Budget 2022: In the last year’s budget, some steps were taken to overcome the problems of Non Resident Indians (NRIs). Allowing NRIs to start One Person Companies (OPCs) made it easier for them to do business in India. The tax benefits to affordable housing and the benefit of tax holidays in this segment were also passed on to NRIs. The government had also relaxed the residency rules in view of the lockdown and flights ban by many countries.
However, many of their old demands are yet to be fulfilled. According to the Economic Times report, NRIs are expecting some of the following changes in the budget to be presented next month.
Liberal Tax Withholding Rule
Lenient tax witholding rules: When it comes to TDS, the scope with NRIs is less. When they sell a property worth less than Rs 50 lakh, they have to pay 20 per cent TDS on capital gains on holding the property for more than two years. On the other hand, TDS is levied under the income tax slab in case of capital gains made for short term i.e. less than two years. A surcharge on LTCG tax is levied on property worth more than Rs 50 lakh, which increases the TDS rate.
Similarly, while no TDS is levied on resident investors in stocks and mutual funds, NRIs have to pay TDS at the highest applicable tax rates. NRIs are expecting parity in TDS rules with them and resident taxpayers in this budget.
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Basic Exemption Limit
Basic exemption limit: Another major problem of NRIs is that they cannot adjust their capital gains against the basic exemption limit of Rs 2.5 lakh. If the capital gains of a resident are less than the basic exemption limit, then no tax is liable to be paid. However, NRIs have to pay full tax on capital gains even if they have an income of less than Rs 2.5 lakh.
investment limit
Investing restrictions: Like other taxpayers, NRIs are eligible for deduction of Rs 1.5 lakh under section 80C and up to Rs 50,000 in NPS under section 80CCD (1B). However, he can invest in limited options only. They cannot invest in Senior Citizen Savings Scheme, PPF account or NSC or Post Office deposits.
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similar tax deductions
Equal tax deductions: NRIs want some other small benefits, although these are important for some people. NRIs may live abroad, but their relatives and family members live here. However, NRIs are not eligible for certain deductions including medical treatment of dependents with disabilities (Section 80DD), treatment of family members suffering from special diseases (Section 80DDB) and disability of self or dependent (Section 80U). Such benefits should also be available to NRIs.
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