When the Indian finance minister had said a month ago that non-resident Indians NRI) who did not pay taxes in the foreign countries where they worked will have to pay tax in India, many Indians working in the Middle East countries had become anxious. Fortunately, a clarification was issued that the intention was to tax only those who sought to escape paying tax, taking advantage of their NRI status. It has been clarified that Indians working in countries where incomes are not taxed will not be taxed in India.
This clarification has brought relief to many Indians employed in the Gulf, who will not be required to pay income tax in India.
As per the clarification, if an Indian citizen becomes deemed resident of India, the income she or he earns outside India shall not be taxed in India. However, if she or he derives income from some business or job in India, say rent from a property or so on, that will be taxed. In other words, if NRIs earn income within in India, it will be taxed in India. If they earn incomes in countries where there is no tax, they will not be required to pay any tax on that income in India either.
It has been clarified that Indians working in the Middle East, as well as those in the Merchant Navy, will not be required to pay any tax on their incomes.