Union Budget always carries high aspirations from the people and its benefits to high number of individuals are a mark of success for the government. Everybody wants to know, how upcoming budget will prove beneficial to them. With the increasing pace of globalization, now even NRIs also pay close attention to the Budget to know the benefits for them from the government. They plan their investments & other financial issues according to the Budget statement.
NRIs plays a vital part in Indian economy as their continuous remittance leads to increase in Foreign Exchange reserve. After the new RBI lenient guidelines toward NRI investment in real estate, NRIs are more and more interested in Indian economy. As the Budget 2013 is round the corner, let’s have a look on all expected proposals from the budget which will prove beneficial to the NRI. Here we discuss few expectations of NRI from the Union Budget 2013:
Introduction of minimum exemption on TDS on rental / professional incomes for NRI
According to the existing law, the resident Indian needs to pay TDS on income only if the amount of income will go beyond certain pre – decided limit in a financial year. For example: a resident Indian is liable to pay TDS on rental income only if the total amount of rental income paid to him exceeds the level of Rs 1,80,000. In same manner, if the professional income exceeds the limit of Rs 30,000, then only person is liable to pay TDS on professional income.
But NRIs are always deprived from such provisions. They need to pay TDS on any such income, no matter how much the amount is. The rate at which TDS is deducted on incomes is 30 percent for NRIs at present. The Budget may introduce a certain exemption of amount for NRIs as well. This will on the other hand, encourage more investment in India by NRIs.
Enlarge deductions under Section 80DD and 80DDB to the NRIs
NRIs have to bear the everyday expenditure on the medical treatment of their parents or other dependants residing in India. Deductions on such expenditures on medical treatment of one’s dependant are available for the residents of India but Non-residents cannot claim for any such deductions. So, NRI’s who have dependants in India should be allowed for such deductions. It seems discriminatory to deprive NRI from this advantage.
Making Infrastructure Bonds more lucrative
Today, infrastructure industry is the most promising industry which brings more & more economic development to the country. It is the only sector where NRI seek quick returns on investment. According to estimates, country needs around 1 trillion USD in next five for development in infrastructure which can be expected from NRI’s. NRI can play a vital role in development of this sector if attractive incentives were given on transfer of funds in infrastructure.
Reduction in rates of TDS on interest payable on long term infrastructural bonds has become a good beginning in 2012’s Finance Act for non residents. Investment in infrastructural bond will give a deduction of Rs 20,000 from 2012. It should be done in this budget as well along with exemption on interest income from such bonds can be given to the NRI.
Exemption Limit of Wealth tax should be raised
In India, on purchase of any asset net worth more than Rs 30 Lakhs lead to the wealth tax which is 1 percent. This is same for resident Indians and non resident. The current limit of exemption of wealth tax appears very small in comparison to increasing rates of properties. So, it is essential to increase this limit of wealth tax. It is expected that Finance Minister may increase this limit upto Rs 1 crore. This will result in wide – ranging investment by the NRI which in turn bring impulse to the real estate industry.
Flexibility in claiming benefits
To make a claim for benefit under tax treaty, non resident need to bring his Tax residency Certificate (TRC), this is very tedious and difficult task because it includes various tax jurisdictions. It becomes compulsory under Finance Act 2012. Additionally, a notification from CBDT provides that the TRC should have all prescribed details as confirmed by the government of country of residence. It is expected that NRI should be provided some relaxation in such particulars.
These are the few expectations of the NRI from the upcoming budget 2013. If these points are considered by Finance Minister, then it will increase the NRI investments in India which in turn will help in meeting high economic growth that is already projected at 6.1-6.7% in the latest economic survey.