Implications of India’s Union Budget for NRIs residing in Oman and other countries

Oman Tuesday 02/February/2021 19:08 PM
By: CA. Sarweshwar Biyani
Implications of India’s Union Budget for NRIs residing in Oman and other countries
CA. Sarweshwar Biyani, Vice President – Finance and Accounts, SV Pittie Sohar Textiles [FZC] SAOC, Sohar Free Zone.

The Union Budget of India is equally important for non-resident Indians residing in Oman as it is for resident Indians. Various reasons contribute to this, specially NRI’s saving, investment, income and tax implications in India.

In 2021 budget, announcement was expected to make residency conditions favourable to NRIs for their investments and income in India, however, budget kept silence on the same.

Last year budget linked residency conditions with NRIs annual income in India. In case annual income in India is more than Rs.15 lakh, NRIs allowed to stay in India only up to 120 days in a year. This is to maintain NRI status and to avoid paying taxes in India. This change considered widely to discourage investment by NRIs in India.

This time there was a considerable hope to amend suitably this provision to boost contribution of NRIs in Indian economy. However, it did not take place.

Another side, this year budget allowed NRIs to open One Person Company [OPC]. Also, many conditions for OPCs were eased like OPC now can grow with no restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days.

This move certainly will assist NRIs with potential entrepreneurship skills to enter into Indian market. However, without suitable relaxation in provisions which link residency with annual income of Rs. 15 lakhs will not encourage the real intended contribution from NRIs in Indian economy.

For NRIs returning to India and facing double taxation issues in respect of their income accrued on foreign retirement benefit account, good initiative proposed by Finance Minister to notify the rules for removing NRIs hardship of double taxation. This is a welcome move and it will give a lot of relief to NRIs on their savings.

Budget provides relief to senior citizens who are 75 years of age or above and have only interest income apart from the pension income. Now, they do not need to file income tax return.

This relief with certain conditions is not appreciated due to various reasons. One age factor is kept very high, second old age senior citizens depend exclusively on their saving, pension and interest income.

These must be tax free partially or fully to provide real relief to them. Only providing relief from filing tax return without any tax rebate/benefit will not help to these citizens effectively.

No change made in income tax slabs in the budget. If no relaxation given in the income tax slabs, it is also considerable and commendable point that no new tax burden put on common man in the crisis situation where government faces huge challenges to manage declined revenue due to pandemic.

Lot of other appreciable initiatives taken in this budget which will benefit common man indirectly and pave the way for economic growth. Health care spending increased by 137 per cent. Widening Production Linked Scheme and expansion of National Infrastructure Pipeline will grow manufacturing sector and create jobs.

On disinvestment front, government planned hefty amount to be achieved from disinvestment of various Public Sector Enterprises. Though earlier targets of disinvestment are yet to be achieved, commitments in this budget are giving hope that government will put forward disinvestment policy with persistent attention and efforts. Achieving disinvestment targets is must to achieve targeted fiscal deficit 6.8 per cent of GDP in financial year 2021 – 22.

CA. Sarweshwar Biyani, Vice President – Finance and Accounts, SV Pittie Sohar Textiles [FZC] SAOC, Sohar Free Zone.