Earlier this year, the Indian government presented the Union Budget 2019 with a focus on investments that boost the economy. Apart from bringing in domestic reforms, Budget 2019 came with a host of changes for the NRI population as well. Given that NRI remittances to India in 2019 amounts to nearly $80 billions of India’s forex reserves so far, the current budget acknowledged this contribution and outlined specific benefits targeted at the non-resident diaspora of India.
What are some of the highlights from Union Budget 2019 impacting NRIs?
- NRI portfolio investment route to be merged with the FPI: Union Budget 2019 has proposed to merge NRI portfolio investment with foreign portfolio investment (FPI). This will provide NRIs with seamless access to Indian equities and encourage larger investments through pooled and professionally managed structures.
- India to host annual Global Investors Meet: The government has proposed to hold a Global Investors Meet annually to spur economic growth and generate more jobs. Initiated with an intent to draw NRIs across the globe towards the Indian investment arena and present them with more opportunities to invest in the country, this promises to be a huge annual attraction.
- NRIs to be encouraged to purchase more investment properties : The limit for tax deducted at source on rental income has now been increased from INR 180,000 to INR 240,000. This encourages NRIs to invest more in both residential and commercial properties in India.
- Aadhaar Cards to be issued on arrival: In a big move to make life easier for NRIs with Indian passports, the government will now issue Aadhaar Cards to NRIs on arrival. This will eliminate the wait for 180 days as previously mandated.
- Gifts to NRIs to become taxable: Currently, gifts that are given by Indian residents to NRIs (apart from specified relatives or blood relations) are not taxable. However, now NRIs will be taxed in India for the gift amount as per normal tax slabs applicable to residents. In the case of mutual treaties between countries, DTAT (Double Taxation Avoidance Treaty) will apply.
- Black Money Act to be expanded to include NRIs: Union Budget 2019 has proposed to expand the scope of the Black Money Act and include NRIs under its purview. This will cover properties and accounts created and owned by NRIs when they were residents. The act covered only residents until now.
- Miscellaneous: Among other features of the Union Budget 2019 impacting its NRI diaspora is the promise to develop bigger and better improved infrastructure that includes airports and efficient railway systems to facilitate global movement for the people.
As NRIs continue to positively influence India’s economic growth, the Union Budget’s proposed policies reflect this contribution and has instituted measures to facilitate further NRI involvement and investments within India while making efforts to curb black money that will help clean the economy.