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India Budget 2021: Why it matters to NRIs too

Dubai - Last year’s Union budget had revised norms on who qualifies as an NRI.



by

Suneeti Ahuja Kohli

Published: Sun 31 Jan 2021, 6:33 PM

Last updated: Sun 31 Jan 2021, 6:41 PM

In just a few hours, at 9:30am (UAE time), India’s finance minister Nirmala Sitharaman will be unveiling the country’s annual budget. The document is as important for the non-resident Indians as it is for the resident Indians, for the incentives it offers for savings and investments and taxes it levies on the income generated in India.

On Sunday, Khaleej Times hosted an online discussion with fours experts to know their views on what to expect and how can the Indian finance ministry encourage more participation of NRIs in the Indian economy.

“We are expecting some announcements linked with the residential status of the NRIs and the rental income generated in the country,” said Neeraj Ritolia, Chairman at ICAI, Abu Dhabi Chapter.

Last year’s Union budget had revised norms on who qualifies as an NRI. Accordingly, visiting NRIs whose total income in India is up to Rs1.5 million during the financial year will continue to remain NRIs if the stay does not exceed 181 days. However, in case the total income exceeds Rs1.5 million, the stay in India cannot exceed 120 days.

“Such limits on income discourages investments in real estate in India. With RERA (Real Estate Regulatory Authority of India) in place, it is a good time for NRIs to invest in gated communities. Investments in infrastructure and real estate benefits other industries too, such as steel and cement. Linking residency status with rental income in the country discourages NRIs to invest,” says Ritolia.

Dixit Jain, Managing Director, The Tax Experts DMCC, too voiced similar concerns and argued for the Indian government to relax this limit. “Income criteria should be increased to a reasonable amount or probably the government should look for a different criterion to define a non-resident Indian.”

Dhaval Jasani, Founder and CEO at ZTI, has also called for reforms in tax filing in case of NRIs. “The Indian tax system has become robust in the last few years, however, there is still scope left to make it easier for the NRIs to file their taxes. The government of India should make it easy for the NRIs by bringing in indexation. The government should bring in the system of final assessment in case of real estate investments and sale. The funds should not be kept in abeyance for 2-3 years.”

India’s growth story is still on track, and so is the NRI interest in ploughing more investments back home. Even though the Covid-19 pandemic shook economies worldwide, India is expected to be back on the growth trajectory in a couple of years as per the Economic Survey, which was tabled in Indian parliament on Friday.

“This year will be more crucial for the economic growth of the country. Yes, we are expecting the economy to expand by 11 per cent in the next financial year, but we will still take some time to operate at full capacity,” said Krishnan Ramachandran, CEO of Barjeel Geojit Financial Services. “The Indian government did well to bring in some structural reforms along with monetary and fiscal support, which is helping revive confidence.”

India’s march towards a $5-trillion economy will benefit individuals, financial institutions and countries that partner with it. “The bilateral trade between UAE and India is at $100 billion right now. The two countries have great potential and scope for furthering trade and relations. Last year, India managed to attract capital inflows from international financial institutions into India. They have bestowed their faith, trust, and confidence in the country,” said Jasani.

India is among the UAE’s largest trading partners, and it is poised to play a significant role in deepening relations. The Indian budget through its measures can deepen NRI engagement, especially from the Gulf, and allow more individuals to be a part of the growth story.

suneeti@khaleejtimes.com


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