Finance Minister Smt Nirmala Sitharaman presented India’s Annual Budget on Feb 1, 2022. She proposed various taxes and other proposals. Here is a summary of Budget proposals, which will impact Non-Resident Indians ‘NRI’ (Indian Citizen living/working abroad), Foreign Citizen (PIOs, OCIs, Others), Seafarers, Expatriates. This Budget 2022 will impact Income Tax Returns of FY 2022-23.
No Change In Income Tax Slabs
- There is no change in income tax slabs.
- Earlier Tax Slabs, which were effective in FY 2021-22, will be applicable in FY 2022-23 as well.
- Option of Low Rate Tax Slabs (without benefit of certain deductions) will be applicable in FY 2022-23 also.
Tax Slabs Applicable For FY 2021-22 and FY 2022-23 – NRIs, Non-Residents, Seafarers, Expatriates
|Taxable Income Slabs||Tax Rates|
(Without Deductions Benefit)
|Existing Tax Rates|
(With Deductions Benefits)
|Up to Rs 2.5 Lakh||Nil||Nil|
|Rs 2.5 Lakh to Rs 5 Lakh||5%||5%|
|Rs 5 Lakh to Rs 7.5 Lakh||10%||20%|
|Rs 7.5 Lakh to Rs 10 Lakh||15%||20%|
|Rs 10 Lakh to Rs 12.5 Lakh||20%||30%|
|Rs 12.5 lakh to Rs 15 Lakh||25%||30%|
|Rs 15 Lakh and above||30%||30%|
Capital Gain Tax Surcharge Limited To 15%
Though there is no change in Income Tax Rates in this Budget, however, the budget has brought a welcome and beneficial clause of restricting the Capital Gain surcharge to 15%. Earlier, the highest applicable surcharge was 37% in case of total income arising from Capital Gains more than Rs 5 Crores. Now, this has been restricted to 15%. This will be very helpful for high value transactions, specifically property sale transactions by NRIs, Foreign Citizens.
Updated Income Tax Return Can Be Filed Upto 3 Years From End Of Financial Year
Budget 2022 introduced a very important provision, which will provide lot of convenience to many assesses including NRIs, Non-residents, Seafarers. As per the existing law, due date of ITR filing is July 31 of the assessment year. Belated date for filing the ITR is Dec 31 of the assessment year. However, after Dec 31 of assessment year, ITR cannot be filed. Hence, there is no mechanism to file an ITR after Dec 31. Hence, if due to some unavoidable circumstances or other reasons, an assessee misses his ITR filing by Belated Date then it was leading to harsh penal provisions and notices by the IT Deptt. Now, to overcome this problem, assessee has been provided a new window. A new section 139(8A) has been inserted by the Budget 2022. Accordingly:
- A new return named Updated Return can be filed now even after Belated Return Last Date.
- This Updated ITR can be filed upto 2 years from the end of relevant AY.
- Hence, effectively, now an ITR can be filed upto 3 years from the end of relevant Financial Year. E.g. ITR of FY 2021-22 can be filed upto March 31, 2025.
- To file ITR under Updated ITR umbrella, assessee will have to pay additional fee/penalty in the form additional tax payment, which can be 25% /50% of the Outstanding Tax Liability.
- The Additional Tax liability will be 25% of outstanding tax liability if updated ITR is filed within 12 months from the end of relevant assessment year. However, this additional tax liability will be 50% of outstanding tax liability if updated ITR is filed after 12 months and within 24 months from the end of relevant assessment year.
- Updated ITR can also be filed by those, where there is refund or loss, however, refund will not be allowed while processing of ITR. The Refund/Loss ITR can be filed with a late fee penalty.
- The new provision intend to provide an opportunity window to those who missed filing ITRs under normal provisions, so that litigation can be substituted by self-compliance.
- Benefit To NRIs, Seafarers, OCIs: Updated ITRis important provision for NRIs, Seafarers who missed filing ITR due to various reasons, however, they otherwise wanted to file the ITR. Important to note here, if there is any financial transaction, TDS, Interest, Foreign assets is reflecting in tax department records, and there is no ITR in IT Deptt records, this leads to enquiry notices from tax department. Updated ITR provision provides window for 3 years now, hence, NRIs, Seafarers, Other Non-residents can opt this option and plug various IT Deptt notices through filing of Updated ITR.
Taxation of Digital or Crypto Currenty – Higher Tax Rate – Budget 2022
Budget 2022 has inserted a new section 115BBH for Crypto Currencies. Under the section:
- Tax at a higher rate of 30% is provided for Virtual Digital Asset (VDA).
- VDA is a wider term which will cover all Digital and Crypto Currencies.
- It will be effective from April 1, 2022.
- 30% tax will be levied on income from VDA i.e. Sale minus Cost price.
- No other expense will be allowed as expense from this income.
- Loss on sale of VDA (Crypto, Digital Currency) can neither be set off against any other income of same year nor it can be carried forward to next years.
- Indexation benefits are not allowed.
- TDS provisions has also been incorporated a new provision to deduct @ 1% TDS on VDA (Crypto) Transactions. With this VDA transactions will be transparent and shall get reported to Income Tax Authorities by the Crypto Exchanges.
- Gifts of Crypto, Digital currencies (to other than close relatives) will be taxable in the recipient hands.
- Impact on Non-Residents, NRIs: As lot of Non-Residents, NRI do Crypto Currencies trading. Hence, benefit of new provision to them will be that they are now clear about the taxation and tax rates of these assets. Although, tax rate is high, which will impact their pocket in the form of net cash flow in hand.
Miscellaneous Proposals Budget 2022 – Impact On NRIs, Other Non-Residents
- Digital Rupee: Govt of India is planning to introduce its own Digital Currency. This can benefit as a cost reduction to NRIs, Other Non-Residents in relation to their cross-border remittances.
- E-Passports: Govt is also planning to introduce E-passport, where chip will be embedded therein. This ease arrival and departures. The chip will also capture date and link it with various Indian ministries and authorities. Once it is introduces, tax authorities will get access to number of days stay in India by an assessee. This data can be part of AIS or 26AS also. It will benefit honest tax payers e.g. Non-residents, NRIs. Also, this will provide information to Income Tax Department about NRIs, OCIs leaving abroad, and hence it will avoid them from unnecessary litigation by tax department. This information will help IT Deptt to catch those who are not fulfilling their tax obligations correctly as per their residential status.
Budget 2022 – Implication, Impact, Usefulness For NRIs, Seafarers, Other Non-Residents
Budget 2022 related above provisions are NRIs, Non-Residents, OCIs specific. It can help NRIs, in relation to their various questions like:
- What is in Budget 2022 in relation to Non-Residents and Expatriates?
- Whether this Budget 2022 will benefit Non-residents i.e. NRIs, OCIs, Seafarers?
- What is the impact of Budget 2022 on NRIs?
- NRI Tax Consultant in India in relation to Budget 2022 provisions?
NRI Tax, RBI Laws Services – Various Topics – By NRI Tax Service Consultants Company Team
- Returning NRIs Tax Laws, RBI Laws – NRI Tax Consultancy Services
- Repatriation of Money – NRO Account – NRI 15CA 15CB Services
- Taxation on Foreign Remittance by Residents Indian – TCS on LRS, Foreign Remittance
- Income Tax Return Services To NRIs, Non Residents In Delhi NCR, Bangalore, Mumbai, Kolkata, Chennai, Hyderabad, Pune, Chandīgarh, Punjab, Other Major Cities India