Indian residents in the UAE and the Middle East will not be taxed on their incomes earned abroad, the Indian government has clarified. There was widespread confusion among Indians living overseas following a proposed change that was part of the federal budget tabled before the Indian parliament on Saturday. A new provision suggested that Indian citizens who did not pay taxes in a foreign country would be deemed residents of India and their global income would be taxable back home. The number of days a person must live outside India was also revised from 182 to 240 to be classified as a non-resident Indian or NRI. However, in a press conference that followed the budget, a senior Indian revenue secretary clarified that income would be taxable only if an individual lived in several different countries. Those who are residents of one country outside India will be exempt. On Sunday, the government of India also issued a statement specifying it was an “anti-abuse provision” to loop in Indian citizens, who live in low or no tax jurisdiction to stay off the tax radar in India. “The new provision is not intended to tax those Indian citizens who are bonafide workers in other countries,” read a press release issued by India’s ministry of finance. “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 the Middle East, and who are not liable to tax in these countries will be taxed in India on the income they have earned there. This interpretation is not correct.” The ministry clarified that income earned outside the country would not be taxed unless it was derived from a business or profession based out of India. “This rule does not affect residents of the UAE and Indians in this region,” said Devesh Mamtani, chief market strategist of Century Financials, a financial services company. “This applies to some people who are misusing the rule. They roam outside the country in different jurisdictions like Dubai, Mauritius and other countries that are tax-free to take their income outside the country but are not residents of any of those countries. “It was brought in to curb this misuse and not to hurt people working abroad.” Dixit Jain, a chartered accountant and managing director of The Tax Experts DMCC said Indians in the UAE and the Gulf cannot be taxed over the income they earn here because India has a double tax avoidance agreement with these nations. “I’m telling people to relax, there is nothing to worry for NRIs in the UAE,” he said. “This is not intended for a person who is a salaried employee or has a business in the UAE or anywhere else in the world.” Mr Jain said a tax residency certificate can be obtained from the UAE’s ministry of finance to prove residency in an overseas country. “This will only be needed if the government of India sends a tax notice to an NRI. A tax residency certificate can be obtained from the host country to prove residency.” The UAE issues such certificates to people who are employed or have businesses here and have been in the Emirates for 180 days.