The Finance Minister in Union Budget 2020 proposed that an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India. This led to the fear that they would now be liable to pay tax in India while earning overseas.
Some Indian citizens allegedly move to low or no tax jurisdiction to avoid payment of tax in India.
To clear confusion the government said, "The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries."
It further said, "In some section 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 tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct."
With this, the government has maintained status quo in terms of taxation as earlier also NRIs income earned from a property, capital gains on transfer of assets located in India, or income from FDs or interest on a savings bank account was taxed.
However, it has reduced the time of stay in India to 120 days from 182 days for an Indian citizen or person of Indian origin to become a resident in India.