What is the Impact of GST on NRIs?

The implementation of the Goods and Services Tax (GST) by the Indian government is having a marginal impact on non-resident Indians (NRIs), according to tax experts. The impact is being mainly felt on remittances and NRO and NRE accounts. generally banking charges are around 100 to 200 rupees per remittance, therefore, an increase of three per cent means the recipient of remittances are having to pay just a few rupees extra.

From July 1, 2017, the Indian government substituted its multi-state and multiple direct tax systems comprising state and central taxes with its ambitious pan-India GST regime. Under this new regime, banking charges on remittance recipients have been increased from 15 to 18 per cent.

NRIs having saving non-resident ordinary rupee (NRO) or non-resident rupee (NRE) account with any bank in India have to bear a small additional cost as the tax has been increased from 15 per cent to 18 per cent for availing such banking services under GST regulations.

Commenting on the property sector, Jena noted that ready-to-move-in property, do not incur any GST but tax on under-construction property has been increased from 12 per cent to 18 per cent. But because one-third of the value of the property is considered as cost of the land, it gets 1/3 GST exemption. In addition, the developer gets tax credit under GST on purchase of raw material which is expected to pass on to the property buyer. Hence, GST is resulting in lower value of properties under construction.

Along with this, renting out residential property is exempt from GST but property in commercial nature attracts 18 per cent GST for all, including Indians living abroad. However, this GST levy on commercial properties is applicable to annual rent receipts of above 2 million rupees.

As per the Indian regulations, every passenger entering India has to pass through a customs check and declare contents of his baggage in the prescribed Indian Customs Declaration Form at airports. If the NRI is carrying jewelry or other goods as baggage (subject to the fulfillment of the baggage conditions), no GST on such goods is payable at the time of bringing the same into India.

However, there is exemption up to 300,000 rupees in case of gems and jewelry and 100,000 rupees in case of any other products, and not exceeding 50 units in numbers in a year, imported by post or air as a personal baggage by a traveler or businessman, tax experts said.

NRIs may be able to claim the GST refund of what they would have paid on their purchases on leaving India, thereby making their purchases cheaper in the home country. However, it seems that neither the system nor the infrastructure is ready at airports and may take some time to get the process ready.