India News - Will NRIs in UAE have to pay tax in India? Here's the answer

The India budget 2020-21 added to a lot of confusion over non resident Indians being taxed in the UAE. Leading tax consultants have clarified with Al Khaleej Today, that if you are holding a resident visa in the UAE, your income will not be taxed back home, Why? "You are a resident of UAE under India-UAE Double Taxation Avoidance Agreements (DTAA) and holding residency visa of UAE. Therefore you will not be covered by the law proposed in today's budget. It may be recalled that the Double Tax Treaty UAE-India was signed in 1993," said H. P. Ranina, lawyer, specializing in tax and exchange management laws of India.

The person who is resident of no country and is out of India for 183 days (Now more than 240 days from April 1, 2021) just to maintain the NRI status will be considered as Resident of India and the world income will be taxable.

If he/she lives 20 days in Dubai, 30 in USA,  50 in Europe etc, it means he/she is not a permanent resident of any country so in that case he/she will be deemed to be resident of India and his global income will be taxed.

"We've made changes in Income Tax Act where if an Indian citizen stays out of the country for more than 182 days, he becomes non-resident," said Revenue Secy of India, Ajay Bhushan Pandey. "Now in order to become non-resident, he/she has to stay out of the country for 240 days."

Krishnan Ramachandran, CEO, Barjeel Geojit Securities, said: "With the UAE - India DTAA in place, a NRI holding a valid residency visa will not be taxed in India with respect to his income in UAE. This can be validated by furnishing a Tax Residency Certificate to the income tax authorities."

Naveen Sharma, Head Accounting, Audit & Advisory Services Focus Group, said: "A lot of Gulf based Indians start or expand their business and it is usual that they have to spend lot of time initially in their new business and now they will have one more headache: Worry about their NRI status because if they lose their NRI status, their entire global income will be taxable." 

Moreover, Indians work in Gulf countries and their families are usually in India and they visit India frequently to take care of them, they usually stay for 4-6 months when they visit them. Now, they have to worry about NRI status.  

Sharma, added: "These are backward looking budget proposals and will create lot of confusion and anxiety among the hardworking Indian population in the Gulf region. This is one of the worst budget proposal in the last 30 years and Government should immediately withdraw this as it is against the interest of the hardworking Indians overseas citizens who remit billions of dollars every year to India." 

Expressing his disappointment, Ashish Mehta, Managing Partner, Ashish Mehta & Associates, said: "This union budget 2020 may discourage investments from NRI whether in businesses or personal investments as it has dented the confidence of the non-resident Indian (NRI). NRI's may invest in their country of residence and other countries and in this instance UAE tends to gain as this may increase investments in the UAE by non-resident Indians whether residing in UAE or in other countries. In the past NRI have always assisted the govt whenever Indian foreign reserves have required inflow of money. Hope the govt will re-consider this move and not implement this new rule. Let us wait for further clarifications to emerge from the government prior to reaching to any conclusion."

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