After the Modi Government passed the budget for 2018, a lot of sectors are reacting to its impending impact on its people. While the biggest winners are the agricultural and healthcare sectors, the budget will have an indirect impact on the Non-resident Indians (NRI). While there are minimal changes made specifically for the NRI overall, the repercussions of the new budget are indirect. There were moderate expectations from the NRI of this year’s budget. However, below are a few policy changes to keep an eye out if you are a NRI –
- Starting April 1, 2018, for any financial transaction over Rs. 2.5 lakhs, every NRI will require a PAN. A NRI is still not eligible for a Aadhaar card.
- Remittance – NRIs will now be taxed based on the size of the economic presence in India rather than just the physical presence.
- Investment Opportunities – The government is expected to make policy changes that will treat all NRI investments into India as domestic investment thereby opening up more foreign investments channels to bring cash flows back into India.
- No more cash payments exceeding the amount of Rs. 10,000 from trusts and organizations.
- Capital gains on income of equity oriented mutual funds over Rs. 100,000 will incur a 10% tax if long term, i.e. if it’s held over one year.
- If as an NRI, you earn income in India over Rs. 50,000,00, a surcharge of 10% will be levied. Over Rs. one crore he will be charged a 15% surcharge.
- NRIs will soon be able to open gold-deposit accounts that will treat gold as an asset class.
- For NRIs who make an income on equity investments or equity linked savings schemes will now pay a 10% tax on that.
- Cryptocurrency not acceptable in India.
Travel to India
- Several airports will be substantially expanded to allow more air travel possible. The intention is to up the travel numbers by one billion trips per year.
- More domestic airports to be interconnected to facilitate easier local travel for the NRI. This would make your commute from an international airport to a far way location much more convenient.
- Additional metro rail networks to be developed in Mumbai and Bengaluru.
Import & Customs
- Customs duty on mobile phones, perfumes, dental hygiene, after shave, deodorants and room fresheners to be hiked to 20%.
- This 20% hike also to apply to imitation jewelry, sunglasses, cigarette lighters, smart watches, wearable devices toys and furniture.
- Any import of LCD/LED/OLED panels and other parts of TVs will have an import duty of 15%.
- Import of solar cells and tempered glass for solar cell manufacture will be exempted from customs duty.
For Parents of the NRI
- Medical expense deduction increased to Rs. 50,000 and one lakh for certain illnesses.
- The first Rs. 50, 000 will be tax exempted for interests accrued from bank and post office saving accounts.
- Senior citizen limit for interest bearing LIC schemes made Rs. 15 lakhs.
It will be interesting to see how these play out in the next year and how much of it will really bear an impact on the NRI. Path2usa helps to further understand the regulations pertaining to NRIs and taxation in India.