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Govt explains residency criteria for NRI, gives example of 'tie breaker rule'


New Delhi [India], Feb 2 (ANI): An Indian citizen who is having a permanent home in the UAE and has his employment or business in the UAE and most of the time stay in the UAE would not be hit by a new provision in the Finance Bill 2020 and would remain resident of the UAE, said the government on Sunday.


The Finance Bill 2020 has introduced a Sub-section (1A) in Section 6 deeming an Indian citizen to be resident in India if he is not liable to tax anywhere else.


"An Indian citizen who is having a permanent home in UAE and have his employment or business in UAE and most of the time stay in UAE would not be hit by this provision and would remain resident of UAE," said the government.


To dispel doubts about the new provision, the government says that "there is an Indian citizen who stays in UAE. As per UAE law, if a person stays there for 183 days or more in a calendar year, he becomes resident of UAE. If under Sub-section (1A), he also becomes resident in India. It becomes a case of tie-breaker. The tie-breaker rule is applied in accordance with Article 4 of India UAE DTAA."

The first rule is where does this person have a permanent home. If he has a permanent home in UAE only, the tie-breaker test is resolved in favour of him being a resident of UAE.


According to the government, if he has a permanent home in both the UAE and India, we go to the second test, which is the centre of vital interest being personal and economic relation. If a person is employed only in UAE or has business establishment only in the UAE or has a source of income only in the UAE, then his economic relation would only lie in the UAE. Under such a scenario, he would become a resident of the UAE.


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