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New provision in Finance Bill 2020

Posted on : 06 Feb 2020

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  • The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries.
  • The interpretation of the proposed provision is that those Indians who are bonafide workers in other countries, including in 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, is not correct.
  • 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.
  • 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. Necessary clarification, if required, shall be incorporated in the relevant provision of the law.

Article Related Questions

  1. Consider the following statements regarding the new provision in Finance Bill 2020.
    1.The new provision is intended to include in tax net those Indian citizens who are bonafide workers in other countries.
    2.Income earned by Indian citizens outside India shall not be taxed in India unless it is derived from an Indian business or profession.
    3.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.
    Which of the statements given above is/are correct?

  2. 1.1 and 2 only

    2.2 and 3 only

    3.2 only

    4.1, 2 and 3

    Right Ans : 2 and 3 only

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