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Union Budget 2024: What Is In It For The NRIs?

Updated on March 14, 2024 01:56 pm
Union Budget 2024

The Indian Union Budget 2024, a significant event in the country's financial calendar, holds implications for Non-Resident Indians (NRIs) as well. Let's explore the key highlights of the budget announcement and how it may affect NRIs.

Key Highlights of the Budget Announcement

Taxation Reforms

The budget proposes various taxation reforms aimed at simplifying the tax structure and promoting investment. It includes changes in income tax slabs and rates, with the aim of reducing the tax burden on individuals.

The two income tax slabs remain unchanged and taxpayers can continue to choose between the two. The most notable differences between the two slabs lies in the fact that the old tax regime allows taxpayers to avail exemptions under various sections of income tax rules. The new text regime, however, offers a fixed but lower tax rate than its predecessor. 

The finance minister, Nirmala Sitharaman, had announced in the 2023-2024 budget that there will be a hike in the income tax rebate limit from 5  lakh Indian rupees to 7 lakh Indian rupees under the new income tax regime. Furthermore, she also issues a hike in the lowest exemption limit under the new tax slab from 2.5 lakh Indian rupees to 3 lakh Indian rupees. 

Infrastructure Development

Without getting too deep in the nitty gritty details, significant allocations have been made towards infrastructure development projects, including transportation, energy, and urban infrastructure. These investments aim to boost economic growth and create employment opportunities.

Boost to Healthcare 

The budget focuses on strengthening the healthcare sector by increasing allocations for healthcare infrastructure, research, and development. This could lead to improvements in healthcare facilities and services across the country.

Promotion of Digital Economy

Measures are proposed to promote the digital economy, including investments in digital infrastructure and the expansion of digital payment systems. This could facilitate greater financial inclusion and ease of transactions for NRIs.

Impact on Non-Resident Indians

The budget announcements could have several implications for NRIs:

  1. Tax Planning: NRIs should stay updated on changes in tax laws and assess their impact on their financial planning. Changes in income tax rates and exemptions may influence investment decisions and retirement planning for NRIs.
  2. Investment Opportunities: Investments in infrastructure projects present attractive opportunities for NRIs looking to invest in India. NRIs may consider diversifying their investment portfolio to include sectors such as real estate, infrastructure, and healthcare.
  3. Digital Transformation: The promotion of the digital economy could lead to the expansion of digital banking services and investment platforms, making it easier for NRIs to manage their finances and invest in India remotely.

Understanding NRE and NRO Accounts

One of the most important decisions an NRI will need to make is which caliber of savings account they want to hold once they immigrate. If you have not made the decision just yet, make sure you tackle that before you start sending money to India or investing. 

India’s banking system offers two types of accounts tailored for Non-Resident Indians (NRIs): Non-Resident External (NRE Account) and Non-Resident Ordinary (NRO Account).

Non-Resident External (NRE) Account: An NRE account allows NRIs to maintain foreign earnings in Indian rupees. It offers full repatriation of both principal and interest earned, making it ideal for parking foreign income.

Non-Resident Ordinary (NRO) Account: An NRO account is used to manage income earned in India, such as rental income, dividends, or pension. While the principal amount is repatriable, the interest earned is subject to certain restrictions.

To gain a more in-depth understanding of the various benefits and drawbacks of NRE Accounts vs. NRO Accounts, rest assured you can find all the information with CompareRemit. 

 To compare the top NRE and NRO accounts and find the best one for you, visit the NRE Account Compare Page or the NRO Account Compare Page.

Frequently Asked Questions (FAQs) 

Are NRIs required to pay taxes in India?

NRIs are liable to pay taxes in India on income earned or received in India. However, they may be eligible for certain exemptions or deductions under the Double Taxation Avoidance Agreement (DTAA) or domestic tax laws.

Can NRIs invest in Indian stocks and mutual funds?

Yes, NRIs can invest in Indian stocks and mutual funds subject to certain regulations prescribed by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

Can NRIs open joint accounts with Indian residents?

NRIs can open joint accounts with Indian residents, subject to compliance with the rules and regulations specified by the respective banks.

What is the procedure for repatriation of funds from NRE and NRO accounts?

Funds from NRE accounts are fully repatriable, while funds from NRO accounts are subject to repatriation restrictions. NRIs need to follow the prescribed procedures and documentation requirements for repatriating funds from these accounts.

How can NRIs stay updated on changes in Indian financial regulations?

NRIs can stay informed about changes in Indian financial regulations by regularly monitoring updates from regulatory authorities such as the RBI, SEBI, and the Income Tax Department, as well as consulting financial advisors specializing in NRI services.

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