budget as long as the duration-of-stay criteria are met.”
“So far, all of the Indian nationals in Oman and the other GCC countries have enjoyed a tax-free income,” said a financial advisor in the country. “It is one of the main advantages for white-collar workers who come here. Indians and other nationals from South Asian countries do make up a significant portion of the labour force in the GCC countries. This income is doubly vital for blue collar workers, many of whom work in the construction, maintenance, and industrial sectors. Families back home depend on this money to run their households, and taxing them would’ve taken a big chunk out of that.”