Income of an NRI generated in India will be taxed here, Nirmala Sitharaman said.

Highlights No intention to tax global income of NRIs: Finance Minister

"Income of NRI generated in India will be taxed here," she said

"Not taxing what you're earning in Dubai": Ms Sitharaman

Finance Minister Nirmala Sitharaman on Sunday said that there is no intention to tax global income of NRIs and only income generated in India will be taxed.

Following the Budget announcement on Saturday, there was confusion about the tax liability of Non-Resident Indians (NRIs) on their global income.

"What we are doing now is that the income of an NRI generated in India will be taxed here. If he's earning something in a jurisdiction where there is no tax, why will I include that into mine that has been generated there," Ms Sitharaman said.

"Whereas if you have a property here and you have a rent out of it, but because you are living there, you carry this rent into your income there and pay no tax there, pay no tax here ... since the property is in India, I have got a sovereign right to tax," she further said in a post Budget interaction with media.

"I am not taxing what you're earning in Dubai but that property which is giving you a rent here, you may be an NRI, you may be living there but that is revenue being generated here for you. So that's the issue," she added.

The Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction.

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 finance ministry said in a statement.

"The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. 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," it said.

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, it added.