Wednesday 26 / June / 2024
The 2024 India election result has come and the new Government under the Primeminstership of Narendra Modi has come into power. Due to the coalition government and the BJP has no absolute majority, a host of welfare measures targeting different segments of society are expected. This is the most appropriate time to highlight certain genuine and reasonable demands of Indians working abroad. It is estimated that nearly 35 million Indians are living abroad.
The Indian diaspora with strong ties to the home country , sent remittances of $125 billion in 2023. This is the highest among all the countries of the world as per the data of World Bank. Despite the that fact that NRIs are supporting to increase the standard of living of people in India, besides supporting the economy by contributing to the Forex reserve, they are not being given due considerations on many areas.. During the last few Union Budgets, nothing special was there for this vital segment. Therefore, it is all the important to highlight certain very important issues for immediate consideration of the new Government.
Need for a comprehensive social security scheme
There are quite a number of schemes available at present designed by the Ministry of External Affairs for the benefit of Pravasi Indians. In reality, majority of the schemes have not reached the Pravasi owing to a host of reasons. The lack of awareness of the schemes among the Pravasis’ is one of the main reasons. Secondly the difficulties associated with the implementation, access and post-follow-up issues also largely contributed to the above. It is a fact that the needy has not benefitted from these welfare schemes.
Therefore, there is an urgent need for a comprehensive welfare scheme, under one umbrella to address the various shortcomings associated with the existing schemes, particularly for the unorganized and low-income groups. A Nodal Agency may be constituted for the effective implementation and monitoring of the schemes, on an ongoing basis. The scheme should cover savings, pension, insurance, and other welfare measures including resettlement. These should help the returned Pravasi’s for leading a better standard of living post-repatriation in their homeland.
There is an urgent need for a contributory Pension scheme. The Union Government to earmark the amount required for the contribution from the annual budgetary allocations. This may be restricted to migrant workers, middle and lower income groups. An option to the Pravasi’s to contribute more amount to the fund, depending on his financial capability while the Government contribution may be capped to a certain amount. As in the case of National Pension Scheme(NPS), the corpus may be entrusted to Pension Fund Regulatory Authority of India(PFRDA) approved agencies. This will ensure a peaceful post repartried life to the Pravasis’
There is also a need for enhanced health insurance coverage for the returnees.
The various social security measures for the Pravasvis’ and their family members including educational grants for the wards etc needed a relook considering the presentday requirements.
A collateral free and concessional financial assistance from Banks and Financial Institutions for setting up of Micro/SMEs or other ventures for resettlement in home land may be considered on favorable terms and made available within a time frame through single window system. A provision for distress relief to those who are repatriated shall also be considered for meeting exigencies, including death of the Pravasis’ or their spouse or children.
The existing scheme of Indian Community Welfare fund –ICWF), Scholarship Programme for Diaspora children (SPDC), Scheme for Legal/Financial Assistance to Indian Women deserted/divorced by NRI husbands etc may also be merged with the comprehensive scheme and brought under the Nodal agency.
Raw deal by income tax authorities
It is a fact that there is a discriminatory treatment in the Income Tax laws applicable to NRIs. In comparison, they are charged with higher rates of taxes, but deprived of many deductions available to “resident Indians”. This community- made up of non-resident Indians (NRIs) as well as People of Indian Origin (PIO) , face a considerable tax burden due to tax laws of Government of India.
Therefore it is very important to review the Rules by the Union Government. It is a fact that NRIs need not pay tax on their income on investments/Deposits with Banks in India.. But NRIs have rental income on properties, interest on their domestic savings with banks and NBFCs etc. There are differential treatment of income earned in respect of the above for nonresidents while comparing with that of resident Indians.
The basic exemption limit for the non residents under age of 60 years, the Indian Income Tax laws remains Rs2.50 Lakhs under the old regime and Rs3 lakhs under the new regime. A large number of of the NRIs fall into this category. For resident Indians, whose taxable income is above Rs2.5 lakhs but below Rs5 lakhs, a rebate of Rs12,500 (max) is allowed while the rebate is Rs25000 under new tax regime as per section 87A of the Income Tax Rules.
Unfortunately this allowance is not made available to NRIs. As a Non-resident, you still get the benefit of the basic exemption limit of Rs250,000 from your total income. However, if your total income in India consists of only short-term capital gains or long-term capital gains, then the benefit of the basic exemption limit is not available with respect to such gains.
Tax Deducted at Source (TDS) is applicable to the domestic income of NRIs at the rate of 30% plus 4% cess (effective rate 31.25) upto an income of Rs50 lakhs. Generally banks and financial institutions deduct the above amount at source (TDS) from NRIs. Most of the NRIs earn small amount of interest on their NRO deposits and other earning while TDS at 31.25% is being deducted and paid to the Income Tax Department irrespective of the amount. As per rules, NRIs need to filed annual return and get a refund, if ther is no tax liability. In reality these segment of people don’t file the IT returns as their income falls below the limit prescribed for filing tax returns and they loose the amount.
In the event of an NRI gets repatriated without completing a mandatory stay abroad, he loses the NRI status and is taxed accordingly for the income earned from 1st April of that year. On the top of it, all his deposits and other investments are subject to tax as applicable to resident Indians. This needs a relook.
The IT Department allows Residents but Not Oridinory Residents (RNORs) to continue to enjoy exemption available to NRIs for certain period after their return to India.
For them, the deposits held in foreign currency (FCNR) is exempt from tax for a certain period.
At least, the NRI should be permitted to enjoy the tax benefit till the maturity of their deposits held in India with Banks and Fis.
Restrictions on small saving deposit schemes
Unlike resident Indians, NRIs are not allowed to participate in certain popular small savings schemes. Investments by NRIs in India are governed primarily by the Foreign Exchange Management Act (FEMA) and regulations set by the Reserve Bank of India (RBI). These laws define the extent, type, and manner in which NRIs can invest in Indian securities, aiming to maintain the balance of payments stability and regulate the flow of foreign exchange.
NRIs are not allowed to participate in the following popular small savings schemes. Whatever be the rationale, the NRIs are denied opportunities for long term savings in risk free investments.
Public Provident Fund (PPF)
his is a long-term investment plan and the maximum amount that can be deposited at multiple occasions is restricted to Rs1.5 lakhs per year. The minimum period is 15 years with options to extent the period. The amount invested in this scheme and also the interest accrued is eligible for deductions under section 80C under the old regime upto a maximum of Rs1.5 lakhs per annum. The interest earned is outside the scope of Income Tax and hence considered a very attractive scheme, but not available to NRIs.
Sukanya Deposit Scheme
This Scheme aims to elevate the status of girls in the country, with a vision to put them on par with global standards. A long term savings plan, as per the current provisions of this scheme NRIs are not eligible to open Sukanya Samriddhi account for their daughters.
Sovereign Gold Bond Scheme
A popular scheme announced by the Government of India with long-term benefits. Despite the attractiveness of SGBs, NRIs are explicitly prohibited from investing in them.
Risk free investments like Senior Citizen Schme (SCSS) — maximum investment Rs 30 lakhs, National Savings Certificate etc with long term horizon also not available to NRIs.
In short, the NRIs need to be treated at par with residents in respect of risk-free investments with or without restrictions on repatriation options or with caps on the amount. Like 5 year Post office Deposit scheme, the NRI may be permitted to open an account jointly with a resident relative.
The investment landscape is ever-evolving, and there may be changes in FEMA/RBI regulations allowing NRIs to invest in above-mentioned risk free investments in future. Such potential policy changes could significantly impact NRIs’ investment strategies, making it crucial for investors to stay updated with the regulatory environment
Expatriates feel the pinch as peak season airfare goes up even 400%
The airlines have resorted to charging excessive fares, particularly in the GCC and European regions during summer vacations and Indian festival times. This makes the NRIs pocket empty particularly when they undertake the journey with family. Various associations and forums have represented against this looting with no positive response. Of late, with the cancellation of Air India Express flights to various destinations have further aggravated the situation. The Indian diaspora in GCC Countries, find it extremely difficult to plan a journey with their family to Indian destinations during vacation or for attending family functions. Urgent and pragmatic steps required from the authorities to stop the day light looting by the airlines.
Rationalisation of passport charges
While the charges for new and renewal of existing passports in India is Rs1,500 and for Takkal Rs3,500, the charges for the same services at overseas locations are exorbitantly high. There is no justification for levying such high charges. It may also be noted that major beneficiaries of such new and renewals are happening from the poor migration workers. Hence a review on the current charges needed a re-look.
Conclusion
A a host of other issues being faced by NRIs like enhanced custom duty free allowances upon repatriation, the high educational fees being charged on the wards of NRIs in professional colleges, digital participation in the adult franchise, and populasing the E passports etc.
The NRIs also alleges organized cromes against them which include land encroachment, cheating, forgery and illegal deposit withdrwals. Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) from around 30 countries has submitt a memorandum to the Prime Minister to bring an NRI Protection Bill or establish a centralised NRI agency in the Union government organised crime against NRIs, which include land encroachment, cheating, forgery, and illegal deposit withdrawals from Banks and Financial institution
The Union Government, various Pravasi Organisations etc to seriously deliberate on these issues and find out immediate solutions to the issues discussed above on an urgent basis. NRIs being Indian citizen’s seek only natural justice.
* The writer is former SBI and financial expert
