Finance Minister Nirmala Sitharaman’s growth oriented Union Budget 2021 has not just appeased the corporate sector and capital markets, but also brought happy times for Indians who are settled abroad.
Speaking to Asian Voice on the Union Budget 2021, Managing Director and CEO of ICICI Bank UK PLC., Loknath Mishra said, “The budget is growth oriented and sets the country on a clear path to become a 5 trillion dollar economy in the medium term. There are multiple initiatives for NRIs, MNCs, FPIs and foreign funds from the UK to partner this growth.”
Here are a few salient points for the NRIs in the 2021 budget:
One Person Companies (OPC)
Until now, only Indians staying in India could enjoy the legal status of a company and have the same access to capital. One had to stay in the country for over 182 days to set up an OPC. The Union Budget 2021 proposes relaxations in the previous rule, and the limit for an Indian to stay in India in order to open an OPC is now only 120 days instead of 182 days. This comes as a breather for young entrepreneurs, start-up founders who’ll be able to do business with more ease and boost the IT sector in particular.
Elimination of double tax
NRIs have been paying double taxes in India post their return to India after retirement on their income earned in foreign lands. Sometimes they are not able to encash the taxes they paid overseas due to mis-mtach of taxation periods. The Union Budget 2021 promises to eliminate double taxation of retirement funds.
Tax benefits on real estate
The budget also extends tax benefits to affordable housing. “The additional deduction of Rs 1.5 lakh for interest on home loans under Sec 80EEA is now available on loans taken till 31 March 2022. This deduction is over and above the deduction of Rs 2 lakh for interest under Section 24. Given that home loan rates have fallen to less than 7%, this additional deduction presents a golden opportunity for NRIs to invest in real estate in the home country,” the Economic Times reported.
Over and above the new and promising proposals for NRIs in the Union Budget 2021, some pain points still continue to persist. Some of them include the TDS rules, wherein NRIs spend about 15% on short term gains from stocks and equity funds and sometimes even higher to benefit from debt funds, gold and real estate. On bank deposits, NRIs have been shelling up to 30% TDS so far.
