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No tax on salaries by NRIs, clarifies Indian minister

Income earned from salaries by non-resident Indians in the Gulf countries will not be taxed in India.

Union Finance Minister Nirmala Sitharaman in a clarification said that an amendment in the Finance Act, 2021, has merely incorporated general definition of the term “liable to tax” in the Income Tax Act to provide clarity.

A tweet from the minister’s office said on Thursday, “No going back on words. The Finance Act, 2021 hasn’t brought in any additional or new tax on hardworking Indian workers in Saudi Arabia, UAE, Oman and Qatar.”

The amendment in the Finance Act has not altered the taxability of salary income earned by non-resident Indian citizens in Gulf countries.

“Their salary income earned in the Gulf countries would continue to be exempt in India”, the Office of Finance Minister tweeted.

Earlier in the day, Trinamool Congress Member of Parliament Mahua Moitra had tweeted a picture of an amendment in Finance Bill, 2021, saying the complicated words in the amendment is in reality a Special Gulf workers tax.

“FM going back on her words. Hardworking Indian workers in Saudi/UAE/Oman/Qatar to be taxed EXTRA,” Moitra tweeted.

Sitharaman said that drawing conclusions without comprehending the facts is worrying. “Further, putting out the conclusion on a social media platform not only misleads but also creates unwanted panic among people,” the minister’s office tweeted.

India’s 2020 budget has proposed to tax Indians who are not tax residents in India but are neither tax residents in any other country. The budget proposed changes in the income tax law to make such individuals deemed tax residents of India.

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