As Budget 2025 approaches, Non-Resident Indians (NRIs) are keenly watching for reforms that could make India a more attractive destination for their investments. By addressing key challenges in taxation and simplifying regulatory processes, the budget has the potential to boost inward remittances and encourage NRIs to invest more confidently in India.
Simplifying TDS compliance
Tax Deduction at Source (TDS) compliance remains a complex issue for NRIs, particularly in property transactions. While resident Indians face a 1% TDS rate on property sales, NRIs encounter higher rates coupled with extensive filing requirements. Although applying for a lower TDS certificate is an option, the lack of strict timelines often leads to delays. NRIs are hopeful that the new budget will introduce a streamlined TDS process, aligning it more closely with regulations for resident Indians.
Leveraging DTAA benefits
NRIs often grapple with dual taxation on income earned abroad, despite India’s Double Tax Avoidance Agreements (DTAAs) with several countries. The application of these agreements remains complex. NRIs expect the budget to enhance clarity and provisions for incorporating DTAA benefits into TDS returns, reducing tax liabilities on income already taxed abroad.
Simplified repatriation of funds
The current repatriation process, particularly for property sale proceeds, involves multiple compliance steps under FEMA guidelines. NRIs are advocating for reforms that simplify the transfer of funds to foreign accounts. Streamlining this process could bolster their confidence in investing in India, knowing their investments can be easily repatriated when required.
Expanding investment opportunities
India’s investment landscape has grown to attract NRIs, offering opportunities in various sectors. However, many schemes remain restricted to resident Indians. NRIs are urging the government to open more avenues, enabling them to diversify their portfolios and inject additional funds into the Indian economy.
Enhanced tax incentives
While NRIs enjoy certain tax benefits, such as exemptions on interest earned from NRE accounts and deductions for investments in life insurance and provident funds, they believe there is room for improvement. Expanding tax incentives for investments could significantly enhance India’s attractiveness as an investment destination
With the right announcements, Budget 2025 can become a turning point for NRIs, addressing critical taxation and investment barriers. By simplifying processes and introducing reforms, the government aims to foster stronger economic ties with the global Indian diaspora and increase inward remittances. This budget can not only resolve some challenges faced by NRIs, but also about set the stage for a more inclusive and investment-friendly India
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