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.
Budget impact on NRIs
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.
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|
|37||Income < ₹ 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.