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India’s budget 2022: How do NRIs gain?
The Narendra Modi-led government has announced three broad measures for NRIs.
Reuters
India’s gross domestic product (GDP) growth for the financial year 2022 is targeted at 9.22 per cent, which gives a lot of confidence to non-resident Indians (NRIs) to invest in India.
NRIs will continue to send remittances, which have been constantly growing at $ 90 (Dh330.57) billion in 2021.
India is ranked seventh in the world as far as remittance to its GDP is concerned.
Indian Finance Minister Nirmala Sitharaman tabled her fourth consecutive budget under challenging circumstances such as high fiscal deficit, inflationary pressure and rising unemployment across various sectors.
With the shortest ever budget speech, the initial message is that the Narendra Modi-led government has not tinkered with the existing taxation regime for NRIs or the taxpayers.
The government has announced three broad measures for NRIs.
The first one is the introduction of e-rupee in the next fiscal year. This will surely bring positive change as it could benefit NRIs in reducing cost on cross-border remittances and provide for faster real-time remittances.
The second noteworthy change is that e-passports are to be rolled out in the financial year starting from April 1. The e-passport will come with an electronic chip with security-related data encoded on it. This will help NRIs in managing entry and exit with ease. The embedded chip in passport and linkages of data with India’s Ministry of External Affairs (MEA) and tax authorities can provide data to tax authorities with seamless accuracy to detect any incorrect disclosure in residential status and incorrect reporting and taxation of foreign income of the NRIs.
However, the implementation of the scheme is a concern and needs to be monitored closely. For safety's sake, it would make sense for the NRIs to still maintain data in a physical model in the initial years, especially where the residential status of NRIs is changing in a borderline case by one or two days.
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The government has provided additional timelines to correct errors in a tax return by providing a two-year window from the end of the assessment year. Now, the taxpayers can file an updated return on payment of additional tax.
This provision indicates that the tax authorities shall make use of financial information obtained from various sources. NRIs will have to be careful in missing out on any information in the tax return as the subsequent rectification after the end of the financial year could cost them additional taxes.
The author is a Senior Partner — Direct Tax & CPP — MBG Corporate Services
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