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How 2019 Budget Impacted NRIs – 7 Changes

The current budget was presented by the finance minister, Nirmala Sitharaman on July 5, 2019. She was an NRI but did that helped her in understanding concerns of NRIs?

Budgets are becoming nonevent as governments don’t wait for one year to announce changes. If they think something is important they introduce it anytime.

2019 Budget NRIs

Budget impact on NRIs 

NRI Gift

If an NRI receives a gift which has a value of ₹ 50,000 or more from anyone apart from relatives, the NRI has to disclose it and pay tax as applicable. The gift can be anything like cash, property etc. If the NRI has no other income but gets a gift the value of which is equal to or greater than ₹ 50,000, from a non-relative, the NRI has to file income tax returns.

Since the gift is accrued in India, it is considered taxable. Earlier such gifts were not taxable for NRIs as it was not mentioned explicitly. Relatives include parents, spouse, siblings, siblings’ spouse, children, children’s spouse, grandparents, grandchildren and grandchildren’s spouse.

The value of the gift received by an NRI is added to the other income if any, and taxed as per the income tax slab applicable unless a double taxation treaty disallows the taxation of the same.

This is brought under the purview of taxation to prevent the inappropriate transfer of money or property.

Must Read – NRI Gift Tax

Interest on Bonds

Interest earned on rupee-denominated bonds, taken between September 17, 2018 and March 31, 2019 has been exempt from income tax.

Aadhar Card for NRIs

NRIs had to wait for 180 days to get their Aadhaar card. But the FM has proposed a change. NRIs will get it on arrival to India once the application formalities are completed.

Black Money Act

Non-resident Indians (NRIs) who flee abroad to avoid prosecution will fall under the ambit of the Black Money Act with retrospective effect. This will enable law enforcement agencies to go after undisclosed foreign assets and money parked abroad.

Surcharge

The surcharge on tax payable by NRIs has increased –

Surcharge (%)Income Slab
10₹ 50,00,000 < Income < ₹ 1,00,00,000 post deduction
15₹ 1,00,00,000 < Income > ₹ 2,00,00,000 post deduction
25₹ 2,00,00,000 < Income > ₹ 5,00,00,000 post deduction
37Income < ₹ 5,00,00,000 post deduction

Check – NRI Tax Rates

NRI Portfolio Investments

NRI portfolio investment route will be merged with the foreign portfolio investment route. (this has created another complexity as FPI were charged higher taxes – clarity on this is awaited)

Mutual Fund Taxation

No additional income-tax shall be chargeable in respect of any amount of income distributed, on or after the 1st day of September, 2019, by a Mutual Fund of which all the unit holders are non-residents and which fulfills certain other specified conditions. This is not clear as there are no such funds as of now and it is only applicable for ‘additional’ tax.

Read – Mutual Fund Tax for NRIs

Do keep in mind the new changes before filing your taxes for the next financial year.

If you have any questions on the budget or you have any inputs/clarity – please feel free to add in the comment section.

About the Author

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning".

  • ANIL says:

    CAN NRI HOLDING AND CONTINUING PPF WHILE RESIDENT STATUS CAN CONTINUE INVESTING EVERY YEAR IN THAT PPF

  • Gopala says:

    Is the FD interest taxable

    • Hemant Beniwal says:

      Hi Gopala,
      can you please clarify?

  • Jatin says:

    Can an NRI continue with the Mutual Fund investments every month, which were started when he was a Resident?

    If yes, any change needed or status quo is okay?

    Thanks.

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